Can the ATO chase a 10 year old debt?

Why ten years changes nothing

There is no statute of limitations on ATO debt. Once an amount has been assessed, it remains due and payable until it is paid, released or discharged through bankruptcy or liquidation. The ATO can shelve it, forget about it for years, and pick it up again. Age is not a defence.

What age does change is the interest. Unless the debt sat on hold with GIC remitted, ten years of general interest charge compounding daily can double the original amount or more. If the debt was on hold, GIC was remitted while it was out of your balance and for 6 months after it was added back. Either way, interest is the first thing to look at when an old debt resurfaces, because it is the part the ATO is most willing to remit.

What usually triggers the ATO to chase an old debt

• A refund. You lodge a return expecting money back and the credit is applied to the old debt instead. This is the most common way people learn a debt still exists.
• The debts on hold program. The ATO is progressively including post-2017 debts on hold in balances, with a letter first where the debt is $100 or more.
• Catching up on lodgements. Lodging several years of overdue returns brings your account back into view and can replace default assessments with real figures, up or down.
• A change in your circumstances. A new job, a new business, a property purchase or an ABN application can prompt the ATO to reassess whether the debt is now worth collecting.
• Company debt following you. A debt from a company you ran can reach you personally through a director penalty notice for unpaid PAYG withholding, GST or super, even if the company has since closed.

What to check before you pay

Old debts are where mistakes live. Before paying anything, get the statement of account and ask the ATO to explain the debt: which period, which tax, how it was calculated, and when it was placed on hold.

• Is it a default assessment? If the ATO estimated your income because a return was never lodged, lodging the real return may reduce the debt substantially.
• Is it actually yours? Debts can belong to a company, a partnership or a trust rather than to you, and a debt from a business closed years ago needs checking against who was liable.
• Were payments posted correctly? Ten years is long enough for a payment to have gone to the wrong account.
• How much is interest versus tax? If most of the balance is GIC, a remission request should go in before or alongside any payment plan.

Your options with an old debt

If the debt is correct, the practical choices are a payment plan, which can be set up online for balances up to $200,000, a GIC remission request for the accumulated interest, and for individuals in genuine financial difficulty, a serious hardship release application for income tax debt. The ATO's dedicated debts on hold line is 1800 305 499. If the debt is wrong, dispute it. Collection does not automatically pause during a dispute, but the ATO will often hold off enforcement while a genuine dispute is being worked through.

What to do next

1. Confirm the debt on your own ATO account through myGov or Online services for business, not through any contact details in a letter, text or call.
2. Ask the ATO for a breakdown by period and by tax versus interest, and check for default assessments or misposted payments.
3. Before agreeing a payment plan, lodge a GIC remission request for the interest and ask whether serious hardship release could apply.

More questions: 8 Old debts and time limits questions answered · Full guide: Old ATO debts resurfacing