What happens if I ignore an ATO letter?
Short answer
It depends on the letter, and some of them keep counting whether you read them or not. A reminder costs only interest for a while. A notice of intent to disclose, director penalty notice, statutory demand or bankruptcy notice each starts a fixed clock that does not need your reply. Open it, then use the ATO letter decoder to work out which type it is.
Letters that are reminders
Most first contact is a reminder: you have an overdue amount, here is how to pay or set up a plan. Ignoring one of these does not trigger anything immediate. What it does is move you into the group the ATO's firmer action page describes as people who continue to ignore SMS and letter reminders. Each ignored reminder makes the next letter less friendly.
A pre-referral warning letter is the last of this kind. If it gets no response the debt can be passed to a collection agency such as recoveriescorp, which will call and text. The money still goes to the ATO. See ATO debt collectors.
Letters that start a clock
These are the ones where ignoring the envelope has a real cost. The days run from the date on the letter or the date it was posted, not from when you open it.
| Letter | Clock | What happens if ignored |
|---|---|---|
| Notice of intent to disclose | 28 days | Business debt of $100,000 or more is reported to credit bureaus. |
| Director penalty notice | 21 days from posting | You become personally liable for the company's PAYGW, GST and super. Options to remit it expire. |
| Statutory demand (companies) | 21 days | Company is presumed insolvent; a winding up application follows. |
| Bankruptcy notice (individuals) | 21 days | An act of bankruptcy; the ATO can petition to make you bankrupt. |
| Final notice to lodge | Date stated | Default assessment with 75% penalty, and possible prosecution. |
POSTING, NOT RECEIPT
A DPN's 21 days start when the ATO posts it to your ASIC registered address. If that address is old, the clock can run out before you know the letter exists.
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What to do instead of ignoring it
You do not have to have the money to respond. Every letter in the table above can be answered with engagement short of full payment: a payment plan stops credit reporting and most firmer action, and a call to the ATO on 13 11 42 puts a note on your file that changes how the next decision is made. For a DPN or statutory demand, get advice inside the 21 days, because after that the options narrow sharply.
If you have a pile of unopened mail, open the newest one first. It tells you where you are now. Then read what happens when you ignore ATO debt to see what usually comes next, and ATO letters explained for the rest of the pile.
What to do next
- Open the letter and find the letter type and the date on it. Count the days from that date, not from today.
- Check it is genuine: real ATO letters quote your reference number and never ask for gift cards or a payment to a personal account.
- If it is a reminder, set up a payment plan or call. If it names 21 or 28 days, get advice this week.
Related questions
What if the ATO letter went to an old address?
For most letters the ATO will keep trying by SMS, myGov and phone. A director penalty notice is different: it is validly served when posted to your ASIC address, even if you never see it. Update your ASIC and ATO contact details, and check myGov and Online services for business, where copies of many letters appear.
Can I ignore a letter from a debt collector about ATO debt?
Recoveriescorp and similar agencies act for the ATO and are legitimate, but you can deal with the ATO directly instead. Ignoring the collector does not pause anything. Setting up a payment plan with the ATO usually ends the collector's involvement.
Got an ATO letter you're not sure about?
Send us the type and date. We'll match you with someone who reads these daily.
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