Accountants have been complaining for months that the tax office has hardened its approach. Now there are numbers to go with the complaints. A new industry survey finds 87% of accountants believe the ATO has become more aggressive, seven in 10 have had clients chased over debts, and construction and trades businesses are bearing the brunt. For tradies and other small Business owners carrying tax debts, the findings are a warning to get on the front foot.

What the survey found

The first ATO Sentiment Report, a survey of accountants, covers the first quarter of 2026–27, from July to September. It was published on 2 November.

Its headline finding is that 87% of accountants say the ATO has become "somewhat or significantly more aggressive" in enforcement and compliance. More than half rate the intensity of ATO activity as high.

Debt collection stands out. Seven in 10 accountants have clients the ATO has contacted about Debt recovery, and nearly one in two had more than 10 clients contacted during the quarter.

The findings were summed up in three words: "aggressive, relentless, and not responsive."

For accountants, that level of debt activity means more time spent fielding calls, negotiating arrangements and explaining letters, often for clients who are already stretched.

Tradies in the firing line

According to the survey, clients in construction and trades were "by far" the most likely to be contacted by the ATO.

The report does not say why. But building and construction businesses have long been subject to extra reporting. Under the taxable payments reporting system, they must report payments made to contractors each year. Separately, the ATO says it is now pre-filling contractor income for tax returns.

More data means more matches, and more matches can mean more letters and calls. For a sole-trader electrician or a small building firm, that can land at the worst time, when invoices are unpaid and cash is tight.

Trades businesses also tend to run on thin margins and lumpy payments. A delayed progress payment from a builder can quickly turn into an unpaid activity statement, and then into a debt the ATO wants to talk about.

The survey also points to tension between the ATO and the profession itself.

One respondent said tax agents are now "viewed by the ATO as another adversary". Others said the ATO often contacts clients directly, bypassing their agents.

Other respondents described a "guilty until proven innocent" approach that is "making it harder for small businesses to do business".

Jerome Doraisamy, who wrote the report, said: "2026 has been a difficult year for the profession, and perceptions such as those shared in this report should not be ignored."

A caution on the numbers

This is an industry survey, run by a trade publication and an insurer. The published article does not disclose the sample size or methodology.

That does not make the findings wrong, but it means they reflect the views of the accountants who responded rather than a measured snapshot of ATO activity. As the first edition, it also has no earlier reading to compare against, so "more aggressive" reflects respondents' own sense of change.

Official data does point in a similar direction. The Tax Ombudsman's Annual Report for 2025–26 shows complaints about the ATO rose 128% in a year, to 3,668. About 65% of complaints came from taxpayers without a representative.

The Ombudsman's case studies include an erroneous director penalty notice that was withdrawn. The point is that ATO actions can be wrong, and they can be challenged.

The watchdog is under pressure too. It met only three of its seven measurable performance targets, and finalised 46% of complaints within 50 days against a target of 60%.

Super is another flashpoint. At a Senate hearing on 28 October, senators questioned the ATO over data-matched letters telling small employers they may have underpaid super. The ATO says those letters are not assessments and carry no penalty.

Hypothetical example: a tradie with tax debts

Hypothetical example: A sole-trader plasterer owes $9,000 to the ATO and $6,000 to a supplier, a total of $15,000.

Under current law, a creditor can petition to make a debtor bankrupt for debts of $10,000 or more, so $15,000 is above the line.

Under an exposure draft bill released by the federal government, the threshold for involuntary Bankruptcy would double to $20,000. It could be met by one debt or several debts added together. On those rules, the plasterer's $15,000 would fall below the threshold.

The draft would also give debtors 28 days, instead of 21, to respond to a bankruptcy notice. This is a proposal only and is not law.

Even if the change goes ahead, the debts would still be owed. A higher threshold changes when bankruptcy can be used as a collection tool, not whether the money has to be paid.

What the findings mean for small businesses

  • Lodging on time still matters even if a bill cannot be paid in full. Unlodged returns and activity statements make debt problems worse.
  • Records that support what is reported matter, because data matching also relies on what others report about you.
  • If you think an ATO action is wrong, ask for a review. The Tax Ombudsman is there if complaints are not resolved.

What to watch

  • Today, 3 November: consultation closes on the exposure draft personal Insolvency bill. Assistant Minister Andrew Leigh said: "Our bankruptcy laws should recognise that a financial setback needn't cast a shadow over the rest of someone's life."
  • Further sentiment readings: the first report covers a single quarter. If later editions follow, they would show whether accountants' views shift as the year goes on.
  • Payday Super's first year: to 30 June 2027, the ATO says it will focus on employers who pay no super or less than the minimum.

For now, the survey gives a clear message from the profession: the ATO is collecting harder, and tradies are feeling it first.