Complaints to Tax Ombudsman skyrocket by 180% in 2 years

The Tax Ombudsman said that it is feeling the impact of the ATO’s greater focus on debt collection, with the tax office also seeing a jump in complaints during this period.

“The ATO has really significantly ramped up its activity on debt collection, and it's really tightened up the way it is approaching debt collection. There are far fewer concessions, if you like, or arrangements that people are seeking that are being agreed by the ATO,” Tax Ombudsman Ruth Owen told Accountants Daily.

The ATO’s debt collection activity contributed to a significant proportion of complaints received, with debt collection and payment-related matters accounting for 19 per cent of complaint investigations from April to September 2026.

Debt collection has been a key focus for the ATO, with Commissioner Rob Heferen recently stating that the ATO will continue to take firmer action on tax debt, with its debt book figure for the end of June expected to exceed the $115 billion figure from June 2025.

While acknowledging the ATO’s responsibility to collect debt, Owen questioned whether it recognises the hardships some taxpayers are facing in the current economic environment.

“Given debt collection is clearly the number one priority for the tax office, my question is whether they’re carrying out that responsibility reasonably. I definitely recognise that they must collect debt, but I question how they go about it,” she said.

“A lot of people tell me that they don’t feel heard by the ATO. They come forward with repayment arrangements or payment plan offers or try to find a way to pay their tax debt back, but the ATO comes back with what seems like an unreasonable request on payment arrangements.”     

Debt calculation, applications for release of debt due to hardship, and director penalty notices (DPN) accounted for just over half of all debt-related complaints. The Tax Ombudsman is currently undertaking a review into how the ATO administers DPNs.

In addition, penalties and interest complaints rose from 13 per cent in the same period last year to make up a further 18 per cent of all complaints. The report noted that this often overlapped with complaints about debt collection.

More than three-quarters of penalty and interest-related complaints were about general interest charges.

Interestingly, penalties or interest were reduced or remitted in 5 per cent of cases, down from 17 per cent in the same period last year. This is indicative of the ATO’s tougher approach to debt collection, the report said.

In payment matters, 56 per cent of complaints were about superannuation while 37 per cent related to the status of the tax refunds.

Fewer cases of ATO acting reasonably

The majority of complaints (82 per cent) originated from unrepresented individuals, including people operating as a business, while 20 per cent related to small business and made up almost a third of the Tax Ombudsman’s investigation complaints.

Organisations accounted for 12 per cent of complaints, but small businesses made up 29 per cent of the more complex cases.

The proportion of cases where the Tax Ombudsman found the ATO acted reasonably decreased by 9 per cent from the same period last year to 63 per cent.

Concerns about the ATO’s communication rose to 15 per cent from 9 per cent last year, while dissatisfaction with the operation of the law itself (rather than agencies like the ATO or the TPB) rose from 5 per cent to 13 per cent year-on-year.

“These types of complaints include taxpayers who consider outcomes unfair because of their individual circumstances, but where the law requires a particular outcome or gives the ATO limited discretion to offer any help,” the report said.

“In these cases, we can provide independent assurance and help taxpayers understand why the outcome occurred and what other options may be available.”

According to the Tax Ombudsman, in just over half of complaints (56 per cent), the agency’s role is to independently assure that the ATO acted reasonably. This was the outcome in 58 per cent of the cases, but the report noted that this was down slightly compared to last year.

Complaints resulting in a better explanation from the Tax Ombudsman remained at 19 per cent, underscoring the importance of helping taxpayers understand debt-related decisions and processes.

More taxpayers turning to the tax ombudsman

Owen said her latest bi-annual insights report has revealed an “unprecedented demand” for the agency’s services as the ATO ramps up its debt collection activity or interest charges.

"At a time when many Australians are facing financial distress, we are seeing increased complaints about how the ATO is collecting tax debt owed and how interest is applied to the debt, often making the amount due impossible to pay back,” Owen said.

“The concentration of complaints we’re seeing around tax debt, interest, missing superannuation, and delayed refunds indicates people are doing it tough at the moment, but they’re still trying to do the right thing and engage with the tax system.”

Owen added that in payment complaints, matters where the Tax Ombudsman helped speed up agency action rose from 4 per cent to 14 per cent. This included faster probate processing, where bereaved families attempt to settle outstanding tax debt.

The report is an opportunity to identify emerging pain points in the tax system, raise issues with the ATO and the TPB, and recommend improvements to tax administration, improve decision-making and policy settings, Owen said.