The Australian Taxation Office (ATO) has apologized after issuing a $1,650 fine to a 97-year-old Brisbane woman who failed to prioritize her tax obligations following the death of her husband, who had managed their financial affairs. The penalty was only overturned after the woman's accountant, Nathan Watt, shared details of the incident on LinkedIn, drawing attention from industry associations and the tax ombudsman.
Background of the Case
The elderly resident, who had a lifetime history of submitting tax returns on time, lost her husband in mid-2023. Her circumstances were further complicated by the sale of the tax practice previously used by the couple. Despite these extenuating circumstances, the ATO charged her $1,650 for the late lodgement of her 2025 returns.
Accountant's Intervention
Watt contacted the ATO to request a remission of the penalty, detailing the woman's situation. The ATO's response stated: "Your remission has been considered, we've decided not to remit. You have not prioritised your tax obligations. It is your responsibility to manage your affairs to ensure lodgment by the due date. Remission would not be considered fair or reasonable when other taxpayers have taken steps to lodge on time."
In his LinkedIn post, Watt expressed dismay at the lack of compassion, wondering "how the person at the ATO who wrote this felt when they were doing it."
Ombudsman's Criticism
The Commonwealth Ombudsman, Ruth Owen, who oversees complaints against the ATO, said such decisions had become systemic. "In too many circumstances that I see, they fail to see the human being behind the tax return," Owen said. "We then get examples like this where clearly this is an elderly person who's been recently bereaved. They should start there. It is really important that these things are raised as complaints because the ATO won't learn unless people highlight the mistakes that they make."
A report published by the ombudsman's office in March found that the ATO routinely failed to consider personal circumstances when making decisions about penalties and interest charges on tax debts.
ATO's Response and Apology
The ATO has taken a hard-edged approach to debt collection in recent years amid concerns that some taxpayers were lodging returns late on the assumption they could get the penalty waived. The agency stated in 2023 that remission requests would only be considered in very limited circumstances. Debt deemed by the ATO to be "collectible" doubled between 2019 and 2025, to over $50 billion.
An ATO spokesperson said the agency was improving how it supported taxpayers by "ensuring our approach reflects the expectations of the community. The ATO acknowledges that in this instance our communication did cause unintended offence and we have both corrected the error and apologised for this communication." The $1,650 penalty has been reversed.
The ATO spokesperson declined to clarify how the initial decision was made or whether it was handled by an internal or outsourced worker. This issue arises amid increased scrutiny of the ATO's reliance on outsourced debt collectors and call centres, which have coincided with a rising number of complaints about deteriorating service. The ATO has referred hundreds of thousands of taxpayers to a private equity-backed debt collector, Recoveriescorp, in recent years.
