ATO debt failures a perverse problem that can be changed now
Consumer Action Law Centre says its Price of Survival report spotlighting the demoralising ways the ATO deals with people’s tax debts shows the need for immediate change.
Almost 1,500 Victorians called the National Debt Helpline about ATO debt in 2025-26 – 18% of all callers, with a typical debt $5,000- $20,000. This is up from just 3% of all callers in 2020-21 – a six-fold increase in just five years. “Tax debt enforcement has become a perverse, stand-out problem on our frontlines causing severe harm – it needs urgent attention from the ATO and must be fixed,” said Consumer Action CEO Stephanie Tonkin.
Consumer Action is calling on the ATO to find a fairer way forward for people who are trying to pay their debts. This must include:
- A fairer financial hardship approach, by considering individual circumstances in the same way as banks, essential services companies and many other sectors.
- Standardised processes, to ensure fairer and more consistent results for people in debt.
“People want to pay, but when you’re on limited incomes, the ATO just makes it so hard,” said Claire Tacon, Director of Financial Counselling Practice, Consumer Action Law Centre.
“ATO debt is also a key issue for people reaching out to the NDH nationally – it’s the second most common reason for contact. The ATO needs to adopt a more flexible approach to hardship so fewer people and small businesses end up in financial hardship,” said Jane Pires Interim CEO of Financial Counselling Australia.
Our tax system must also be safe for people experiencing financial abuse as part of family and domestic violence. Consumer Action recognises the ATO’s commitment to their part in making government systems safer for victim survivors of family and domestic violence and encourages urgent action and ongoing prioritisation.
Kathleen feels like she’s “on probation” with the ATO
One person Consumer Action is helping is retiree Kathleen, who is living in a bus to escape homelessness.
Kathleen is being pursued by the ATO for a debt of $9,000 and has not been offered hardship arrangements. “They’ve given me the runaround. It’s like being on probation, you’ve got to report in otherwise they fine me,” she said.
Kathleen is available to speak with media.
ENDS
Media contact: Mark Pearce, mark@consumeraction.org.au Tel: 0413 299 567