During times of crisis—such as natural disasters, pandemics, or severe financial hardship—taxpayers may struggle to meet their tax obligations on time. Recognising this, the Australian Taxation Office (ATO) provides options to request remission (reduction or cancellation) of penalties and interest charged on overdue taxes. This detailed guide explains when and how you can request remission, eligibility criteria, the application process, and tips to improve your chances of success.
What Is Remission of Penalties and Interest?
Remission means the ATO agrees to reduce or cancel penalties and interest that have been applied due to late payment or lodgment of tax obligations. This helps ease the financial burden on taxpayers facing genuine difficulties during extraordinary circumstances.
When Can You Request Remission?
You can request remission if:
- You have been charged penalties or interest because you could not pay or lodge on time.
- Your failure to comply was due to circumstances beyond your control, such as illness, natural disasters, or economic crises.
- You have a history of timely compliance but were affected by the crisis.
- You are experiencing ongoing hardship affecting your ability to meet obligations.
The ATO assesses each request on its merits and the individual’s specific situation.
Types of Penalties and Interest Eligible for Remission
Common charges that may be remitted include:
- Failure to lodge on time penalties
- General interest charge (GIC) on unpaid tax debts
- Failure to pay penalties
- Penalties related to superannuation guarantee obligations
How to Request Remission
To request remission, follow these steps:
- Gather Evidence: Collect documents supporting your claim, such as medical certificates, disaster declarations, financial statements, or letters explaining your circumstances.
- Contact the ATO: You can call the ATO, use your myGov account to send a secure message, or work through a registered tax agent.
- Submit a Formal Request: Explain your situation clearly, why you could not meet your obligations, and provide evidence. Request specific remission of penalties and/or interest.
- Negotiate Payment Arrangements: Where possible, agree on payment plans for any remaining tax debt to demonstrate your commitment to compliance.
What the ATO Considers When Assessing Requests
The ATO evaluates remission requests based on factors such as:
- The nature and extent of the crisis or hardship
- Whether you took reasonable care to comply
- Your compliance history and willingness to cooperate
- Whether you acted promptly once the issue was identified
- Impact of the penalties or interest on your financial situation
Tips to Improve Your Chances of Remission
- Act quickly and communicate early with the ATO.
- Provide detailed and honest explanations supported by evidence.
- Maintain good compliance history before the crisis.
- Show willingness to pay outstanding tax debts via payment plans.
- Seek professional advice if your situation is complex.
What Happens After You Request Remission?
The ATO will review your request and notify you of their decision. If remission is granted:
- Specified penalties and/or interest will be reduced or cancelled.
- You will be advised on any remaining tax liabilities or payment arrangements.
If remission is denied, the ATO will provide reasons, and you may be able to appeal or negotiate alternative arrangements.
Additional Support During Crises
In widespread crises like natural disasters or pandemics, the ATO often announces special relief measures, including automatic interest waivers or extended lodgment deadlines. Stay informed about such announcements to benefit from broader support initiatives.
Conclusion
Requesting remission of penalties and interest during a crisis can provide significant financial relief when you face unexpected hardships. By understanding the process, acting promptly, and providing clear evidence of your circumstances, you can improve your chances of obtaining remission and managing your tax debts effectively. Always maintain open communication with the ATO and consider professional advice to navigate this process successfully.
