The Australian Taxation Office (ATO) has quietly relaunched a major campaign to recover billions of dollars in old, dormant tax debts, after its initial controversial attempt sparked a public outcry. New documents reveal the agency is now targeting $5.3 billion from more than 325,000 taxpayers, with some debts stretching back to 2017.
The Scale and Scope of the Revamped Campaign
According to documents obtained under Freedom of Information laws by Guardian Australia, the renewed initiative focuses on debts that were previously deemed "uneconomical to pursue" and had remained invisible to taxpayers for years. The vast majority of those affected are individuals and small businesses, including sole traders.
The debts largely stem from historical business activity statements, GST payments, and PAYG instalments. While the median debt is $1,470.60, the figures vary wildly. At the extreme end, one unnamed high-wealth individual who has moved overseas owes a staggering $109.9 million, which the ATO has so far been unable to recover.
Under the new scheme, the tax office has begun notifying taxpayers of these "on-hold" debts via their online myGov accounts and through letters. The term "on-hold" signifies that the ATO intends to recoup the money by withholding future tax refunds, rather than demanding immediate payment.
Political Sensitivity and Learning from Past Mistakes
The internal correspondence between the ATO and Treasury highlights the political sensitivity surrounding this latest push. It comes after the original 2023 campaign was suspended following fierce criticism, including from the tax ombudsman, and was widely dubbed "robotax" by an angry public, drawing parallels to the infamous Robodebt scandal.
The ombudsman had previously slammed the ATO for failing to consider whether seizing a refund to cover an old debt could push vulnerable people into hardship or even homelessness. In response, the ATO assured the government it had consulted widely and revised its communications strategy, acknowledging that "whilst it may still surprise some taxpayers to see updates to their account balances", the approach had been improved.
In a key concession, the current campaign has been limited to debts placed on hold from 1 January 2017 onwards, following intervention by the Labor government. This puts the most controversial element—debts dating back decades—on ice. However, many taxpayers will still be notified of debts that predate the standard five-year period for which they are required to keep financial records.
Future Implications and Mounting Scrutiny
The documents indicate that these on-hold debts could be taken off their suspended status after June 2026, potentially opening the door for the ATO to begin demanding direct repayment. Furthermore, interest will start accruing on the amounts six months after they are first made visible to the taxpayer.
This campaign represents just a portion of the ATO's total dormant debt ledger. While over 1.6 million taxpayers have roughly $19.7 billion in on-hold debts, a significant share predates 2017 and falls outside this new collection drive.
The tax office's aggressive debt recovery tactics have faced persistent scrutiny, leading to a spike in complaints. Its methods include referring hundreds of thousands of cases, including those involving people on Centrelink benefits, to private debt collectors. The ATO also relies heavily on outsourced call centres, where staff have reportedly complained of poor training and conditions, contributing to a decline in service quality.
