The Tax Ombudsman will review the Australian Taxation Office’s approach to tax debt interest (known as the general interest charge or GIC) and its management of compromised tax accounts in the coming year, as part of her forward work plan announced on Monday.
Tax debt and ATO’s treatment of taxpayers with tax debt are a major source of complaints to the Ombudsman. The application of interest, especially on larger debts, can very quickly make them impossible to pay back. The ATO has very publicly stated that it is toughening up its position on remitting interest when a debt is being paid back or is in a payment plan; the Ombudsman will be reviewing ATO’s process and procedures, and whether their stance on remission is fair, reasonable and applied consistently.
Ruth Owen, the Ombudsman said “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. 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.”
The second review announced will focus on how the ATO manages compromised tax accounts. Many Australians have found themselves victims of scammers and fraudsters accessing their tax file numbers and other personal details to carry out their crimes, compromising their tax accounts and leaving victims with the consequences.
A report by the Ombudsman last year highlighted the importance of bank account integrity and made recommendations about how the ATO manages the risk of fraudsters changing bank account details in legitimate taxpayer accounts. However, taxpayers are still reporting difficulties unlocking their accounts after they have been compromised. This new review will respond to those concerns and investigate whether the ATO is helping taxpayers with easy and low-cost access to the services they need to protect their accounts and put things right.
Ms Owen is looking forward to digging deeper into an issue that clearly resonates with the community in the next year.
“This is a great example of why the work that we do is so important,” she says. “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.”
In 2026, the Ombudsman will also look into how the ATO engages with and supports First Nations taxpayers.
“Support for First Nations taxpayers is an especially important area for us to look at,” says Ms Owen. “Data suggests that Aboriginal and Torres Strait Islander taxpayers face unique challenges when they engage with the tax system, and these only make it harder and more costly to resolve other difficulties when they arise. 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 final proposed review is on ATO’s online services for agents, which builds on the Ombudsman’s current review of the registered agent phone line.
“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.”
The full forward work plan, including details of the reviews planned and information on how to contribute, is available on our website.