ATO late lodgement penalty: up to $364 per 28 days, capped at $1,820 per document · interest 11.43% p.a. compounding daily · See how to remit them →
The escalation ladder
| Rung | What happens | The interrupt |
|---|---|---|
| 1. Interest and reminders | General interest charge compounds daily from each due date, with letters and SMS | A payment plan - routine at this stage and quick to arrange |
| 2. Credit bureau disclosure | Business debts over $100,000, 90+ days old, where the business is not engaging, are reportable to credit agencies | Engagement itself: a plan or a genuine dispute makes the debt non-reportable |
| 3. Garnishee notices | The ATO takes money directly from the company bank account, or from customers who owe it | Pre-emption. Garnishees follow silence, they rarely follow an active arrangement |
| 4. Director penalty notices | The trust-money debts (PAYG withholding, GST, super) go personal on a 21-day clock | The lodgment shield set months earlier, then the 21-day options |
| 5. Statutory demand | 21 days to pay or the company is presumed insolvent - the formal doorway to court | Payment, a genuine-dispute application, or the restructuring decision made now rather than after |
| 6. Wind-up application | The ATO applies to liquidate the company. It is Australia's most frequent wind-up applicant | By this rung the choice is liquidation's terms, not whether |
Shrink the debt before you repay it
The balance the ladder is chasing is usually inflated: failure to lodge penalties at entity multipliers, years of general interest charge (partly remittable, and no longer deductible), and, where lodgments are missing, default assessments that real returns shrink.
The sequence that works
Lodge everything outstanding
This single step unlocks payment plans, remission, restructuring eligibility and the escapable column of the director penalty regime all at once.
Remit the penalty and interest layer
A voluntary multi-year catch-up is the strongest fact pattern the remission system sees. Attack this before you agree to repay anything.
Then arrange or restructure the true core
With honest numbers you can choose between a payment plan, a formal restructure, or an orderly close - a choice that only exists because steps 1 and 2 happened.
Rates and thresholds checked August 2026
Frequently asked questions
What happens if my company does not pay its tax debt?
Can the ATO report my business debt to credit agencies?
Can the ATO take money from my company bank account?
Can the ATO shut my company down?
What is the first thing to do about a big company tax debt?
General information only - not personal tax, financial or legal advice. Consider your own circumstances or speak to a registered tax agent. Remission of penalties or interest and payment plans are decisions of the ATO and outcomes can't be guaranteed.