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Australian Taxation Office Pauses Controversial Debt Letters Amid Public Backlash

The Australian Taxation Office (ATO) has temporarily halted its letter campaign alerting taxpayers to historical “on-hold” debts after widespread reports of unnecessary distress among recipients. 

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Thousands of Australians recently received notifications claiming they owed money, ranging from a few cents to thousands of dollars, and could face deductions from future tax refunds.

The ATO acknowledged the negative impact of its communication approach and announced a review of the on-hold debt scheme. 

However, the tax office clarified that this pause did not mean erasing the alleged debts.

“Taxpayers can check whether they have a debt on hold by calling us. However, we accept that our communication approach caused unnecessary distress—especially for those debts incurred several years ago,” the ATO said in a statement.

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On-hold debts are tax arrears that the ATO is not actively pursuing but plans to extract from future tax refunds or credits. 

According to The Guardian, while some debts were paused due to their small amount, others represent significant sums.

Many of the debts predate the standard five-year-retention period for taxpayer records. 

The ATO clarified that the purpose of the letters was to provide individuals with full visibility of their existing debts with the ATO.

“The ATO does not have the power to forgive or waive a tax debt.”

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