If you have an undisputed tax debt, the ATO may accept a reduced amount as full payment of the undisputed debt, but it does not happen automatically or easily. A debt compromise application needs to be made and requires careful planning and execution. The ATO will assess an application based on your particular facts and circumstances with the primary focus being on how the debt came about and why you were unable to pay the whole amount owed when it was due for payment. The amount offered cannot be simply what you think you should pay (otherwise see debt negotiation) and must be viewed by the ATO as an acceptable alternative to bankruptcy. Therefore, an analysis of your assets and liabilities will determine what offer the ATO may accept. Applications based on hardship have a very strict requirements and should not be made unless there is provable serious financial hardship.