Hardship deserves support. It still needs the right advice.

Tell the ATO what has changed

If illness, disrupted income or another serious event has affected payment, explain the circumstances and provide accurate information when asked. The available response depends on the debt, taxpayer and legal rules.

Your accountant can assess payment arrangements or relief pathways. A loan is not an appropriate answer if it leaves you unable to cover essential costs. If stress is affecting your wellbeing, reach out to your GP or a suitable support service as well as addressing the finances.

Replace uncertainty with a practical next step

It is common to put off looking at a tax debt when the numbers feel overwhelming. Start by confirming what you owe, which obligations are overdue and whether any notice has a deadline.

An accountant can check the balance and lodgements. The ATO can discuss payment arrangements. A lawyer or insolvency practitioner may be needed if you face enforcement or solvency concerns. A finance adviser can help assess whether borrowing is realistic.

Borrowing is one option, not the only option

Depending on your situation, you may consider paying from business funds, an ATO payment arrangement, eligible remission requests or external finance. Debt reduction, approval and enforcement outcomes are not guaranteed.

If a notice is involved, seek appropriate advice now. Do not wait until you have assembled every document before asking what the deadline means.

Independent support can help you organise the decision

If it is difficult to see what is affordable, independent small business debt support can help you understand the position and prepare for discussions with creditors. Use the ASBFEO resource below to find appropriate support.

Keep urgent legal notices visible while asking for assistance. Financial counselling, accounting advice and legal representation have different roles, and none should be assumed to automatically pause enforcement.

What "hardship" means to the ATO versus what it means to you

Financial hardship is a real and serious situation for many business owners, but it is important to separate the everyday meaning of the term from the specific legal concept of "serious hardship" that applies to certain ATO relief provisions. Ordinary cash-flow pressure, even significant pressure, does not automatically meet the threshold the ATO applies when assessing formal hardship-based relief such as debt release.

That does not mean nothing can be done if your business is under genuine pressure — it means the available responses are broader than just "hardship release" and usually involve a combination of ATO contact, a realistic payment arrangement, and professional advice rather than a single formal application.

What relief is realistically available

Depending on your specific circumstances, options the ATO may consider include a payment plan tailored to your cash flow, remission of some interest or penalties where there is a genuine, evidenced reason for late payment, and in limited, legally specific circumstances, release from certain debts. None of these are automatic, and none should be assumed before you have actually discussed your situation with the ATO or your accountant.

It is also worth being clear about what is not generally available: there is no standard program that simply reduces the amount of tax, GST or super guarantee charge actually owed because a business is doing it tough. These are amounts that were correctly assessed; relief mechanisms generally address the timing or interest cost of paying them, not the underlying liability itself (except in the narrow release circumstances discussed elsewhere).

Telling the ATO what has actually changed

If illness, a major customer loss, a natural disaster or another significant disruption has genuinely affected your ability to pay, explain it to the ATO clearly, with dates and, where possible, supporting documentation. The ATO is generally more able to help when it understands precisely what happened and when, rather than a general statement that trading has been difficult.

Be accurate rather than persuasive. Overstating circumstances, or using a hardship narrative that does not reflect the real situation, can undermine your credibility if it does not hold up, and may affect how future requests are viewed.

A hypothetical scenario showing a realistic response

This is a hypothetical example only, to illustrate a realistic combination of responses — not a prediction of any outcome. Imagine a retail business owner whose major supplier delay caused several months of reduced stock and falling sales, leaving BAS payments overdue while lodgements stayed current. A realistic combination of responses might include contacting the ATO promptly to discuss a payment plan sized to current (reduced) revenue, requesting remission of GIC for the specific affected months with supporting supplier correspondence, and speaking to an accountant about whether a cash-flow forecast supports taking on any additional finance, or whether the business should wait until trading recovers.

The outcome in any real case depends on the ATO’s assessment of the actual facts and the business’s capacity to pay — this scenario is illustrative of the process, not a guaranteed result.

Checklist: responding to genuine hardship

• Contact the ATO before a missed payment becomes a pattern, not after.
• Prepare a realistic, week-by-week cash-flow forecast with your accountant before proposing a payment plan.
• Gather dated evidence of whatever event caused the disruption.
• Separate "can I get interest remitted" from "can the debt itself be released" — they are different questions.
• Look after your own wellbeing too — contact your GP or a suitable support service if financial stress is significant.

Common mistakes

A common mistake is waiting until a notice or recovery action arrives before contacting the ATO. Proactive contact, even before a payment is missed, is generally viewed more favourably than reactive contact after the fact. Another mistake is assuming a loan is automatically the right answer to hardship — if the business cannot service a loan either, borrowing can turn a tax problem into a bigger, harder-to-unwind debt problem.

A third mistake is treating one conversation with the ATO as the end of the process. Circumstances change, and if a payment plan or arrangement becomes unaffordable again, the ATO generally expects you to make contact again rather than simply stop paying.

Questions owners ask

Will the ATO reduce the actual tax I owe because of hardship? Generally no — hardship relief mechanisms typically address interest, penalties or, in narrow cases, formal release, not a general reduction of a correctly assessed liability.

Should I get a loan to pay the ATO if I am already struggling financially? Only if the business can genuinely service the repayments on top of ongoing obligations — speak to your accountant about affordability before applying, and consider whether a payment plan or other option is more appropriate first.

Does the ATO consider personal circumstances, like illness, for a business debt? In some cases personal circumstances affecting the people running a business can be relevant context for a hardship-related request, but the legal eligibility rules depend on the specific provision being relied on — check with the ATO or your accountant.

What if hardship is ongoing rather than temporary? Ongoing, structural cash-flow problems are a different issue to a one-off disruption, and may call for a broader conversation about restructuring, viability or insolvency advice rather than interest remission alone.

A general 30/60/90-day roadmap for genuine hardship

In the first 30 days, get a clear, honest cash-flow picture with your accountant and make first contact with the ATO if you have not already, even before a specific solution is decided. In the next 30 days, agree a realistic payment arrangement or lodge a remission request where there is a genuine basis for one, and get at least one finance quote if borrowing is even a possibility, so you have real numbers to compare.

In the final 30 days of this illustrative window, check whether the arrangement is actually holding up against real trading results, not projections. If it is not, go back to the ATO and your accountant promptly rather than letting repayments lapse quietly, since a pattern of missed payments after an agreed arrangement is generally viewed less favourably than an early, proactive update.

Industry-specific hardship patterns

Hardship can look different depending on your sector. A seasonal tourism or hospitality business may face a genuine, predictable low-revenue period each year, which is different from an unexpected one-off shock, and the ATO may view a recurring seasonal gap differently to a sudden disruption. A business reliant on a small number of large customers or contracts may face sudden, severe hardship if just one of those relationships ends, even though its overall industry is otherwise stable.

Understanding which pattern applies to you helps frame a more accurate conversation with the ATO and a more realistic repayment arrangement with your accountant.

Records to keep when claiming hardship

• Dated evidence of the event or circumstances causing the hardship.
• Bank statements or management accounts showing the actual cash-flow impact.
• Copies of all correspondence with the ATO, including any payment plan terms agreed.
• A simple cash-flow forecast prepared with your accountant, updated as circumstances change.
• Records of any finance sought or obtained to help manage the situation.

Bringing your accountant in early

An accountant who understands both your numbers and how the ATO generally responds to hardship-related contact can help you present a realistic, credible picture rather than either understating or overstating the position. They can also help you decide, with real figures, whether finance is appropriate at all — borrowing to meet a genuinely temporary gap can make sense, but borrowing to paper over an unsustainable cost base usually just delays a harder conversation.

Describe the circumstances with a clear timeline

Record when the difficulty began, what changed and how it affected payment. Illness, interrupted trading, a major customer failure or another event may need different supporting evidence. Provide accurate details and avoid presenting a generic hardship story as your own. Your accountant can help connect the events to the relevant liabilities and periods.

Separate a temporary interruption from an ongoing shortfall. Identify essential costs, current income and what payment capacity realistically exists. A repayment proposal based on hoped-for sales can worsen distress if those sales do not arrive. Ask what assistance is available for your taxpayer type and debt rather than assuming every form of relief applies to a company.

Do not confuse remission with release of the principal

Interest remission concerns a charge on the debt; it does not necessarily reduce the underlying tax liability. Hardship release operates under separate legal rules. A decision not to pursue a debt is not necessarily the same as extinguishing it. Confirm precisely what is being requested, what remains payable and the effect of any decision.

Keep dealing with the payment position while a request is considered. Neither a request for relief nor a pending lending application should be assumed to stop recovery action. If a legal notice has arrived, have a lawyer confirm the deadline independently from any discussions about assistance.

Choose support that fits the underlying problem

A viable business with a short-term funding gap faces a different decision from a company unable to pay debts as they fall due. Formal restructuring involves legal eligibility and a registered practitioner; refinancing involves a new loan contract. One cannot be substituted for the other simply because the monthly payment looks more manageable.

Ask your accountant and appropriately qualified advisers to explain the options and consequences. ASBFEO’s debt support resources include pathways to independent help. If financial pressure is affecting your wellbeing, seek personal support as well as financial guidance. You do not need to sign a loan contract to begin asking for assistance.