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Debt disputes

What to do if you disagree with us about a debt, and what we can and can't do to help.

Last updated 30 April 2023

How we approach debt disputes

We have an obligation to collect all money legally owed to the Commonwealth, therefore we usually cannot accept less than the full amount. We will work with you to help you manage the payment of your tax debt – including if deferred payment or payment by instalments is an option.

In our approach to collecting tax and super debt, we seek a balance between considering your individual circumstances and the associated risks to recovery (including your compliance history and the size of the debt).

Further information can be found at Help with paying.

However, there will be times when we need to take stronger action to recover tax debts.

If your debt reaches the formal debt recovery stage we will continue to consider suitable processes, including dispute resolution processes to resolve the issue prior to, and potentially during, litigation.

Disputes relating to debt matters, include:

  • legal action to recover a tax liability
  • legal action to recover director penalties
  • insolvency proceedings (including bankruptcy and winding up action)
  • actions in relation to an unfair preference or other voidable transaction, or where the Commissioner seeks an indemnity from a company director.

What you can do if you owe us money

If you think your assessment is incorrect you can possibly dispute your tax liability. In some cases, for example director penalties, you may be able to demonstrate to us that you have a defence to the liability. Otherwise, it is your obligation to either pay the debt in full by the due date or make an appropriate arrangement to pay the debt in a timely manner.

What if you can't pay

If you are aware of an upcoming liability that you cannot pay, or we have contacted you about a liability, it is in your interests to engage with us early to discuss payment at a later date or by instalments

We encourage you to talk to us. We are always willing to discuss your situation and we provide a phone number on all our correspondence. You should phone us if you are confused or have difficulty paying. In these circumstances we will:

  • explain the situation clearly and listen to what you have to say
  • discuss your payment options and financial situation.

If you cannot pay and are unable to agree to a payment arrangement, or are unwilling to engage with us, we will consider firmer debt recovery actions. This may include any of the following:

  • issuing a garnishee notice to your bank or a third party
  • requesting financial information to assess your ability to pay
  • issuing a Directors penalty notice if you are a director of a company
  • issuing a statutory demand.

Further information can be found at Stronger action approach to debt collection.

What formal debt recovery actions we take

To recover any debt you owe us, we may do any of the following:

  • Start court proceedings to obtain a Judgment that you pay us.
  • For individuals, initiate bankruptcy proceedings.
  • For companies, initiate winding up proceedings.

How we can assist you

We offer a range of services and tools to assist you to manage your tax debt. You can phone us to discuss these options.

During the debt recovery process, we will continue to consider suitable arrangements to resolve any issues.

We aim to address debt early, while your liability is more manageable.