ATO advice on debts on hold

The ATO advises that debts on hold are not visible on an account balance but remain payable and new credits and refunds are offset against it.

When a debt is placed on hold, the ATO does not try and collect the debt.

A debt deemed uneconomical for collection will be re-raised later if the account holder becomes entitled to credits. These credits will be applied to reduce the balance, or if the account holder’s circumstances change.

The ATO will notify an account holder by letter that it has paused debt collection, any credits the account holder becomes entitled to will be offset against the debt, and it may be re-raised in future depending on the circumstances.

Through the ATO online services account holders will see a transaction with the description “non-pursuit” on your statement of account, for the relevant account. The debt on hold amount will not show as an outstanding balance on the account, as it has been made “inactive”, but the debt is still on record.

The ATO stated that although it may have decided to place the debt on hold at a point in time, the debt will remain owing. General interest charges (GIC) may apply automatically to what is owed.

More details are available in PS LA 2011/17 Debt relief, waiver and non-pursuit.

If the account holder’s circumstances change and they are able to pay all or part of the debt, they can pay at any time. Payment options can be found on how to pay.

If they are unable to pay in full, they should contact the ATO to discuss payment options, including a payment plan.

Offsetting is where the ATO uses a credit or refund from one account to pay off an outstanding or on-hold debt on another account.

It may offset credits from one account to reduce the amount owed from an on-hold debt.

An offset transaction can be found on the statement of account and in the online services account with the description “Offset”.

The law requires the ATO to offset credits against any tax debt you owe, except in limited circumstances, including when:

• There is a payment plan for all outstanding debts, which have been fully complied with.
• The tax debt has a future due date.
• The tax debt is for a director penalty liability.
• The available credit is a Family Tax Benefit amount.
• The account holder has been granted a deferral of recovery action.

To find out more, refer to Tax support for individuals or Tax support for businesses and not-for-profits.

More details are available in PS LA 2011/21  – Offsetting of refunds and credits against taxation and other debts.

For information about rights and obligations visit taxpayers’ charter.

The ATO may re-raise some or all of a tax debt it previously placed on hold when new information becomes available that suggests recovery of the debt is now possible.

It may reactivate your debts on hold if:

• The situation has changed, and it has reason to believe the account holder is now able to pay the debt.
• The account holder agrees to pay the debt.
• The ATO offsets a credit against the debt.

When a debt is re-raised, the ATO will notify the account holder or their authorised representative, either by phone or in writing.

When the ATO notifies the account holder that a debt has been re-raised, the account holder needs to pay the outstanding amount in full by the due date advised.

If they are unable to pay by this date, they may be able to set up a payment plan to pay in instalments. For more information see support to lodge and pay.

To view a debt on hold transaction in ATO online:

Individuals and sole traders:

• Visit online services for individuals.
• Select the tax drop-down menu.
• Select accounts.
• Select tax accounts.
• Choose the account you want to view.
• Select filter.
• Update the “from” date to 01/01/2000.
• Scroll through the account or download CSV (Excel) file and search for the following transactions “non-pursuit”, “re-raise of non-pursuit”, “partial re-raise of non-pursuit” and “cancellation of non-pursuit” – the net amount of the debit/s minus the credit/s is the remaining balance of the debt on hold.

Registered tax professionals:

• Visit online services for agents.
• Visit view client list or favourite clients (if you have added client to favourite list).
• Choose client identifier.
• Select the accounts and payments drop-down menu.
• Select tax accounts.
• Choose the account you want to view.
• Select filter.
• Update the “from” date to 01/01/2000.
• Scroll through the account or download CSV (Excel) file and search for the following transactions “non-pursuit”, “re-raise of non-pursuit”, “partial re-raise of non-pursuit” and “cancellation of non-pursuit” – the net amount of the debit/s minus the credit/s is the remaining balance of debt on hold.

Businesses:

• Visit online services for business.
• Select the accounts and payments drop-down menu.
• Select tax accounts.
• Choose the account you want to view.
• Select filter.
• Update the “from” date to 01/01/2000.
• Scroll through the account or download CSV (Excel) file and search for the following transactions “non-pursuit”, “re-raise of non-pursuit”, “partial re-raise of non-pursuit” and “cancellation of non-pursuit” – the net amount of the debit/s minus the credit/s is the remaining non-pursued balance of debt on hold.