That’s the question as more than $50B in tax debt hangs over businesses and households. 

The Tax Ombudsman has stepped in, calling remission outcomes “pot luck.” At the same time, the ATO has launched its own consultation into penalties and payment plans. 

This isn’t about rewriting the law — the rules for penalties and interest are already set. What’s under review is how those rules are applied: fairness, consistency, and transparency in ATO decision-making. 

Meanwhile, enforcement is running hot: 

• 84,000 Director Penalty Notices issued in 2024–25 — triple the year before 

• “Debts on hold” reinstated from August 

• Interest no longer deductible since 1 July 

• Collections locked in as the ATO’s #1 priority for 2025–26 

Bottom line: Reviews may reshape the system tomorrow. But today, only a formal ATO payment plan shields clients from exposure. 

"With the current interest charge rate at around 11% for unpaid debts, for some taxpayers the interest itself can very quickly become larger than the original debt. Without a reduction or remission in the interest, many taxpayers face growing debts that are beyond their means to pay back, even when they want to meet their obligations." 
— Ruth Owen, Tax Ombudsman 

Fairness on trial: The Ombudsman is asking whether remission decisions are consistent — or just ‘pot luck’ — and whether small businesses really have any practical right of appeal under the current system.

• Trigger: 134 complaints in 2024–25 about inconsistent GIC remission

• Focus: Are ATO decisions on remission clear, consistent, and fair?

• Appeals gap: Refusals to remit GIC can’t be challenged at the AAT. The only avenue is the Federal Court — costly, complex, and often out of reach for small businesses.

• GIC context: 10.78% p.a., compounding daily — and no longer deductible since 1 July.

• Timeline: Submissions close 10 October 2025; final report due February 2026

• How to participate: Submissions and survey responses are open now. The Ombudsman is also presenting a series of webinars for tax professionals and businesses — details and registration links are available on the Ombudsman’s website.

Process Under Pressure: The consultation is testing if the ATO’s internal systems for penalties and relief remain fair, transparent, and workable.

• Scope: penalties, payment plans, remission processes 

• Purpose: ATO reviewing its own “taxpayer relief” approach  

• Timeline: Submissions close 2 October 2025 

• How to participate: Submissions are open via the ATO’s website.

These reviews are about application, not legislation. Complaints suggest remission still feels like “pot luck,” varying by officer or channel. 

For clients, the cost is real: with GIC compounding daily and no longer deductible, interest can outpace the debt itself. 

👉 Advisor Action: Contribute to the reviews if you can. But more importantly, protect clients now with payment plans, up-to-date lodgements, and remission submissions that are watertight. 

What Really Changes Outcomes

Clients often assume effort equals protection. The ATO doesn’t see it that way. What matters is whether the pathway is formal, compliant, and sustainable. 

CASE FILE 1: The Voluntary Trap 

• Problem: A client paid $1,000/week voluntarily. Despite tens of thousands paid, they were still reported.

• Fix: A formal plan — with lower repayments — cleared the listing in a week.

• Advisor insight: Voluntary payments drain cash flow without protection. Always convert to a formal plan. If in doubt, escalate early.

CASE FILE 2: The Single Slip

• Problem: A smash repairer with $800K debt lost their plan after one missed instalment. The ATO refused reinstatement.

• Fix: Urgent negotiation and updated lodgements restored protection — but only after weeks of stress.

• Advisor insight: Sustainability matters more than speed. Stress-test instalments before committing.

CASE FILE 3: Small Debt, Same Stress

• Problem: A business with $180K debt assumed the risk was smaller. Anxiety was the same.

• Fix: A structured plan restored certainty.

• Advisor insight: The ATO’s tools don’t scale with debt size. Treat every client with debt as high-stakes.

👉 Advisor Takeaway: Outcomes aren’t random. They hinge on formal, compliant submissions — and the skill of those negotiating with the ATO. 

▶️ Watch: How the ATO is changing how it looks at tax debt in 2025 »

Good vs. Bad Payment Plans

✅ Good Plans

• Formally approved (not informal)

• Aligned to real cash flow

• Lodgements up to date

• Remission factored in

• Flexible enough to absorb shocks

🚩 Red Flags

• Voluntary payments with no protection

• Overdue lodgements still outstanding

• Unrealistic instalments that won’t last

• Default 12-month templates

• Plans that collapse after a single slip

👉 Advisor checkpoint: Ask yourself — Is it formal? Are lodgements current? Can it survive one slip?

▶️ Watch: What a successful payment plan looks like »

Remission Isn’t Pot Luck: Why Specialists Deliver Better Outcomes

By Michael Moon, Director, Tax Assure 

The Ombudsman has called remission outcomes “pot luck.” Inside the system, they aren’t random — they’re shaped by precedent, compliance history, and the quality of the submission. 

Michael Moon shares the one lever that matters most when it comes to ensuring the best outcome with the ATO.  
 
Read the article in full here »

👉 Advisor takeaway: You don’t need to be the tax debt specialist. Your role is to spot exposure early, then bring in the right support before it escalates. 

Five things to check now: 

1. Reinstated debts — check client accounts 

2. Voluntary payers — convert to formal plans 

3. Lodgements — ensure everything is current 

4. Instalments — stress-test sustainability 

5. Remission — push harder; with deductibility gone, it’s more valuable 
   

For Brokers: Keep More Deals Alive

Tax debt doesn’t just sit quietly in the background — it derails transactions.

• Defaults reported mid-deal

• DPNs landing without warning

• Old debts reinstated at settlement

👉 Broker takeaway: Don’t walk away. With the right specialists, clients can secure compliant ATO plans that protect the deal — and your commission.

We’ve prepared a practical Tax Debt Guide for Brokers. To get your copy, just reply to this email and we’ll send it straight through.

For Advisors: The Blind Spots That Break Plans

The biggest risks aren’t always the balance — they’re the details: 

• One overdue BAS can cancel a plan automatically  

• Unsustainable instalments collapse in 3–6 months  

• No remission request upfront leaves clients overpaying thousands  

👉 Advisor takeaway: Don’t just ask if a client is “in a plan.” Ask if it’s sustainable, compliant, and remission-backed. 

The Ombudsman’s review may improve fairness. The ATO’s consultation may refine process. But all of that takes time. In the meantime, clients are still left balancing cash flow, deadlines, and stress.

Your job: spot exposure early and bring in the right support. Because the sooner you engage with the ATO, the better.

📞 Connect with Tax Assure: We work alongside advisors to secure outcomes before enforcement makes the decision for your clients. Book a consultation »

IN CASE YOU MISSED IT

▶️ ATO debts: DPNs, SBRs and company director's personal liabilities »
▶️ The difference between good and bad ATO payment plans »
▶️ Do SBRs reset the clock for businesses with 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.}