How long do you have to pay an ATO debt?

You generally have until the due date on your notice of assessment or activity statement to pay an ATO debt. There is no grace period after that: general interest charge (GIC) runs from the due date, and the ATO can start recovery action, although it can defer the due date or accept a payment plan if you ask.

This guide is part of our wider work on tax debts. If you have already received a director penalty notice, garnishee notice or statutory demand, the deadline in that document comes first.

When is a tax debt due?

Your ATO account shows the due date for each debt. These are the usual rules.

Debt	Usually due
Income tax for individuals and most trusts	21 days after your lodgement due date, or 21 days after the notice of assessment if you lodged on time and it issued later (Income Tax Assessment Act 1997 (ITAA 1997), s 5-5(5) and (6))
Income tax for companies and super funds	The first day of the sixth month after the income year ends, which is 1 December for a 30 June year end (s 5-5(4))
Extra tax from an amended assessment	21 days after the ATO gives you the notice of amended assessment (s 5-5(7))
Shortfall interest charge	21 days after the ATO gives you notice of the charge (s 5-10)
Quarterly activity statements (GST, PAYG withholding, PAYG instalments)	The 28th day of the month after the quarter ends, and 28 February for the October to December quarter (A New Tax System (Goods and Services Tax) Act 1999 (GST Act), s 33-3; Taxation Administration Act 1953 (TAA), Sch 1 ss 16-75(4) and 45-61(2))
Monthly activity statements	Generally the 21st day of the following month (GST Act s 33-5(1); TAA Sch 1 s 16-75(2))

If you lodge your own return, the lodgement due date is usually 31 October, so your tax is usually due on 21 November. If a registered tax agent lodges for you, the ATO's lodgement program often gives a later lodgement date and, under the ATO's published arrangements, a later payment date too. For example, for 2025–26 returns with a 15 May 2027 lodgement date, the payment date is 21 March, 21 April or 5 June 2027, depending on when the return is lodged. A lodgement deferral doesn't by itself move the payment date (TAA Sch 1 s 388-55(2)), so check the due date on your notice of assessment.

For quarterly activity statements lodged electronically by a registered agent, the ATO's program generally extends both the lodgement and the payment date by about four weeks (for example, from 28 October to 25 November 2026), but not for the October to December quarter, which is already due on 28 February.

For companies and super funds, the ATO often aligns the payment date with a later lodgement due date, so check the ATO account rather than assuming 1 December. For 2025–26, for example, many companies and funds whose returns are lodged by a tax agent have a 15 May 2027 payment date, while large and medium taxpayers that were taxable last year still pay by 1 December 2026.

If a due date falls on a weekend, or on a public holiday throughout any state or territory, the payment is due on the next business day (TAA s 8AAZMB). For example, 21 November 2026 is a Saturday, so income tax due that day can be paid by Monday 23 November 2026. The same applies to the dates above: 28 February, 21 March, 15 May and 5 June 2027 all fall on a weekend, so payments due on those days are due on the next business day instead.

Lodging late doesn't move the due date. For an individual, tax on a late return was still due 21 days after the lodgement due date, so GIC is backdated to that day (ITAA 1997 ss 5-5(5) and 5-15).

How long do you have to pay a tax debt?

Strictly, only until the due date. From then the tax is a debt due to the Commonwealth, which the ATO can sue to recover (TAA Sch 1 s 255-5). It usually sends reminders first, but the law gives you no period of grace.

If you can't pay on time, there are two ways to get more time.

• A deferral moves the due date. The ATO can defer the time for payment in your particular case, by written notice (Sch 1 s 255-10(1) and (2)). GIC then runs from the new date. It can also defer due dates for a class of taxpayers, such as people affected by a natural disaster, by a notice on the ATO website (s 255-10(2A) and (2B)).
• A payment plan spreads the payments but keeps the due date. The ATO can let you pay by instalments under an arrangement (s 255-15(1)). The arrangement doesn't change when the debt was due, so GIC keeps running on the unpaid balance (s 255-15(2)).

Ask before the due date if you can, with a proposal you can keep to. See ATO payment plans and payment arrangements.

Disputing a debt doesn't pause it either. An objection doesn't change the due date, and while a review in the Administrative Review Tribunal (ART) or a Federal Court appeal is pending the ATO can generally still recover the tax (TAA ss 14ZZM(1) and 14ZZR), although it may agree to hold off.

One exception: a small business entity that has asked the ART to review an assessment relating to its business can ask the ART for an order pausing recovery while the review runs. The ART can make the order only if the application isn't frivolous, misconceived or lacking in substance (TAA ss 14ZZM(2) and 14ZZH). See ATO objections.

Does the ATO charge interest on tax debt?

Yes. If a debt isn't paid by the due date, GIC accrues on the unpaid amount for each day from the due date until the debt and the interest are paid (for example, ITAA 1997 s 5-15 for unpaid income tax, and TAA s 8AAZF for debts in a running balance account, such as activity statement debts). It compounds daily, because GIC is charged on unpaid interest as well as the original debt (TAA s 8AAC).

• The rate is the monthly average yield of 90-day bank accepted bills, published by the Reserve Bank, plus 7 percentage points, reset each quarter (TAA s 8AAD). See how the general interest charge works and the current rate.
• It isn't deductible if it is incurred in an income year starting on or after 1 July 2025, even if the debt it is charged on is older (ITAA 1997 s 26-5(1A)).
• It can be remitted. You can ask the ATO to remit some or all of it on the grounds set out in TAA s 8AAG. It often makes sense to ask while negotiating a payment plan.

Why do you have a tax debt?

Usually because too little tax was paid during the year. Common reasons:

• Two jobs, both claiming the tax-free threshold, so each employer withholds as if its pay is your only income.
• Income with no tax taken out, such as rent, interest, dividends, capital gains, or business or contracting income.
• A study loan. Compulsory HECS-HELP and other study loan repayments are worked out in your assessment and show up as a bill if not enough extra was withheld.
• PAYG instalments set too low, or varied down.
• Activity statements. GST and PAYG withholding are collected during the quarter but paid later, so the money can be spent before the BAS is due.
• An amended assessment after an ATO review or audit, usually with shortfall interest charge and sometimes penalties.
• An old debt on hold being offset against a later refund (see below).

If the debt looks wrong, check it before you agree to a plan. An assessment can usually be challenged by objection, but only within the time limits, which run from when the notice of assessment is given.

How can you pay off a tax debt?

You can repay a tax debt in one payment or over time. The main options:

1. Pay in full by the due date, which avoids GIC altogether.
2. Set up a payment plan. Many plans can be set up through ATO online services or by your tax agent. For larger debts, or where earlier plans have failed, the ATO may ask for financial information first.
3. Borrow to pay. Commercial interest can cost less than GIC, which is no longer deductible. Compare the full cost before you commit.
4. Apply for release. An individual can apply to be released from some tax debts, such as income tax, PAYG instalments and related interest, if paying would cause serious hardship (TAA Sch 1 ss 340-5 and 340-10). Release is only for individuals and deceased estates, not companies, and doesn't cover GST or PAYG withholding. See release from tax debt and ATO hardship.

The ATO decides how a payment or credit is applied across your debts and isn't required to follow your instructions (TAA s 8AAZLE). If you are a director of a company with unpaid PAYG withholding, GST or super guarantee charge, get advice before the company makes a large payment.

What happens if you don't pay a tax debt?

The ATO usually escalates in stages. The order varies, and large or growing debts can move quickly.

1. Reminders by letter, text message and phone, asking you to pay or make an arrangement, while GIC keeps accruing.
2. Refund offsets, debt collectors and, for businesses, credit reporting (see below).
3. Garnishee notices. The ATO can require a bank, customer or anyone else who owes or may later owe you money to pay the ATO instead (TAA Sch 1 s 260-5). See ATO garnishee notices.
4. Director penalty notices. Company directors can become personally liable for the company's unpaid PAYG withholding, GST and super guarantee charge (TAA Sch 1 Div 269). See director penalty notices.
5. Court action and insolvency. The ATO can sue for the debt (Sch 1 s 255-5(2)). For a company, it can serve a statutory demand and then apply to wind the company up (Corporations Act 2001, ss 459E and 459P). For an individual, it usually obtains a court judgment first, because a bankruptcy notice can only be issued on a final judgment or order (Bankruptcy Act 1966, s 41).
6. Departure prohibition orders. In some cases the ATO can stop a person with a tax debt leaving Australia (TAA s 14S).

Does the ATO use debt collectors?

Yes. If you don't respond about an overdue debt, the ATO may send a pre-referral warning letter and then refer the debt to an external debt collection agency, which contacts you by phone, email, text message or letter on the ATO's behalf. The ATO's guidance says that since 29 January 2024 the agency has been recoveriescorp, and that it may contact your registered tax agent instead (ATO, If you don't pay, last updated 5 January 2026).

The debt is still owed to the Commonwealth (TAA Sch 1 s 255-5), and referral doesn't change your options: you can still ask for a payment plan or for GIC to be remitted.

Scammers pose as the ATO and its agents. Check that any contact is genuine by phoning the ATO, or the agency on the number the ATO publishes, not a number given in the message.

Does ATO debt affect your credit rating?

For businesses, it can. The ATO may disclose certain overdue business tax debts to credit reporting bureaus, but only for businesses in a class the Minister has declared, and only after writing to the business and waiting 28 days (TAA Sch 1 s 355-72). Broadly, the class covers businesses with an ABN owing at least $100,000 that has been overdue for more than 90 days and isn't being managed with the ATO (Taxation Administration (Tax Debt Information Disclosure) Declaration 2019, s 6). Our guide to small business tax debt and ATO credit reporting sets out the criteria and what to do about a notice.

Individuals without an ABN aren't in the class, but a court judgment or bankruptcy can still affect a person's credit file.

Can the ATO take your tax refund to pay a debt?

Generally, yes. The law requires the ATO to apply refunds, credits and payments against your tax debts, including older ones, and to refund only what is left (TAA ss 8AAZL, 8AAZLA, 8AAZLB and 8AAZLF). It doesn't have to offset against a debt under a payment plan you are keeping to (s 8AAZL(3)(b)), and says it won't in that case where that is fair and reasonable (Practice Statement PS LA 2011/14, para 69).

A debt the ATO has stopped pursuing for a time (a debt "on hold") isn't cancelled. The ATO's guidance says the law requires it to offset refunds and credits against a debt on hold too (ATO, If you don't pay, last updated 5 January 2026).

There is one exception for now. For individuals, small businesses and not-for-profits, the ATO says it isn't currently offsetting refunds or credits against debts placed on hold before 1 January 2017, while a law change announced in the 2024–25 Budget is pending. That change, which would give the ATO a discretion not to offset those debts, isn't yet law (ATO, Debts placed on hold before 1 January 2017, last updated 7 April 2026).

Is there a time limit on the ATO collecting a tax debt?

Generally, no. The High Court held that the income tax collection and recovery provisions cover the field and leave no room for state limitation Acts (Deputy Federal Commissioner of Taxation v Moorebank Pty Ltd [1988] HCA 29; (1988) 165 CLR 55 at [9]).

The NSW Court of Appeal later held that the current collection and recovery rules in Schedule 1 to the TAA work the same way, so the six-year period in the Limitation Act 1969 (NSW) didn't stop the ATO recovering employee tax deductions that an employer failed to pay over in 1995 to 1998 (MUC v Deputy Commissioner of Taxation [2008] NSWCA 96 at [58]). An old tax debt doesn't usually become unenforceable just because years have passed.

The time limits people often hear about apply to the ATO amending an assessment (Income Tax Assessment Act 1936, s 170), not to collecting a debt that has already been assessed.

How we help with an ATO debt

• Check the debt. We confirm what is owed, when each amount fell due and whether the assessment, penalties and interest are right.
• Ask for time. We prepare deferral requests and payment plan proposals backed by cash-flow figures, and seek remission of GIC and penalties where the grounds exist.
• Respond to recovery action. We deal with garnishee notices, director penalty notices, statutory demands and bankruptcy notices, working alongside your accountant.

Next step

Send us your latest ATO statement of account, the notice of assessment or activity statement the debt came from, any ATO letters about it, and a short note of what you can realistically pay each month. If the ATO has already issued a garnishee notice, director penalty notice or statutory demand, send that first and tell us the date it arrived. In a first call we'll work out when the debt was due, what the ATO can do next and which options are worth pursuing.