Release, waiver, write off, non pursuit: what is the difference?
Short answer
Release and waiver permanently end a tax debt. A write off or non-pursuit decision usually does not: the ATO has stopped chasing it, but the debt still exists and can be re-raised. The words get used loosely, including by advisers, and the difference decides whether you can ever be asked to pay again. The mechanisms are covered in depth at ATO debt forgiveness.
The five terms side by side
| Term | Who decides | Is the debt gone? | Can it come back? |
|---|---|---|---|
| Release (serious hardship) | The ATO, on your application | Yes, the released amount is extinguished | No |
| Waiver | The Finance Minister or delegate, not the ATO | Yes | No |
| Write off: irrecoverable at law | The ATO | Effectively yes | Only in very limited circumstances |
| Write off: uneconomical to pursue (non-pursuit, debt on hold) | The ATO | No, it remains legally payable | Yes, at any time |
| Compromise | The ATO, by agreement | The unpaid balance is not pursued once you pay the agreed amount | Can be undone if your disclosure was false or incomplete |
Remission is a sixth word you will see. It applies to interest and penalties, not the original tax, and it is by far the most common form of relief. See GIC remission.
Release and waiver: the permanent ones
Release is the hardship mechanism in the tax law. It is available to individuals and sole traders, for income tax, PAYG instalments, FBT and the Medicare levy, when paying would leave you without basic necessities. You apply to the ATO, and if it is granted the debt cannot be recovered later. See how to apply for release.
Waiver sits outside the tax law. It is a power of the Finance Minister under Commonwealth financial law to waive any debt owed to the Commonwealth, and it is described as a remedy of last resort. The ATO prepares a submission and you get a chance to comment on it before the Minister decides. It is used where release is not available and there is something exceptional about the case. It is rare, and it is not something the ATO can grant on the phone.
Not sure what your ATO letter actually means?
A specialist can read your statement of account and tell you what is gone and what can come back.
Write off and non-pursuit: the ones that can come back
The ATO can decide not to pursue a debt for two reasons. If it is irrecoverable at law, for example because a company has been deregistered with no assets and no director liability, the debt is effectively finished. If it is uneconomical to pursue, because the cost of collecting it would outweigh the amount, the ATO writes it off in its accounts but the debt stays due and payable. On your account it shows as a debt on hold.
That second kind is the one to watch. The ATO will take any refund or credit against it, and it can re-raise the debt when your situation changes. Thousands of people found old debts reappearing for exactly this reason. See what uneconomical to pursue means for the current rules, including the six months of interest remission the ATO applies when it puts an on-hold debt back on an account.
ASK WHICH ONE
If you are told a debt has been written off, ask the ATO whether it was written off as irrecoverable or as uneconomical to pursue. Only the first is safe to plan around.
What to do next
- Check your ATO statement of account for the words debt on hold or included in account balance, which signal non-pursuit rather than forgiveness.
- If you are an individual in genuine hardship, look at release, which is the only one of these you can apply for directly.
- If someone tells you a debt is written off, ask for the reason in writing.
- For interest and penalties, ask about remission, which is separate from all of the above.
Related questions
Can I apply for a waiver of my tax debt?
You can write to the Department of Finance asking for a waiver, but it is a last resort used in exceptional cases, usually where release under the tax law is unavailable and there is something unfair about enforcing the debt. In practice the ATO expects you to go through release, payment plans and remission first.
If the ATO writes off my debt, does it show on my credit file?
No. Neither a write off nor a debt on hold is reported to credit bureaus. The only route from tax debt to a credit file is the disclosure of business tax debt scheme, which applies to business debts of $100,000 or more that are overdue and not being managed.
Not sure what your ATO letter actually means?
A specialist can read your statement of account and tell you what is gone and what can come back.
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