Is there a statute of limitations on ATO debt?
Short answer
No. There is no statute of limitations on the ATO collecting a tax debt. Once tax has been assessed, the ATO can recover it at any time, however old it is. The time limits people have heard of apply to something else: how far back the ATO can amend an assessment, and how long you have to object. That is why an old ATO debt can reappear years later.
No time limit on recovery
State limitation laws stop a creditor suing on an ordinary debt after a set number of years. Those laws do not bind the ATO. A tax debt is owed to the Commonwealth, and the tax law gives the ATO the power to recover it without any limitation period. Whether the debt is 3 years old or 20 years old, it is still due and payable, and the ATO can use the same tools: refund offsets, payment plans, garnishee notices and, at the far end, court action.
This is the legal reason the ATO's debts on hold program exists. The ATO shelves a debt it thinks is uneconomical to pursue, but it does not lose the right to collect it. Our page on whether ATO debt expires covers what happens to those debts over time.
Time limits that do exist
Tax law has plenty of deadlines. They just run in the other direction: they limit when an assessment can be changed, not how long the ATO has to collect.
| Time limit | What it covers |
|---|---|
| 2 years from the notice of assessment | How long the ATO (or you) can amend an income tax assessment for most individuals and small businesses |
| 4 years from the notice of assessment | The amendment period for most other taxpayers, and for GST |
| No limit | Amendment where the ATO finds fraud or evasion |
| Same as the amendment period | Your deadline to object to an assessment; late objections need a reason |
| 21 days | A director penalty notice, counted from the date the ATO posts it |
| 21 days | A statutory demand on a company, after which it is presumed insolvent |
The amendment limits matter for old debts in one way. If the ATO wants to raise a new liability for a year long past, it generally needs to be inside the amendment period or have grounds to allege fraud or evasion. Our page on how far back the ATO can go explains that side. But a debt that was assessed at the time, and simply never paid, is not subject to those limits at all.
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What this means if you have an old debt
Waiting out an ATO debt is not a strategy, because there is nothing to wait out. Interest at 11.43% p.a. keeps compounding unless remitted, and any refund you become entitled to is applied to the debt automatically, even one that is on hold. Ignoring the debt also removes the goodwill that helps when you eventually ask for a GIC remission or a payment arrangement.
What you can do is check the debt is right. Old debts are where errors hide: a default assessment made because a return was never lodged, a payment posted to the wrong account, a period that belongs to a company rather than to you personally. If the amount is wrong, disputing the assessment or lodging the missing return is the way to fix it. If it is right, a payment plan with an interest remission request is usually the practical next move.
What to do next
- Find the debt on your statement of account in ATO online services and note the period it relates to and whether it was ever placed on hold.
- Check whether the assessment behind the debt is correct, and lodge any missing return or object if it is not.
- If the debt is correct, ask for GIC remission on the accumulated interest before agreeing a payment plan.
Related questions
Can the ATO still sue me for a debt that is more than 6 years old?
Yes. The 6 year limitation period that applies to most ordinary debts in Australian states does not apply to tax debts. The ATO can commence recovery action on an assessed tax debt of any age. In practice, it usually starts with refund offsets and a request to pay before anything goes near a court.
Is there a time limit on the ATO issuing a default assessment for years I never lodged?
Not really. Where no return has been lodged, there is no assessment to amend, so the usual 2 and 4 year amendment periods do not start running. The ATO can issue a default assessment for an unlodged year at any time. Lodging the actual return is normally the way to replace the estimate with the real figure.
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