ATO gets tougher on proposed tax repayment plans to collect billions

The ATO has shifted into a new tax-collection phase and will be increasing efforts to recoup money from small businesses behind in repayments.

The ATO is increasingly getting tougher on businesses behind in tax repayments.

The Australian Taxation Office is getting tougher on proposed repayment and restructuring plans by refocusing on compliance as it seeks to recover more than $35bn in debt from small businesses.

According the latest Australian Securities & Investments Commission data, in the first half of the 2025 financial year to 31 December there were 7483 insolvencies, 47 per cent higher than the same period the previous year.

There were 13.448 insolvency appointments for the whole 2024 calendar year, as the Covid “catch-up” continues.

Chris Baskerville, a partner at insolvency solutions firm Jirsch Sutherland, said at the current rate records would be broken.

“It looks like that since June they have accelerated faster than at the peak of GFC. I’m anticipating that we will go a record corporate insolvency by June 30 2025,” he said.

Mr Baskerville said with the continued increase in insolvencies the ATO was getting tougher on businesses behind in repayments.

“The ATO has been laser-focused on collecting tax debt, and based on its 2025-28 corporate plan, that shows no sign of abating,” he said.

“We expect to see an even greater focus on the collection of business debts, particularly PAYG withholding, GST and superannuation guarantee, for the rest of this financial year and beyond.”

Jirsch Sutherland partner Chris Baskerville.

Mr Baskerville said voluntary liquidations accounted for most of the insolvency actions while small business restructuring was increasing in popularity, having tripled in the first half of the 2025 financial year to 1514, compared with the corresponding period in 2023.

While SBRs were more popular Mr Baskerville warned the ATO was getting tougher, with restructuring proposals proving harder to “get over the line”.

“As we approach the fourth anniversary of the SBR regime, it’s clear the ATO has a renewed focus on compliance,” he said.

“Even if a company pays all its outstanding taxes and superannuation just before entering into an SBR that does not guarantee it will be approved.”

Mr Baskerville said the feedback his firm was receiving was that the ATO had increased the lowest standard repayments to 30c on the dollar from 20c, making it harder for struggling businesses to be accepted on to a SBR plan.

“We also understand that the ATO is starting to get annoyed that they are the last creditor on the list of creditors being repaid,” he said.

“In other words they will pay every single bill except the one owing the taxman and then do an SBR on tax owed. The ATO is starting to starting to get a little jacked of that.

“We hear there are also certain industries, for public policy reasons, they are against allowing a small business restructuring appointment.”

An ATO spokesman said the tax office would generally support a restructuring plan if it was commercially appropriate and it would be objectively fair and reasonable, considering the company’s compliance history and the conduct of the directors.

“Repayment plans are tailored to the specific circumstances of each business and its creditors,” he said.

“The terms of these plans, including the repayment amounts and schedules, are negotiated between the business and its creditors, often with the assistance of a small business restructuring practitioner.

“This approach allows for flexibility to accommodate the unique financial situations of different businesses.

“It’s important for businesses considering restructuring to consult with qualified professionals to develop a repayment plan that is feasible and acceptable to all parties involved.”

Originally published as ATO gets tougher on proposed tax repayment plans to collect billions