Starting August 2025, the Australian Taxation Office (ATO) has begun progressively including previously paused tax debt – known as debts on hold – in taxpayers’ account balances.
This change is designed to improve transparency and help individuals and businesses better manage their tax obligations.
What Is a Debt on Hold?
A debt on hold is a tax debt the ATO has paused collecting, typically because it was not cost-effective to pursue at the time. While the ATO stops contacting you about the debt, it remains legally payable. Previously, these debts were excluded from your account balance, making them easy to overlook. Now, they will appear in your ATO account, allowing you to track them more easily
Who Will Be Notified?
If your debt on hold is $100 or more, you or your tax agent will receive a letter before it’s added to your account balance. Debts under $100 will still be included but won’t trigger a notification
If you’re already on a payment plan for another debt, the ATO will contact you before adding the debt on hold to your balance.
How Will This Affect You?
Once a debt on hold is included in your account balance, it may impact:
- Refunds: Any future credits or refunds will be automatically offset against the debt.
- Interest Charges: The ATO will continue to remit the General Interest Charge (GIC) for six months after the debt is added. After that, GIC will begin to apply unless the debt is paid.
Example Scenario
Let’s say you had a $200 debt placed on hold in 2020. In September 2025, the ATO includes this debt in your account balance. You’ll receive a letter, and the debt will appear in your online account as “Existing debt on hold included in account balance – Income Tax for the period 01 Jul 17 to 30 Jun 18.” If unpaid, GIC will begin accruing from March 2026.
What Can You Do?
You can choose to:
- Pay the debt early to avoid future interest charges.
- Review your account via ATO online services or speak with your tax agent.
- Set up a payment plan if needed.
- Offset credits or refunds against the debt automatically.
Need Help?
If you’re unsure whether you have a debt on hold or how this change might affect your tax position, we recommend checking your ATO account or speaking with your tax professional. You can also contact the ATO directly at 1800 305 499 for support.
