In certain circumstances, the ATO can release you from a tax debt entirely. This is known as a Release of Debt, and it's available when paying the debt would cause you serious hardship. It's different from a Compromise Proposal. A release means the debt is written off completely.
The serious hardship test considers whether paying the tax debt would leave you unable to provide food, accommodation, clothing, medical treatment, or education for yourself or your dependants. The bar is high, but for those who genuinely qualify, it provides complete relief.
To apply, you need to provide comprehensive financial information to the ATO: income, expenses, assets, liabilities, and evidence of your circumstances. The ATO will assess whether recovery of the debt is consistent with their role as a model litigant and whether hardship is genuinely established.
We help clients prepare these applications with the level of detail and documentation the ATO expects. Getting the application right the first time is important. A poorly prepared submission can result in refusal even where the circumstances genuinely warrant a release.
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