In response to community feedback, the Australian Taxation Office (ATO) has paused its awareness campaign around tax debts on hold.

“The ATO has heard the concerns raised by the community.”

“We have paused the awareness campaign and will review our overall approach on how we communicate about debts on hold,” it said in a statement.

According to the ATO, these debts relate to tax returns for past income years.

“The letters provided a reminder about existing debts but did not require payment.”

“It’s important to us that taxpayers have trust in our tax system and our records.”

“We verified that all debts exist, and that all taxpayers were previously informed when the debt was originally incurred through their notice of assessment.”

“Taxpayers can check whether they have a debt on hold by calling us.”

“However, we accept that our communication approach caused unnecessary distress – especially for those debts incurred several years ago.”

“We will review our overall approach to debts on hold before progressing any further.”

“No further action is required by anyone who has received a letter. However, if you have questions about your existing tax debt, you can contact the ATO for further information.”

Background

In the past, the ATO has excluded some debts from being recovered, such as when the debts are very small. While the ATO decides not to pursue the debt, the debt remains payable.

According to the ATO, this practice was expanded during COVID-19 to support the community and it paused offsetting debts previously put on hold entirely, meaning debts were not deducted from tax refunds or credits.

However, this practice was reviewed by the Australian National Audit Office (ANAO) as part of the ATO’s financial statements audit. The review found excluding any existing debts from being offset was not consistent with the law, regardless of when the debt arose.

The ATO said it investigated further and received clear advice that all debts must be offset as required by law. It does not have the power to forgive or waive a tax debt.

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