Tax debt stress: where to start when you can't face it

The first three actions

People who have been avoiding a tax debt for months usually find the same thing when they finally look: the number is real, but it is smaller and more manageable than the version in their head. Avoidance is normal. It is also the expensive option, because interest is running at 11.43% a year while nothing happens. So the aim is not to fix it today. The aim is three small actions.

1. Open the letters. All of them, in date order. You are looking for two things: the total the ATO says you owe, and any letter with a date in it. Most ATO letters are reminders and statements, not deadlines. If you are not sure what one means, the letter decoder tells you in plain English.
2. Log in and see the real number. Go to myGov, open ATO online services, and look at your account balance. Write it down, split into tax, interest and penalties. That split matters, because interest and penalties can often be reduced. If you cannot log in, the ATO can tell you the figure over the phone.
3. Make one phone call. Not to solve everything. Just to start. You can call the ATO on 13 11 42 and say "I have a debt I cannot pay in full and I want to work something out." If you would rather talk to someone independent first, the National Debt Helpline on 1800 007 007 is free and confidential, and the Small Business Debt Helpline on 1800 413 828 does the same for business owners and sole traders. Both can call the ATO with you.

That is the whole first day. Stop there if you need to.

Free help that exists for exactly this

None of these cost anything and none of them judge.

• National Debt Helpline: 1800 007 007. Free financial counsellors, for any debt including tax. They will help you work out what you can afford and what to ask the ATO for.
• Small Business Debt Helpline: 1800 413 828. The same, for small businesses and sole traders.
• Lifeline: 13 11 14. Any time, day or night, if things feel bigger than a debt.
• Beyond Blue: 1300 22 4636. Support and someone to talk to, 24 hours.
• The ATO itself. The ATO has a vulnerability framework and specialised support teams for people going through illness, family breakdown, disaster, domestic violence or serious financial hardship. Say so when you call. It can lead to extra time, a pause on collection activity, interest being remitted, and for individuals with income tax debt, release from the debt altogether where paying it would leave you without essentials. See what counts as serious hardship.

What happens once you engage

The ATO's treatment of a debt turns on one thing: whether you are engaging. Once you are, firmer action such as garnishees or credit reporting stops being the likely path, and the normal outcomes are:

• A payment plan, set up online in minutes for debts under $200,000, sized to what you can actually pay.
• Interest reduced or wiped through GIC remission where your circumstances explain the delay.
• Late returns lodged, which often replaces an estimated figure with a smaller real one.
• For individuals in serious hardship, release from income tax debt.

If you want a second pair of eyes before you call, the situation checker takes two minutes, and matching with a tax debt specialist is free. Neither replaces the three actions above. They just make the call easier.

What to do next

1. Open every ATO letter, put them in date order, and note the total and any date mentioned.
2. Log in to ATO online services through myGov and write down the balance, split into tax, interest and penalties.
3. Make one call: the ATO on 13 11 42, or the National Debt Helpline on 1800 007 007 if you want someone independent to help you plan what to say.

More questions: 12 Life situations questions answered · Full guide: Can't pay your tax bill