Rising ATO Debt Fuels Surge in Financial Helpline Calls

Rowan Ashford

Published: February 5, 2026 4:52 PM ET

Rising ATO Debt Fuels Surge in Financial Helpline Calls

Last year saw a significant rise in calls to financial helplines, particularly among small business owners burdened by debt to the Australian Taxation Office (ATO). The Small Business Debt Helpline noted a 21% increase in inquiries for the year ending December 31, 2025. This marked a troubling trend, with 6,205 cases handled primarily concerning tax debt issues.

Surge in ATO Debt Calls

According to the latest data, 64% of the helpline’s cases involved ATO debt, climbing from 61% the previous year. In total, the Small Business Debt Helpline assisted clients with $429 million in tax-related debts, with the median debt size reaching approximately $70,000.

Record High ATO Collectable Debt

The ATO reported a record high in total collectable debt, surpassing $50 billion. A spokeswoman emphasized that reducing unpaid taxes remains a key focus of the agency. This commitment includes taking stronger actions against those who neglect to engage with the ATO regarding their obligations.

Experience of Distressed Business Owners

Many business owners express severe distress and worry over their financial situations.
Calls often reveal exhaustion and anxiety, with some callers breaking down emotionally.
Concerns extend to layoffs and the stability of their households.

Financial counsellors, like Anna Dooland from the Small Business Debt Helpline, report that many callers feel overwhelmed by rising costs and external shocks. They urged the ATO to provide more flexibility in payment options for those unable to meet their tax obligations promptly.

Challenges with ATO’s Debt Collection Methods

The ATO’s approach to debt collection has come under scrutiny. Increasingly, the agency is issuing Director Penalty Notices, making business owners personally liable for tax debts. Additionally, the ATO has resumed using garnishee notices, allowing direct withdrawal from bank accounts, and reporting debts to credit agencies, which complicates access to credit for affected individuals.

Concerns from Financial Experts

Ruth Owen, Australia’s tax ombudsman, highlighted complaints regarding the ATO’s rigid debt collection strategies. She pointed out that many small businesses wish to repay their obligations but require more leniency due to their challenging financial circumstances.

Owen also noted that general interest charges are compounding tax debts at alarming rates, making it increasingly difficult for borrowers to keep up. A debt of $20,000 can quickly escalate to $40,000 due to high-interest accruals.

Broader Financial Issues for Small Businesses

Beyond ATO debts, small businesses report various financial pressures, including business loans and mortgages related to business operations. The Small Business Debt Helpline also fields calls concerning motor vehicle financing and other personal debts.

Support for Small Business Owners

The Small Business Debt Helpline has assisted over 16,000 businesses since its inception in 2020.
Common distress signals primarily come from the construction and accommodation sectors.
Small business owners can access help via the helpline by calling 1800 413 828.

The ongoing strain from rising debts continues to challenge small business owners across Australia, emphasizing the urgent need for supportive measures from the ATO and financial institutions.