The ATO says I owe money I don't recognise. What do I do?
Short answer
Do not pay it and do not ignore it. First confirm the contact is really from the ATO, then find the debt on your own statement of account and ask the ATO to explain it. Most unrecognised debts turn out to be an old debt re-raised from hold, an estimate for a year you never lodged, or interest on something you thought was finished. Each has a different fix.
First, make sure it is the ATO
A demand for money you do not recognise is the classic scam opening. Genuine ATO messages never contain links asking you to log in or pay, never threaten arrest, and never ask for payment by gift card, crypto or transfer to a personal account. Do not use any phone number, link or reference in the message itself. Log in to myGov or Online services for business and see whether the debt appears on your account, or call the ATO on 13 11 42. If the debt is not on your account, report the contact on 1800 008 540. Our page on ATO scam or real compares the signs. A text from recoveriescorp or another agency can be legitimate, because the ATO does use collection agencies, but payment still goes to the ATO's own payment reference.
Find the debt on your account
Open Tax, then Accounts, then Summary in ATO online services, check every account, and filter transactions from 01/01/2000 sorted oldest to newest. Our guide to checking what you owe has the full steps. Then match the debt to one of these common explanations.
| What you see | What it usually means |
|---|---|
| A transaction described as non-pursuit, then re-raise of non-pursuit or included in account balance | A debt the ATO put on hold years ago and has now added back. GIC is remitted for 6 months from the date it was included. |
| An assessment for a year with no return lodged | A default assessment: the ATO's estimate of your income, often high. Lodging the real return normally replaces it. |
| A series of GIC or penalty lines on an account you thought was paid | Interest or penalties that kept accruing after the last payment, or a failure to lodge penalty on an overdue return. |
| A debt on the activity statement account | Unpaid GST, PAYG withholding or PAYG instalments from a business or ABN, including one that has closed. |
| A refund credit transferred to another account | An offset: your refund was used against an existing debt on another account. |
| Nothing on your personal account, but a letter naming a company | Possibly a director penalty notice, which makes you personally liable for company amounts and has a 21 day clock from the date of posting. |
Debt you don't recognise?
Free, confidential help checking what it is and whether it is right before you pay.
Ask the ATO to explain it
You are entitled to know which period the debt relates to, what tax it is, how it was calculated, how much is interest or penalty, and when it was placed on hold if it was. Ask for that in writing if the phone answer is unclear. Old debts are where errors sit: a payment posted to the wrong account, a period that belongs to a partnership or company rather than to you, or an amendment that was never made. For debts on hold the ATO has a dedicated line, 1800 305 499.
If it is wrong, and if it is right
If the debt is wrong, the remedy depends on the cause. A default assessment is usually fixed by lodging the real return. An error in an assessment is fixed by an objection, which has time limits, generally 2 years or 4 years from the notice of assessment depending on your circumstances, though late objections can be accepted with a reason. A misposted payment is fixed by asking the ATO to correct the account. Our guide to disputing an ATO debt covers the routes. Collection does not automatically stop during a dispute, but the ATO will often hold enforcement while a genuine dispute is worked through if you ask.
If the debt is right, deal with it before interest at 11.43% p.a. resumes or continues. A payment plan can be set up online for debts up to $200,000, a GIC remission request can cut the interest portion, and individuals in serious hardship can ask for release from income tax debt.
What to do next
- Confirm the debt exists on your own ATO account through myGov or Online services for business, ignoring any contact details in the message you received.
- Ask the ATO for a written breakdown: period, tax type, calculation, interest and penalties, and any date the debt was placed on hold.
- Lodge any missing return, object if the assessment is wrong, or set up a payment plan and request GIC remission if it is right, and do it before any 21 day deadline on a notice runs out.
Related questions
Do I have to pay while I am disputing the debt?
Legally the debt remains payable while a dispute runs, and interest keeps accruing on any part that is eventually upheld. In practice the ATO will often agree to hold recovery action while a genuine objection or review is underway, especially if you ask and stay in contact. Some people pay the undisputed part and dispute the rest, which limits the interest exposure.
The debt is from a business I closed years ago. Is it still mine?
If you were a sole trader, yes: the business's tax debts were always personally yours and closing the business does not change that. If it was a company, the company's debt is generally the company's, but unpaid PAYG withholding, GST and super can become your personal liability under the director penalty rules, so a letter naming an old company needs to be checked quickly rather than filed away.
Debt you don't recognise?
Free, confidential help checking what it is and whether it is right before you pay.
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