The ATO is Moving Harder and Faster on Debt Collection in FY 2026 and Beyond

26 August 2026

The ATO is Moving Harder and Faster on Debt Collection in FY 2026 and Beyond

The debt is growing

The latest ATO collectable debt figures are well worth a look. ATO collectable debt has climbed from $44.8 billion in 2021/22 to an estimated $59 billion in 2025/26, an increase of roughly 32% in five years.

Two components of that figure stand out:

Insolvent debt (debt owed by entities already in some form of insolvency) has more than doubled, from $9 billion to $20.1.
Disputed debt has grown from $12.9 billion to $26.2 billion.

Small business debt remains the largest single segment of collectable debt, growing from $29.3 billion to $38.3 billion, and within that segment, activity statement debt (GST, PAYG-w, and related BAS liabilities) is the standout: up from $10.1 billion in 2018/19 to $28.3 billion in 2025/26, close to tripling. Super guarantee debt has also crept up steadily, from $0.9 billion to $2.1 billion.

What this means in practice: Firmer and stronger ATO enforcement action is continuing

The ATO’s patience for aged debt continues to shrink. Between 1 July 2025 and 31 March 2026, the ATO issued:

From what we are seeing on the ground, ATO collection posture is hardening as debt grows and ages, including:

Director Penalty Notices: We are seeing DPNs issued more readily and issued earlier in the debt lifecycle. This includes both non-lockdown DPNs (where a 21-day window exists to avoid personal liability) and lockdown DPNs (issued where PAYG-w, SGC, or GST liabilities were unreported for more than three months after the due date, and which carry personal liability regardless of subsequent action). With Payday Super reforms tightening reporting timeframes for superannuation guarantee obligations, the window for lockdown DPN exposure is only getting narrower.
Garnishee notices: Garnishee action against banking facilities and receivables appears to be a more routine part of the ATO’s approach, rather than a tool of last resort following a period of non-engagement.
Credit reporting: The ATO’s ability to report business tax debts of over $100,00 to credit reporting bureaus, where certain thresholds and conditions are met, continues to be used as leverage in a way that many businesses (and their financiers) still underestimate.
Statutory demands: We are also seeing more statutory demands issued as a precursor to ATO wind-up applications. ATO-initiated corporate wind-ups are following the same trend — from 3,941 in 2020/21 to over 8,180 in just the first nine months of 2025/26, already close to the full-year total for 2024/25 (10,534).

The key takeaway: Early engagement can change the outcome

Early engagement remains the single biggest lever available. Once a DPN, garnishee, or statutory demand lands, the options narrow considerably.

If you have a client who is falling behind with ATO obligations, has entered into a payment plan under strain, is receiving warning correspondence, or simply unsure of where their business is heading, a conversation before the next ATO step can often be the difference between a managed outcome and a forced one.

We are always happy to be a sounding board, confidentially and without obligation, if you or a client would like to talk through where things stand.

This article contains general information only and does not constitute legal, financial or professional advice. Specific circumstances should be discussed with your professional adviser.

About the author

Greg Quin is a Managing Partner at Equinox (formerly HLB Mann Judd Insolvency WA). He specialises in guiding directors, accountants and lawyers through complex insolvency and restructuring matters, from early-stage financial distress through to formal appointments, with a focus on practical outcomes over textbook process.

Greg works closely with referral partners to identify the right course of action early, whether that’s Safe Harbour, voluntary administration, or a negotiated resolution with the ATO or other creditors. He’s known for straightforward, commercially-minded advice and for managing appointments with the confidentiality and professionalism clients expect when the stakes are high.