FAQ and information to assist the community

Serious hardship is a general term and can apply where you are unable to provide the following for yourself, your family or dependents:

• food
• accommodation
• clothing
• medical treatment
• education
• other basic necessities.

There are a number of options available to individuals who are experiencing serious hardship.

Applying for release from your tax debts

Individuals and trustees of an estate of a deceased person can apply to the ATO for release of certain tax debts.

Tax debts that have been released will not be sought to be recovered from the taxpayer at a later date.

The ATO has published an online tool to assist taxpayers to assess their eligibility for release: Debt Release Tool

The ATO has also published some general information on its website about release, how to apply and the factors it will consider when considering a release application as well as the type of evidence it may require: Release from your tax debt | Australian Taxation Office (ato.gov.au)

Priority processing

Taxpayers experiencing serious hardship can also request priority processing of their income tax returns. This may be helpful where the taxpayer is expecting a refund or credit that may assist to alleviate the hardship.

There is general information on the ATO website about how to request priority processing: Requesting priority processing | Australian Taxation Office (ato.gov.au)

Taxpayers should note that priority processing does NOT guarantee that a refund or credit will be issued to them. Where the taxpayer owes a tax debt or other government debts, the refund or credit may be applied to pay the outstanding debt.

Taxpayers should be aware of what debts are currently owing and engage with the ATO, or other government agencies, to explore options to manage that debt.

Waiver of Commonwealth Debt

As a last resort, and in limited circumstances, taxpayers may also apply for waiver of debt from the Department of Finance.

Information on the waiver process and how to apply are available on the Department of Finance’s website: Waiver of Debt | Department of Finance

The ATO may disclose the tax debt information of certain taxpayers to credit reporting bureaus where certain conditions are met:

• the taxpayer has an Australian Business Number (ABN)
• they have one or more tax debts and at least $100,000 is overdue by more than 90 days
• they are not engaging with the ATO to manage their tax debt
• they do not have an active complaint with the IGTO about the ATOI’s intention to report their tax debt information.

Before the ATO reports your tax debt information to a credit reporting bureau, it will send you a letter stating its intention to do so. There are a number of things you can do in response to the letter:

• Engage with the ATO to manage the debt. Effective engagement can include:
  • Entering into and complying with a payment arrangement
  • Applying for release of the tax debt (if you are eligible)
  • Having an active objection against the tax decision to which the debt relates
  • Having proceedings before the Administrative Appeals Tribunal or the Federal Court in relation to the tax decision to which the debt relates
• If you have been affected by family tragedy, serious illness or natural disasters that have prevented you from dealing with your tax debt, you should raise this with the ATO discuss your options and any support it can provide
• You may lodge a dispute with the IGTO about the ATO’s intention to disclose your tax debt information – Lodge a dispute – IGTO

Directors may be personally liable for their company’s unpaid Pay-As-You-Go Withholding (PAYGW), Goods and Services Tax (GST) or Superannuation Guarantee Charge (SGC). The amounts that a director is personally liable for are called Directory Penalties and the ATO can collect these penalty amounts once it issues a Director Penalty Notice (DPN).

DPN disputes are complex. Directors who receive DPNs should seek professional legal and/or tax advice as a priority.

A complication that can arise with DPNs occurs where:

• The person is no longer a director of the company
• The company no longer exists – it has been wound up or deregistered

In these circumstances, there are difficulties in accessing details of the underlying debt and disputing the debt amount, due to the disclosure provisions provided in the legislation. The ATO’s approach to disclosing information in these circumstances has been inconsistent.

Taxpayers who receive a DPN and are seeking information about the underlying debts to which their DPN relates should, in the first instance, try and obtain information from the ATO.

Where that is not possible, they may wish to lodge a dispute with the IGTO for investigation about the debts relating to the DPN – Lodge a dispute – IGTO.

While the IGTO is empowered to investigate the debt matters, we are unable to intervene in legal or recovery proceedings that may have been commenced in relation to the DPNs. Taxpayers should ensure they engage tax and legal advice to manage any litigation that is on foot.

Individuals, sole traders and business are eligible to enter into a payment plan or arrangement to repay outstanding tax debts.

The ATO has produced a Payment Plan Estimator to assist taxpayers to work out a payment plan that they can afford: Payment plan estimator | Australian Taxation Office

There are a number of ways to set up a payment arrangement:

• Individuals and sole traders with debts of less than $200,000 may be able to use:
  • the ATO’s online services to set up the payment arrangement: Self-help services | Australian Taxation Office (ato.gov.au)
  • The ATO’s self-service phone line on 13 28 65
  • The ATO’s contact centre to speak with an officer on 13 11 42
• Businesses that owe less than $200,000 may be able to use:
  • Online services for business – Online services for business login page | Australian Taxation Office (ato.gov.au)
  • The ATO’s self-service phone line on 13 72 26
  • The ATO’s contact centre to speak with an officer on 13 11 42
• Registered tax and BAS agents may also set up payment arrangements for their clients through Online services for Agents

General information about payment arrangements is available on the ATO website: Payment plans | Australian Taxation Office (ato.gov.au)

All taxpayers are entitled to understand what debts they owe, the reason these debts were raised, how they were calculated and options available to manage and pay the debts.

Taxpayers and tax agents who have received communications from the ATO about tax debts may take the following actions:

• In the first instance, taxpayers should call 1800 305 499 to enquire about the debt, ask how it arose and the components that make up the amount. If the taxpayer believes they have paid the debt, they should discuss this with the ATO officer.
• If, after speaking with the ATO officer the taxpayer remains dissatisfied, the taxpayer may wish to raise a formal complaint with the ATO. This may be done by either:
  • Calling the ATO on 1800 199 010; or
  • Lodging a complaint through the ATO’s Complaints Form.
• In either case, taxpayers should ensure that they receive a complaint reference number which looks like 1-XXXXXXXXX (1 dash followed by 10 or 11 digits). ATO Complaints will endeavour to resolve the matter for the taxpayer within 15 business days.

Finally, if the taxpayer remains dissatisfied after ATO Complaints has sought to address the matter, they may wish to lodge a dispute with the Taxation Ombudsman. Details on lodging a dispute with the Taxation Ombudsman are available on our website.