The Australian Taxation Office (ATO) uses several methods to enforce tax recovery:

• Commencing civil proceedings in any court of competent jurisdiction to recover unpaid tax as a debt due to the Commonwealth
• Issuing garnishee notices to third parties (such as banks or employers) who owe money to, or hold money for, the tax debtor. This allows the ATO to collect tax debts directly from these third parties
• Accepting payment by instalments, subject to general interest charges on outstanding amounts
• Accepting security for payment or negotiating compromise arrangements for undisputed debts
• Initiating bankruptcy or liquidation proceedings against individuals or companies to recover assets
• Using estimates of PAYG withholding, superannuation guarantee charge (SGC), and GST liabilities to recover amounts owing
• Serving recovery documents by post to the taxpayer’s last known address, or seeking substituted service orders from the court if the taxpayer cannot be found or is overseas
• Pursuing cross-border recovery under international treaties, including mutual assistance provisions for collection of foreign tax debt
• Applying penalties and interest charges for late payment or non-payment of tax-related liabilities

These enforcement measures ensure the ATO can recover unpaid tax efficiently, both domestically and internationally, regardless of ongoing disputes or the taxpayer’s location.

Is tax liability suspended during disputes?

No, tax liability is generally not suspended during disputes in Australia.

Once an assessment is issued, the taxpayer is required to pay the assessed tax by the due date, even if they have lodged an objection or are pursuing a review or appeal.

The ATO may continue recovery action for unpaid tax throughout the dispute process. However, in limited circumstances, such as for small business entities, the Administrative Appeals Tribunal (AAT) may pause recovery action while a dispute is being resolved.