The ATO doesn't write off tax debt because a business is struggling. There is a formal release for serious hardship, but it's narrow. Only individuals can apply. A company, trust or partnership can't have its tax debt released, and GST, PAYG withholding, superannuation guarantee and Director Penalty Notice debts can't be released at all. Even where serious hardship is clear, most applications are refused. The ATO sets out the rules on its release from your tax debt page.

That doesn't mean the number on the ATO's letter is fixed. General interest charge and penalties can sometimes be reduced on request. A payment plan the ATO will accept can stop enforcement. If the business can't pay what it owes, a formal restructure under the Small Business Restructuring process can reduce the debt across all creditors, ATO included, and a liquidation or bankruptcy can bring it to an end.

Which one fits depends on how much you owe, what's in the company's name or yours, and whether a Director Penalty Notice is already on the way. We look at the whole picture and coordinate the response with the ATO, your accountant and the right people. If you've had a Director Penalty Notice, start with director penalty notices. For the wider picture, see ATO debt.