Highlights

  • The Tax Ombudsman received 2,376 complaints in the six months to September 2026, up 74% year on year.
  • Penalty and interest complaints grew from 13% to 18% of the total, with most targeting the general interest charge.
  • Individuals without a tax agent filed 82% of complaints, while small business made up 20% of the total.
  • Relief from penalties or interest now arrives in only 5% of cases, down from 17%.

Behind every overdue tax bill sits someone waiting to be heard, and lately thousands of them have taken that wait to the Tax Ombudsman. The surge tracks an ATO leaning harder on unpaid tax: a 74% rise on the same period in 2025 and 180% on two years earlier. With the ATO facing Senate Estimates tonight, the numbers are about to get a very public airing.

What is driving the surge

Debt collection and interest charges sit at the centre. Tax Ombudsman Ruth Owen said complaints "increased sharply in the six months to September 2026", mainly about how the ATO collects tax debt and applies interest. She called it "unprecedented demand", and the number of complaints her office investigated rose by more than 28%.

Owen said the ATO "has really significantly ramped up its activity on debt collection" and is offering fewer payment arrangements. "I question how they go about it," she said.

Interest, penalties and shrinking relief

More than three-quarters of penalty and interest complaints concerned the general interest charge (GIC). Debt collection and payment matters each made up 19% of investigations between April and September 2026. Just over half of debt-related complaints centred on debt calculation, hardship release applications and director penalty notices.

Remission is getting rarer too. The share of cases where penalties or interest were reduced or remitted fell from 17% to 5%.

Who is complaining

Mostly ordinary taxpayers. Small business accounted for 29% of the more complex investigated cases, and organisations made up 12% of complaints. Among payment-related complaints, superannuation accounted for 56% and tax refunds for 37%. Complaints about ATO communication rose from 9% to 15%, and complaints about the law itself rose from 5% to 13%.

"A lot of people tell me that they don't feel heard by the ATO," Owen said. ACCI chief executive Andrew McKellar said businesses are "feeling that they're really struggling on a range of fronts".

Two sets of numbers

By the ATO's own count, 1,358 complaints arrived over the same period. The gap is largely about scope: the Ombudsman's 2,376 includes cases resolved without ATO involvement, plus complaints about the Tax Practitioners Board and state taxes. The office investigated 501 of them. A finding that the ATO acted reasonably in 63% of cases, down 9 points, has also been cited.

The cost of waiting

The ATO's debt book was last reported at $115 billion in June 2025 and is expected to exceed that. Commissioner Rob Heferen told The Tax Institute's Tax Summit in September: "where debt is collectable, we will continue to take firmer actions."

The GIC compounds daily, and since 1 July 2025 it is no longer tax deductible. Take a hypothetical sole trader who owes $20,000 for 12 months at 11.51% a year: about $2,439 in interest builds up, taking the debt to roughly $22,439. The actual rate is set quarterly and can change.

Dates to watch

The ATO is scheduled to appear before the Senate Economics Legislation Committee from 5pm AEDT on Wednesday 28 October, though times should be checked against the official program. The 2025–26 annual report should show where the debt book now stands. For people preparing their own return, lodgment closes on Monday 2 November and payment generally falls due on 21 November. The Ombudsman's director penalty notice review is expected to report by April 2027.