Clarity on your ATO account: debt on hold is coming to the surface
You may have heard that the Australian Taxation Office (ATO) is changing the way it presents your account balance. This is a big move towards greater clarity and it's something every business owner or individual taxpayer needs to be aware of.
The Key Change: Including 'Debt on Hold'
What is a 'debt on hold'? Essentially, it's an old debt the ATO previously decided wasn't worth the cost of chasing up at the time. While they weren't actively collecting it, the debt still legally existed, and any future tax refunds or credits were (and still are) automatically used to pay it down.
The big issue?
Up until now these debts often didn't show in your main account balance. This created a confusing, incomplete picture of your total financial liability to the ATO.
From August 2025, the ATO is adding these 'debts on hold' to your visible account balance.
Why This Matters to You (and Your BAS Agent)
Full Transparency: You will finally see your total amount owing in one place. No more surprises when a refund disappears to pay off an invisible debt.
Plan Ahead: Seeing the full picture makes cash flow management and future tax planning easier. You'll know exactly how much you need to budget for.
Better Advice: This improved transparency is a game changer for your bookkeeper or BAS Agent. They'll have a complete view of your liabilities (including the tax type and period the debt relates to) and can offer you much better advice on payment strategies, potential offsets and avoiding future interest.
A Quick Note on Interest
The good news is that while a debt was on hold, the ATO didn't charge interest. When it's added to your account, they will continue to waive interest for another six months.
Action Point: After this six month grace period, interest will start building up. You can pay all or part of the debt at any time to prevent this.
What to Expect Next:
Letter in the Mail: If your 'debt on hold' is $100 or more, you (or your agent) will receive a letter before it’s added to your account. Debts under $100 will simply be added.
Existing Payment Plans: If you're already on a payment plan for another debt, the ATO will check in with your agent first.
This change is about making your tax world clearer and more manageable. If you have any concerns or want to discuss the best way to manage any reappearing debts, make sure you reach out to your registered BAS Agent for guidance.
This information is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided in relation to your own circumstances.
