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ATO revives offsets against debts on hold


Inactive amounts owed by taxpayers will be deducted from credits, starting in June.

By Philip King4 minute read

Debts on hold will again be used to offset tax refunds or credits starting next month, the ATO said this week.


The office is already sending letters to taxpayers reminding those with aged debts of their liability, which will have been categorised as “inactive” and does not appear as an outstanding balance on their account.

The ATO defined aged debt as an uneconomical non-pursued debt that it has placed on hold, and taken no recent action to collect.

“From June 2022, we will recommence offsetting clients’ tax refunds or credits to pay off their debts-on-hold,” the ATO said in its tax professionals newsletter.

“You may notice that your client’s refund is less than expected as we use a tax refund or credit from one account to pay off an outstanding debt on the same or another account. 

“In some cases, we may use credits your clients receive from other government agencies to pay off their debt.

The ATO said debts were typically placed on hold because it was uneconomical to undertake collection activity. They did not appear as outstanding balances but taxpayers were notified by letter that the office had paused debt collection.

The debt remained on the taxpayer’s record and “General Interest Charges may apply automatically”.

The debt on hold could also be re-raised at a later date if the taxpayer became entitled to credits. The taxpayer would be notified and the offset would appear on their statement of account.

“The law requires us to offset credits against any tax debt you owe, except in limited circumstances, which are where:

- you have a payment plan for all of your outstanding debts, which you have been fully complying 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

- you have been granted a deferral of recovery action.”

Debts on hold could also be paid in part or full at any time, and payment plans were available, the office said.

The ATO would also re-raise debts if the taxpayer’s situation had changed and “we have reason to believe you are now able to pay the debt”.

When a debt had been re-raised, it had to be paid in full by the due date.

Tax agents can access information about non-pursued debts by following this link: debts on hold. The ATO’s Online services for agents includes access to offset transactions and the relevant taxpayer’s statement of account.

ATO revives offsets against debts on hold
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Philip King

Philip King


Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

You can email Philip on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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