IGTO to focus on ATO tax debt approach in FY26

The ATO’s approach to general interest charge (GIC) and its management of account fraud have been listed as focus points in the Tax Ombudsman’s list of systemic reviews.

Announced on Monday (23 June), the Ombudsman’s work plan would be set to home in on tax debt and the ATO’s treatment of taxpayers following an influx of complaints within these areas.

Ruth Owen, the Inspector-General of Taxation and Taxation Ombudsman (IGTO), said that based on the ATO’s public statement to “toughen up” its position on remitting interest when a debt was being paid back was reason to review the system, as the application of interest could make it impossible to pay back.

“The general interest charge is important to deter non-compliance and late payment, but it should not be used to penalise taxpayers with legitimate reasons for payment delays,” she said.

“Our review will build on the work the ATO is already doing to find ways we can make this aspect of tax administration fairer and more transparent for all taxpayers.

A second review was also announced by the Ombudsman, which would focus on how the ATO manages compromised tax accounts, as the risk of being targeted by a scammer was higher than ever before.

The Ombudsman noted that many Australians had found themselves victims of scammers and fraudsters accessing their tax file numbers and other personal details to commit crimes, which compromised their tax accounts and left victims with severe consequences.

The Ombudsman has previously stressed the importance of bank account integrity and security and made recommendations in a report about how the ATO managed the risk of fraudsters changing bank account details in legitimate taxpayer accounts.

Despite the awareness and recommendations made by the Ombudsman and other industry figures, taxpayers were still reporting difficulties unlocking their accounts after they had been compromised.

Owen said the new review would respond to those concerns and would investigate whether the ATO was helping taxpayers with effective and affordable access to the services they needed to protect their accounts.

“This is a great example of why the work that we do is so important.”

“Our first review looked at one aspect of identity fraud in the tax system, and when we consulted on our work plan for the next year, tax professionals and taxpayers all agreed that this was an area where more can be done. It’s an issue that affects large numbers of regular taxpayers and I’m really pleased that we can look into it and help make things better for everyone as a result.”

Another element of the systemic reviews to be looked into by the Ombudsman throughout 2026 included how the ATO engaged with and supported First Nations taxpayers.

According to Owen, data suggested that Aboriginal and Torres Strait Islander taxpayers faced unique challenges when they engaged with the tax system, making it harder and more expensive to resolve difficulties when they appeared.

“Support for First Nations taxpayers is an especially important area for us to look at. I’m confident that more can be done to support First Nations taxpayers and I hope we can work with them, their communities and their representatives to make recommendations that will really make things better.”

The Ombudsman also revealed she would continue and build on her review of the registered agent phone line, listing a review of the ATO’s online services for agents as the final proposed area.

Owen said she was looking forward to “digging deeper” into issues that clearly resonated with the community in the 2026 financial year.

“Agents play a vital role in Australia’s tax system, guiding taxpayers through complex processes and laws, and fostering voluntary compliance.”

“I want to ensure that we support the valuable work they do and by building on my office’s current review of the registered agent phone service to look at the online services provided, I hope we will find ways to enhance the tools available to agents to support their work and services to taxpayers.”