The Australian Taxation Office (ATO) has paused a letter campaign that told taxpayers they had historical debts “on hold” following community backlash.
Thousands of Aussies recently received letters from the ATO telling them they had debts “on hold”, which would be taken from future tax refunds. The amount owing ranged from a few cents to thousands of dollars and, in some cases, the debts were decades old.
Some tax agents say they have received letters on behalf of clients relating to debts raised more than 20 years ago, and have questioned if it is fair to pursue matters from so long ago.
And others have compared the letters to the much-criticised "robodebt" campaign, where Services Australia sent letters to welfare recipients pursuing often incorrectly-generated debts.
The tax office said it has verified that all of the debts exist, and that those with the debts have been notified about them before.
But in a Statement, the ATO said… “The ATO has heard the concerns raised by the community. We have paused the awareness campaign and will review our overall approach on how we communicate about debts-on-hold,”
“The purpose of the letters was to ensure people had full visibility of their existing debts with the ATO, where collection had been put on hold.”
What are debts on hold?
Tax debts on hold are debts the ATO is not taking active steps to recover, but remain payable.
The ATO is able to recoup debts owed by automatically reducing a person’s tax refund, with “very limited circumstances” in which it has the discretion not to do so.
During COVID-19, the ATO paused offsetting debts on hold, meaning they weren’t deducted from any refunds or credits. It then resumed its “business-as-usual” approach to debt collection in June 2022.
An ATO spokesperson previously told Yahoo Finance that, during the 2022-23 financial year, more than 14,000 taxpayers paid their ‘on hold’ debts, totalling $63.6 million.
