The Australian Taxation Office (ATO) has quietly restarted a major campaign to claw back billions of dollars in old, dormant tax debts, after its initial controversial attempt was suspended following a fierce public backlash.
Internal documents, obtained under Freedom of Information laws, reveal the revamped program aims to recover $5.3 billion from more than 325,000 taxpayers, primarily individuals and small businesses. This move comes after the tax office conceded flaws in its original 2023 approach, which was widely criticised and dubbed "robotax".
Debts Emerging From the Shadows
The debts targeted in this new campaign have been invisible to many taxpayers for years, having been placed "on hold" after being deemed uneconomical for the ATO to pursue actively. They largely relate to old business activity statements, GST payments, and PAYG instalments.
While the government intervened last year to suspend the most contentious part of the original plan—debts from decades ago—this new scheme still pursues arrears put on hold from 1 January 2017. This means many people are now being notified of liabilities that predate the standard five-year period for which taxpayers are required to keep their own financial records.
According to the documents, the median debt amount is $1,470.60. However, the scale varies dramatically, with one unnamed high-wealth individual who has moved overseas reportedly owing a staggering $109.9 million.
A Revised Approach With Lingering Concerns
Under the renewed campaign, the ATO has begun alerting taxpayers to these on-hold debts via their online myGov accounts and through letters. The agency has marked these amounts to be automatically deducted from any future tax refunds, rather than demanding immediate payment.
Tax officials have assured the government they have learned from past mistakes, revising their communications after broad consultation. This follows sharp criticism from the Commonwealth Ombudsman, which faulted the previous campaign for failing to consider whether seizing a refund could push vulnerable people into hardship or even homelessness.
Despite these assurances, the newly released correspondence shows the ATO's new guidance to the government does not explicitly address this specific vulnerability concern raised by the watchdog.
Interest will begin accruing on the debts six months after they are made visible to the taxpayer. Furthermore, the documents indicate these on-hold statuses could be lifted after June 2026, opening the door for the ATO to start demanding direct repayments.
The Broader Debt Landscape and Scrutiny
The 325,788 taxpayers targeted in this specific initiative represent just a portion of the ATO's overall on-hold debt book. In total, more than 1.6 million taxpayers have roughly $19.7 billion in debts classified as on-hold, with a significant share predating 2017 and thus excluded from this latest action.
The ATO's aggressive debt recovery tactics have faced persistent scrutiny in recent years, leading to a spike in complaints to its inspector-general. The tax office has increasingly engaged private debt collectors to chase amounts owed, including from those on welfare benefits, and relies heavily on outsourced call centres, where staff have complained of poor training.
This relaunch of the robotax-style campaign underscores the ongoing tension between the ATO's mandate to collect revenue and the practical, often distressing, impact of pursuing long-dormant debts with individuals who may have no means to verify or contest them.
