$5.3m worth of ‘on hold’ tax debts soon to be subject to GIC, ATO reveals

The documents, which contained correspondence between the ATO and Treasury, revealed that the ATO planned to make $5.3 million worth of tax debts visible across 325,788 taxpayer accounts as of August 2025. 

“These steps will ensure taxpayers will be able to see what amounts they owe so they can keep track of their tax debt,” the correspondence read.

“Including these debts in account balances does not mean they have been taken off hold, and while a debt is on hold the ATO will not actively pursue payment of the debt.”

As of 31 August 2025, approximately 1.6 million taxpayers had $19.7 billion in debts on hold as the ATO deemed them “uneconomical to pursue”, according to tax authorities. 

Between August and December 2025, the ATO estimated that approximately 391,000 taxpayers would be able to see their on-hold debts in their account balance. Of these, 329,000 had debts placed on hold since January 2017, and 62,000 had debts placed on hold before that.

While all debts placed on hold after November 2023 were made visible to taxpayers, many previous debts had not been included in taxpayer balances. This had led some to believe that the debts were no longer payable, the ATO said.

“Before November 2023, debts placed on hold were not included in the account balance on the statement of account or ATO online services, and some taxpayers may have considered these debts were no longer legally payable,” the Tax Office noted in its correspondence.

When a taxpayer had debts on hold, the ATO would not actively pursue them. However, the Tax Office was obliged to offset any future tax refunds or credits against the debt balance.

The ATO said GIC would be remitted for the period where debt placed on hold was not included in taxpayers’ account balances, and for a further six months from the day it was made visible in the balance.

“Taxpayers have the option to pay part, or all their debt on hold at any time, which will reduce the GIC that will apply 6 months after their debt on hold is included in their account balance,” it said in correspondence with Treasury.

The correspondence also detailed the ATO’s revised communications strategy regarding debts on hold, based on best-practice principles from the Tax Ombudsman. These included a focus on transparency, accountability for previous actions, details about where the debt stemmed, and clarity on how to seek help.

The Tax Office said it would deliver “tailored support and training” to staff responding to taxpayer questions, including account explanations on the origin of the debt.

“Staff training also focuses on ensuring that we identify and support taxpayers experiencing hardship,” the correspondence read.