The Australian Taxation Office (ATO) has significantly intensified its debt recovery efforts in 2025, responding to a record-breaking surge in outstanding tax liabilities. As of this year, the ATO’s debt book has ballooned to over $105 billion, with $46.4 billion considered collectible. This figure now represents more than 16% of the Commonwealth’s total revenue, prompting urgent action from the tax office.
📊 What’s Driving the Debt Surge?
Commissioner of Taxation Rob Heferen attributes the rise to pandemic-era leniency and deferred enforcement. He stated that the ATO is now shifting gears:
“We will be firmer and faster in dealing with unpaid GST, PAYGW and super,” Heferen said. “Unpaid tax and super contradicts a fair tax system… paying tax isn’t optional”
Much of the debt comprises:
- GST collected but not remitted
- Pay As You Go (PAYG) withholding
- Unpaid superannuation contributions
These are funds that businesses have withheld from employees or customers but failed to pass on to the government.
⚠️ New Enforcement Tactics
To tackle the mounting debt, the ATO has ramped up its use of statutory powers, including:
- Director Penalty Notices (DPNs): Over 26,000 DPNs were issued in the 2023–24 financial year, worth an estimated $4 billion . These hold company directors personally liable for unpaid GST, PAYG, and super.
- Garnishee Notices: Directly claiming funds from business bank accounts.
- Tax Debt Disclosure: Reporting businesses to credit agencies, impacting credit ratings.
- Bankruptcy and Wind-Up Applications: For individuals and businesses with significant unpaid debts.
- Departure Prohibition Orders: Preventing individuals with large debts from leaving Australia.
💸 Cost of Carrying Debt Is Rising
From 1 July 2025, interest charged by the ATO on late or underpaid tax is no longer tax deductible, increasing the financial burden for businesses
🧭 What Businesses Should Do
The ATO is urging businesses to:
- Engage early and proactively.
- Keep ASIC records up to date to avoid missing critical notices.
- Consider payment plans or restructuring options if unable to pay in full.
Deputy Commissioner Vivek Chaudhary reinforced the shift:
“We are returning to normal debt collection now… with an increase in firmer actions, and a willingness to escalate to legal actions, especially for large debts and those choosing not to engage”
The ATO’s renewed focus on debt recovery is a clear signal to businesses and individuals: tax obligations must be met, and non-compliance will face swift and serious consequences. With over $100 billion at stake, the ATO is deploying every tool available to restore fiscal balance and ensure fairness across the tax system.
