Australia Tax Debt Collection Guide
Australian tax debt collection and ATO debt recovery. The guide covers: the General Interest Charge (the 'GIC') — the 'GIC' is the 'interest charge' imposed by the 'ATO' on the 'unpaid tax' (the 'tax debt' — the 'tax liability that is not paid by the due date'); the 'GIC rate' is the 'benchmark rate' plus the '7% premium' — the 'GIC rate for the 2025-26 year' is approximately 10.43% per year (the 'GIC rate is updated quarterly'); the 'GIC' is the 'compounding daily' (the 'daily compounding interest'); the 'GIC' is 'deductible' for the 'taxpayer' (the 'GIC on the unpaid tax' is 'deductible' under the 'Section 8-1 of the ITAA 1997' if the 'tax is the income tax or the GST relating to the business'); the Shortfall Interest Charge (the 'SIC') — the 'SIC' is the 'interest charge' on the 'tax shortfall' (the 'additional tax assessed by the ATO after the audit or the amendment'); the 'SIC rate' is the 'benchmark rate' plus the '3% premium' — the 'SIC rate for the 2025-26 year' is approximately 6.43% per year; the 'SIC' is 'deductible' for the 'taxpayer'; the payment plans with the ATO — the 'taxpayer' can 'enter into the payment plan' (the 'ATO payment arrangement') for the 'unpaid tax'; the 'payment plan' is the 'agreement between the taxpayer and the ATO' to 'pay the tax debt in the instalments'; the 'payment plan' may be 'automatic' (the 'under $2,000' — the 'automatic payment plan') or the 'negotiated' (the 'above $2,000' — the 'ATO negotiates the payment plan based on the taxpayer's financial situation'); the 'GIC still accrues' on the 'outstanding balance' during the 'payment plan'; the garnishee notices — the 'ATO can issue the 'garnishee notice' (the 'garnishee order') to the 'third party' (the 'bank', the 'employer', the 'debtor') to 'require the third party to pay the money to the ATO' from the 'funds held for the taxpayer' (the 'bank account', the 'salary', the 'accounts receivable'); the 'garnishee notice' is the 'powerful ATO recovery tool' — the 'ATO can garnish the bank accounts and the salary WITHOUT the court order'; the Director Penalty Notice (the 'DPN') — the 'DPN' is the 'notice' issued by the 'ATO' to the 'director of the company' for the 'unpaid director penalties' — the 'DPN' for the 'unpaid PAYG withholding', the 'unpaid GST', and the 'unpaid super guarantee'; the 'director' is 'personally liable' for the 'company's unpaid PAYG, GST, and the super guarantee' under the 'Director Penalty Regime' (the 'Section 269-15 of the TAA 1953'); the 'director must 'pay the penalty' or 'take the action' (the 'appoint the administrator', the 'wind up the company', or the 'pay the liability') within 28 days of the 'DPN issue date'.
GIC & SIC Rates
- GIC at 10.43%: The 'General Interest Charge' on the 'unpaid tax' — the 'daily compounding interest' at approximately 10.43% per year (the '2025-26 rate').
- SIC at 6.43%: The 'Shortfall Interest Charge' on the 'tax shortfall from the audit' — approximately 6.43% per year.
- GIC deductibility: The 'GIC' is 'deductible' if the 'tax is the income tax or the business GST'.
For the tax audit and the dispute resolution, see our Tax Audit & Appeals Guide →.
ATO Payment Plans
- Automatic plan (under $2,000): The 'automatic payment plan' for the 'tax debt under $2,000' — the 'no financial statement required'.
- Negotiated plan (over $2,000): The 'negotiated payment plan' requires the 'financial statement' and the 'ATO approval'.
- GIC accrues: The 'GIC continues to accrue' on the 'outstanding balance' during the 'payment plan'.
For the tax filing and the payment deadlines, see our Tax Filing Procedures Guide →.
DPN & Garnishee
- Director Penalty Notice: The 'director is personally liable' for the 'unpaid PAYG, GST, and the super guarantee'. The '28-day deadline' for the 'director to respond'.
- Garnishee notice: The 'ATO can garnish the bank accounts and the salary' to 'recover the unpaid tax'.
For the director obligations and the company forms, see our Company Forms Guide →.