ATO to utilise GIC as ‘key tool’ in managing growing debt book

Collectable debt remains a major focus for the ATO, with Commissioner Rob Heferen emphasising the importance of maintaining a fair tax system in a recent address.

Speaking at The Tax Summit in Sydney last week, Heferen noted that the ATO's debt book had continued to grow in recent years, jumping from $96.3 billion at the end of June 2023 up to $115 billion at the end of June 2025.

Of the $115 billion in debt reported by the ATO for June 2025, $54.2 billion was collectable debt, $22.6 billion was in dispute, $18.4 billion related to insolvencies, and $19.8 billion was not economical for the ATO to pursue.

“We will publish our next annual report in October, and while the numbers haven’t been finalised yet, we expect to see that those figures have continued to grow,” said Heferen.

Heferen said collectable debt would remain a key focus area for the ATO, with the Tax Office continuing to take firmer action in this area.

“To restore greater rigour in the system and ensure more people are paying on time, a key tool at our disposal is the general interest charge, or GIC,” he said.

He noted that general interest charge (GIC) was an important mechanism for maintaining fairness in the system by encouraging timely payment.

“[It ensures] taxpayers who defer payment do not gain a financial advantage over others who meet their obligations on time,” he said.

Of the total $54.2 billion in collectable debt for June 2025, around $9.7 billion was general interest charge, he said.

“That’s not the debt itself; it’s the interest that has been imposed because obligations haven’t been paid,” he said.

Heferen acknowledged that many accountants were dealing with clients under significant pressure.

“In those situations, the decisions aren’t always easy, and the considerations extend beyond tax. For businesses under pressure, we understand that circumstances can change. Cash flow can tighten, markets can shift, and even otherwise viable businesses can find themselves facing difficult decisions,” he said.

“But using withholdings as a source of working capital is not fair to those businesses that are meeting their obligations, and it is not sustainable for the system as a whole.”

Heferen said taxpayers should engage early with the ATO in these situations, and tax agents should encourage the conversations before a problem becomes a crisis.

“If a business has the capacity to pay but chooses not to, that’s fundamentally a fairness issue. And I know very few, if any, professional advisers would have a different view,” he said.

“That said, I recognise that many taxpayers who fall behind are not acting deliberately. They’re dealing with genuine cash flow pressures and difficult choices.”