This month: The ATO gets a failing grade from the Government's own watchdog, private equity enters the debt collection game, and we show you what needs doing before December chaos hits.

"The service experienced by tax agents when contacting the ATO is overwhelmingly negative… quality has deteriorated over the past two years.”

— Tax Ombudsman Review 2025

The Tax Ombudsman just reviewed the ATO's agent service.

Verdict: "Overwhelmingly negative."

For many advisors, that finding will feel familiar. But the ATO is operating under extraordinary pressure - record collectible debt, finite resources, and a system trying to correct itself after years of turbulence. The rules haven't changed, but the tolerance has, and that shift has real consequences.

The immediate impact on advisors is clear:

• Agent satisfaction with ATO service has hit record lows.

• The former specialist line? Gone. Everyone is now in the same queue.

• Enforcement is running hot, with $56 billion in collectible debt and 84,000 Director Penalty Notices issued - triple last year's figure.

The Ombudsman has called for systemic reform. The ATO has acknowledged the strain, but meaningful change will take time.

The plot twist: When specialists manage these same cases, outcomes are still overwhelmingly successful.

This year, Tax Assure achieved a 97% success rate in securing sustainable arrangements with the ATO.

Same system. Same rules. Different outcomes.

The only variable is who's driving.

▶️ Watch: What Changed In How the ATO Looks at Debt »

The Ombudsman's review shows a system under strain.

Half of all ATO calls are now handled by staff with less than a year's experience, while enforcement runs at record levels. Since COVID, record debt and high staff turnover have created inconsistencies that frustrate both taxpayers and advisors.

The Ombudsman called it "opinion shopping" - agents calling repeatedly, hoping for consistent answers.

For advisors, this creates a dangerous pattern: You call for help → Get inconsistent guidance → Application fails on a technicality → Enforcement triggers → Directors become personally liable.

The support you once relied on isn't what it was and the stakes are higher than ever.

One rejected plan can have a lasting ripple effect. It makes the ATO view your next submission more skeptically, and while you rework the application, debt keeps growing and enforcement can escalate very quickly.

What this means in practice: The ATO's expectations around compliance, documentation, and evidence haven't changed - but the quality of guidance and support you receive from the ATO has.

The reality: Applications need to be right the first time, regardless of what support is available. Because fixing them later will almost certainly cost more and often means key negotiation options are no longer available as the debt grows and the ATO moves toward legal recovery. It's not ideal, but it's what's playing out right now.

▶️ Watch: Why ATO Debt Became a Fact of Life For Many Businesses »

The ATO sorts every taxpayer into just two buckets: compliant or non-compliant. There's no middle ground.

Compliant:
✅ Formal arrangement with reference number
✅ All lodgements current
✅ Clear story about what broke and what is fixed

Non-compliant:
❌ Voluntary payments (look responsible, count for nothing)
❌ Late lodgements (even by days)
❌ Waiting for them to call

Once tagged non-compliant, leniency disappears. Every ATO system works against you. Since 1 July, the GIC (currently 10.61%, compounding daily) is no longer deductible.

ATO Annual Report 2024–25

• $56.3 billion collectible debt (up 6% year-on-year)

• Two-thirds owed by small businesses trying to get compliant

• 84,000 DPNs issued

• 49% of complaints linked to debt or payment issues

• 25+ days average Practice Mail response

• 27% of call time spent on hold

“A substantial proportion of small business arrangements do not progress to full completion.” — ATO Annual Report 2024–25

Tax Assure (Jan–Jun 2025):

• ~97% sustainable outcomes

• 2–6 weeks to compliant status

• Up to 40% improved remission results

Outcomes improve when the evidence is right and the engagement is consistent.

As part of efforts to manage unprecedented backlogs, the ATO has outsourced segments of collection work to private agencies.

According to The Guardian (Oct 2025), 355,000 taxpayers have been referred to Recoveriescorp, a private debt collector owned by private-equity group Allegro Funds.

What we know:

• The ATO is using private collectors for certain tax debts

• Recoveriescorp is one of the agencies involved

• The selection criteria isn't public

What to watch for: If a client receives a Recoveriescorp notice, don't ignore it. Private collection typically means the ATO has already exhausted internal processes.

Unlike ATO negotiations, private collectors have different KPIs and less flexibility. Early intervention can sometimes redirect the case back to ATO channels where more options exist.

▶️ Watch: Does the ATO Treat Interest & Penalties Different To Core Debt »

The ATO has begun notifying 160,000 small businesses about "on-hold" debts. Small historical amounts previously excluded from account balances. The move adds $2.9 billion in dormant debt back into the system, with some balances dating to 2010.

Most amounts are minor (median $3,450, many under $100) and won't trigger active recovery. However, advisors should note these amounts will appear in account summaries and may attract GIC from May 2026 if left unaddressed, as reported in Smart Company (Nov 2025).

▶️ Watch: Controlling Cash Flow Issues & Getting An ATO Payment Plan »

The reports on two Ombudsman investigations are due early 2026:

• GIC remission: testing if decisions are “pot luck.”

• Complex cases: reviewing maladministration patterns.

For more news and updates, head to the Ombudsman’s site.

When Excel Isn’t Enough

A manufacturing business with $6 million in tax and super arrears was rejected twice despite producing perfect cash flow spreadsheets.

Why: The ATO doesn't want forecasts. It wants proof of control and evidence that behaviour has genuinely changed and that the plan is sustainable.

Solution: A specialist translated their story into ATO language, showed measurable discipline, and secured a three-year plan.

Lesson: Each rejection makes the next one harder. Getting it right the first time matters.

For more case studies, watch the video below where we unpack three recent case files.

▶️ Watch: Why Businesses Can’t Take a Holiday From the ATO: 3 Case Studies

November Checklist: Lock These In Before December

1. Convert voluntary payers into formal plans: Voluntary payments don't protect clients. Lodge proposals and secure reference numbers.

2. Update all lodgements and obligations: Bring BAS, IAS, returns, and super to "current" status to avoid automatic non-compliant tagging.

3. Recalculate GIC exposure at 10.61%, non-deductible: Show clients the true cost of waiting through December–February.

4. Identify plans at risk of failure: Assess missed instalments, changing cash flow, and seasonal dips. Adjust before enforcement tightens.

5. Fix and resubmit any rejected plans early: One rejection creates headwinds that make every subsequent step harder. Correct evidence and resubmit before ATO response times slow.

▶️ Watch: What Does A Successful Payment Plan Look Like »

1. The system is under heavy strain. The cracks are visible, and the Ombudsman confirmed it.
   

2. It's formal plans or nothing. Voluntary payments offer no protection.
   

3. Eat the frog: December is the danger zone. Minimal support meets maximum enforcement, and the longer you wait, the more it costs.

The system is strained, but not broken.

Post-COVID backlogs, rising insolvencies, and limited resourcing have created inconsistencies that frustrate everyone involved. Yet the ATO's objective remains the same: restore balance and compliance across the system.

For advisors and clients, the question isn't why this is happening, but how to stay ahead of it. Most cases still succeed when handled correctly from the start.

Success comes down to preparation and timing. If something feels off in a client's position, act early. The longer you wait, the more it costs.

Need specialist help? Book a consultation »

IN CASE YOU MISSED IT

▶️ How a manufacturer cleared $90M ATO & super debt »
▶️ Why more business consultants are working with tax debt specialists »
▶️ On DPNs, SBRs and company directors’ personal liabilities »
▶️ High LVR refinancing hacks to tackle ATO debt »

THAT’S IT FOR THIS EDITION

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^{Disclaimer: The information provided is for general purposes only and should not be considered as specific financial, tax, or legal advice. We recommend consulting with a qualified tax professional or advisor to discuss your specific circumstances before making any decisions or engaging with the Tax Assure team directly.}