iscoverThe Tax Office is starting to include tax debts on hold in taxpayers’ account balances from this month.
‘Window of opportunity’: ATO makes change to tax debts on hold
11 August 2025
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8 minute read
As of 1 August 2025, the ATO will progressively include debts placed on hold in account balances, not including debts placed on hold before 1 January 2017.
“A debt on hold is a tax debt we have paused taking actions to collect. We may place a debt on hold if we decide it’s not cost effective to collect the debt at the time,” the ATO said.
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It was noted that while a debt was on hold, it may not appear in an account balance; the ATO would not try and collect it despite it remaining due and legally payable and could be offset with any entitled credits or refunds.
“You may have a debt on hold that is not currently included in your account – even if your current account balance is zero. If your situation changes and we believe it is cost effective to collect your debt on hold, we may take it off hold. This means we will contact you to pay the debt.”
The Tax Office would also remit GIC that was applied to debts on hold when they were not included in account balances, meaning taxpayers had not been charged GIC for that period.
The ATO would stop remitting GIC six months from the day the debt on hold was included within an account balance, which GIC would then start to apply.
Amanda Gascoigne, accounting practice coach, told Accountants Daily that this ATO change was an important one for tax practitioners to be across.
“With debts on hold now being progressively included in taxpayers’ account balances, and GIC to start accruing six months after inclusion, there’s a window of opportunity to act before the debt starts growing again,” she said.
“I see this as a timely reminder for practitioners to proactively review their clients’ ATO debt positions, have those sometimes-tricky conversations, and explore manageable solutions. It’s also a chance to demonstrate the broader value we provide beyond compliance – supporting clients to manage tax debts, ease financial stress, and in some cases, explore restructuring or repayment options.”
The ATO noted that its decision to place a debt on hold could not be objected to or requested to be taken off hold; however, taxpayers or practitioners may be able to object to the relevant assessment or amended assessment that raised the debt if it believed it was incorrectly calculated.
Gascoigne urged practitioners to be proactive and view the details of their clients’ debt on hold in ATO Online Services for Agents or their statement of account so tabs could be kept on the respective tax debt.
“I recommend adding a question about ATO debts to your annual checklist – are they reducing or growing? If they’re growing, that could indicate a deeper issue with profitability, cash flow, or even a lack of awareness around tax obligations,” she said.
“Getting ahead of these conversations can make a world of difference to clients who may be quietly burdened by these debts.”
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