By the time they moved, the interest had compounded, the options had narrowed, and the window had closed.
That window is shorter than it's ever been.
I was presenting to a room of accountants and advisors last week. The question I kept getting asked was some version of the same thing: is it getting better or worse?
The honest answer is both.
Earlier this year a formal review examined how the ATO handles requests to waive interest on unpaid tax debt — the general interest charge, or GIC.
The ATO accepted the findings and acted. As a result, there's now a clearer pathway to challenge a decision that went against you, but the bar to succeed hasn't dropped. If anything, the process now requires a stronger written case than before. And enforcement hasn't paused while that takes effect.
The ATO is moving faster on recovery than it was two years ago. Letters that used to go unanswered for months are now getting follow-up within weeks.
Director Penalty Notices are being issued earlier in the process. The window between "we owe some tax" and "this is now a personal liability" has shortened. Most business owners don't know that window exists until it's already closing.
A DPN makes the debt personal. It doesn't matter what structure you're trading through. Once it's issued, your house is in the conversation. We're seeing more of them, and we're seeing them earlier.
Meanwhile the interest runs every day, including the days you're trying to sort it out. As of 1 April the GIC sits at 10.96% per annum, compounding daily. Since July last year it stopped being tax deductible.
The deduction was worth roughly $15,000 on a $50,000 liability. That saving is gone. A business that owed $80,000 twelve months ago and has been managing it informally is likely sitting closer to $89,000 today. The original debt didn't grow. The interest did.
Payday super lands 1 July. For businesses already carrying ATO debt, that's another cashflow hit on a fixed date. These pressures don't ease on their own.
The advisors in that room were worried. Not panicked. Worried. That's telling. They were worried because their clients aren't coming to them early enough. They hear about the ATO problem when the situation has already compounded, when options have narrowed, when the cost of fixing it has grown. The advice gap isn't knowledge. It's timing.
Here is what acting early looks like. You need a payment arrangement formalised, not informal. You need a remission application running alongside it, not instead of it.
And you need someone who can tell you whether that application is strong enough to succeed — because the standard required hasn't changed just because the pathway has opened.
Delay isn't only failing to start. It's also failing to check.
Not all payment plans are equal. A good one is built around your business, your cash cycle, and what you can actually keep up with and when structured properly, can run to three years. A not-so-good one is a cookie-cutter arrangement that was never really going to hold.
When conditions shift, a plan can start to strain before anyone notices. With the rate up, deductibility gone, and payday super coming, now is the right moment to check whether yours still fits.
The businesses coming through this are treating it as a financial problem that needs specialist management. The ones that don't make it usually had the same information. They just waited.
Don't wait to find out which side of that line you're on. There are paths through this. They just get narrower the longer you wait.
Tax Debt Matters is a monthly column. Michael Moon is a Director at Tax Assure, a specialist tax debt negotiation firm. Tax Assure works on an assessment and engagement fee followed by a success fee based on interest and penalties actually remitted. Initial consults are obligation free. 1300 952 295 | www.taxassure.com.au
