The Australian Taxation Office's management of small business collectable debt

Submission Date: 28 October 2026

The Business Law Section of the Law Council of Australia (BLS) welcomes the opportunity to participate in the Joint Committee of Public Accounts and Audit inquiry (JCPAA) into the Australian Taxation Office (ATO) management of small business collectable debt. The Taxation Committee, the Insolvency & Restructuring Committee, and the Small and Medium Enterprise Business Committee (together, the Committees) of the BLS have jointly prepared this submission.¹

The Committees acknowledge the critical role that the ATO plays in raising tax revenue and restoring the payment performance of the taxpaying community and understand that this role can cause difficulties for taxpayers with outstanding tax debt.

However, the Committees are concerned about the impact that the combination of the high rate of the general interest charge and the ATO’s current debt management strategies is having on small businesses and their controlling individuals. Without wishing to be alarmist, many practitioners assisting clients in this area, often on a pro bono/reduced fee basis, have expressed concern that this issue could be the “next robodebt”. Practitioners are increasingly attempting to assist taxpayers through a system in which meaningful human engagement is often absent and where processes can appear to create barriers rather than provide support.

Certain practitioners are concerned about the mental health of a number of affected small business operators. Members of the Committees have observed situations in which the system has effectively "broken" clients, causing significant financial and emotional distress and giving practitioners genuine concern for their clients' broader wellbeing.

The issues raised in this submission are illustrated by the case studies set out in Appendix A and Appendix B. These are actual matters. The issues highlighted are reflected across countless matters being handled by members of the Committees. Further case studies can be provided if that would assist the Inquiry.

^{1 The Committees have previously provided submissions to the Tax Ombudsman and the ATO on related debt collection matters and refer the JCPAA to each of those submissions if additional information is required.}

Last Updated on 30/10/2026

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