Covering Note. Ministerial Correspondence Relating To The Ato’s Debt On Hold Practice Or Campaign.

Written by Claude Haiku 4.5 from the extracted text on 27 Feb 2026. It can miss or misread redacted and scanned pages. Check the source before relying on it.

The ATO clarifies its "debt on hold" practice—where tax debts are deemed uneconomical to pursue and recovery action ceases. The disclosure outlines that debts on hold cannot be waived unless meeting specific debt relief criteria under PS LA 2011/17, and the ATO is legally required to offset these debts against any refunds or credits taxpayers become entitled to. This offsetting practice previously caused taxpayer confusion when account balances didn't reflect outstanding debts on hold, leading to unexpected refund reductions. To address this concern, the ATO is now including debts on hold in account balance statements to provide taxpayers with a complete tax position overview. The documents include revised taxpayer correspondence, updated online descriptions, and supporting materials for the Assistant Treasurer, indicating a policy adjustment aimed at improving transparency around this administrative practice. Most debts on hold comprise undisputed prior-year taxpayer-assessed liabilities.