What is an ATO letter of demand?

What the letter actually is

"Letter of demand" is a general term rather than an ATO form name. The ATO's own letters at this stage are titled things like overdue account reminder, warning of firmer action, final notice, or, for referred debts, a pre-referral warning before the file goes to recoveriescorp. Whatever the heading, the content is the same:

• The amount overdue and the accounts it sits on.
• A date by which you are expected to pay or make contact.
• A list of what the ATO may do next: garnishee notices, director penalty notices, credit reporting, referral to an external collection agency, or legal action.
• How to pay and how to arrange a payment plan.

Two letters that look similar but are legally different are the statutory demand, a formal 21-day demand served on a company that leads to a winding up application, and the notice of intent to disclose, which starts a 28-day clock before a business debt is reported to credit bureaus. Our ATO letters guide and letter decoder show how to tell them apart from a general warning letter.

How urgent is it?

A warning letter has no statutory deadline of its own, but it is the last polite step. If you do nothing by the date on the letter, the next contact is usually a formal notice, and those do carry hard timeframes:

Interest also keeps running the whole time at the general interest charge rate, 11.43% per year compounding daily, and interest incurred since 1 July 2025 is no longer tax deductible. Engaging before the letter's date is what keeps the ATO on the softer side of the ladder.

What to do with a letter of demand

1. Confirm it is real. Log in to myGov; the same letter should be in your ATO inbox. If it is not, check our scam or real guide before you call any number on it.
2. Check the balance and any unlodged returns or BAS. Lodging outstanding items is often the first thing the ATO asks for.
3. Call 13 11 42 before the date on the letter. If you can pay in full, do. If not, ask for a payment plan; debts up to $200,000 can usually be set up on the call or online.
4. Ask about interest remission on the same call, and put a written request in afterwards if the amount is large.
5. If you disagree with the amount, say so and follow the dispute process. A dispute does not automatically stop collection, so a plan on the undisputed part is still worth having.

If you are a company director, read the director penalty notice guide now, not later. The warning letter is often the last thing you receive before company debt becomes personal.

What to do next

1. Check the letter is in your myGov inbox, then note the date it gives you.
2. Lodge anything outstanding and call 13 11 42 before that date, with a monthly figure you can keep.
3. Ask about a payment plan and interest remission; if you are a director, read about DPNs today.

More questions: 11 Calls, texts, letters and scams questions answered · Full guide: ATO letters & notices