A report from the Australian National Audit Office (ANAO) tabled on 30 June 2026 looked at how the ATO manages small business tax debt. The numbers are large, and they hint at where the ATO's attention may head next.

What the audit found

According to the ANAO, small business accounted for about $35.9 billion of the ATO's $54.2 billion in collectable debt in 2024-25. The auditor judged the ATO's management of small business debt risks as only partly effective, and noted there were no internal targets for reducing small business debt volumes. It made eight recommendations, and the ATO agreed to all of them.

In its own response, the ATO said the report found its debt framework largely sound, and pointed out that much of the debt is undisputed and self-reported. SmartCompany reported that the ATO is expected to set new targets for reducing small business debt.

Why you should care

Targets tend to mean more follow-up. Commentary from insolvency advisers, reported by Dynamic Business, says the ATO's firmer tools include director penalty notices, garnishee notices and asset freezes. A director penalty notice can make a director personally liable for certain unpaid company amounts, such as PAYG withholding and super guarantee charges.

The same article notes that penalties and interest keep growing the longer a debt sits, and that a notice sent to an outdated ASIC registered office address still takes effect from the date it was sent, even if you never saw it.

What to do

  • List what you owe. Check your ATO online services for BAS, PAYG withholding, super and income tax balances, so nothing surprises you.
  • Lodge first. Even if you cannot pay, getting returns and statements in on time keeps your options open.
  • Talk to the ATO early. Payment plans and other arrangements are easier to arrange before enforcement action starts.
  • Prioritise withholding and super. These are the amounts that can come back to directors personally.
  • Keep your addresses current. Make sure your ASIC registered office and ATO contact details are right, and that someone opens the mail.
  • Get advice quickly. If a notice arrives, speak to your accountant straight away, because strict time limits can apply.

The audit does not change your obligations, but it is a good reminder that tax debts are best handled early, while there is still room to negotiate.