Australia’s tax debt problem is enormous, although some of the headline figures circulating online need a little context.
According to the Australian National Audit Office’s June 2026 audit, the ATO recorded $98.4 billion in total tax owing at 30 June 2025, rather than the $105 billion-plus figure sometimes quoted. Of that amount, $54.2 billion was considered collectable debt, with small businesses accounting for $35.9 billion, or 66.1% of the total collectable debt book. That was $19.4 billion more than in 2018–19.
Those figures are striking enough on their own. More important for business owners is the change in the ATO’s approach to recovering what it is owed. The comparatively restrained collection environment seen during the pandemic has ended. The ANAO notes that firmer recovery measures resumed in 2023–24, including garnishee notices, Director Penalty Notices (DPNs), directions to pay and disclosure of qualifying business tax debts. Stronger payment performance and debt collection are also priorities under the ATO’s 2025–26 corporate plan.
For people who own both a business and real estate, that shift deserves attention. A company tax problem does not necessarily remain confined to the company.
Carrying tax debt is getting more expensive
A significant change took effect on 1 July 2025. General Interest Charge (GIC) and Shortfall Interest Charge incurred from that date are no longer deductible for income-tax purposes. GIC also compounds daily, so allowing an overdue liability to sit unresolved can steadily increase its cost.
The scale is revealing: small-business collectable GIC reached $6.4 billion in 2024–25, compared with $2.4 billion in 2019–20.
| Issue | Current position | Why it matters to property owners |
| Total tax owing | $98.4 billion at 30 June 2025 | Shows the sheer scale of outstanding ATO liabilities |
| Collectable debt | $54.2 billion | Represents debt considered available for recovery |
| Small-business debt | $35.9 billion, or 66.1% of collectable debt | Small businesses sit at the centre of the recovery effort |
| GIC | No longer deductible when incurred from 1 July 2025 | Carrying overdue tax has become more expensive |
| Director penalties | Can apply to unpaid PAYG withholding, net GST and SGC | Certain company debts can become personal liabilities |
| Credit reporting | Available where statutory conditions are met | May complicate borrowing or refinancing |
| Property sale withholding | FRCGW is 15%, with no property-value threshold since 1 January 2025 | Vendors should address clearance certificates early |
When the debt follows the director
For company directors, DPNs are particularly important. Certain unpaid company obligations — including PAYG withholding, net GST and super guarantee charge — can result in directors becoming personally liable. Recovery action may then include garnishee notices, tax-credit offsets and court proceedings.
There are usually warning signs before a tax problem reaches that stage:
- BAS, PAYG or super obligations repeatedly fall behind;
- ATO correspondence goes unanswered;
- an existing payment arrangement defaults;
- a director receives a DPN; or
- business tax debt becomes eligible for disclosure to a credit reporting bureau.
The credit-reporting rules are also more nuanced than the shorthand claim that owing $100,000 for 90 days automatically damages a business’s credit record. The disclosure regime can apply where business tax debts total at least $100,000 and have been overdue for more than 90 days, but other statutory conditions must also be satisfied, including requirements concerning engagement with the Commissioner.
That makes early engagement valuable. Businesses actively working with the ATO to manage their debts may avoid disclosure to credit reporting bureaus, and a payment arrangement can be one way of preventing matters from progressing to firmer recovery action. It is not, however, a magic reset button: entering a payment plan does not automatically cancel a DPN or guarantee that every enforcement measure will stop.
Selling property adds another deadline
Tax debt can become particularly uncomfortable when a property is about to change hands.
Since 1 January 2025, the foreign resident capital gains withholding regime has applied at 15% with no property-value threshold. An Australian resident vendor disposing of relevant Australian real property generally needs an ATO clearance certificate so the purchaser is not required to withhold 15% from the transaction.
The ATO may also use garnishee powers against money held or owed to a taxpayer, which can extend, in appropriate circumstances, to proceeds associated with a real estate sale.
The practical message is straightforward: do not allow tax debt to become a settlement-day discovery. If a sale, refinance or property restructure is on the horizon, dealing with substantial business tax liabilities early leaves far more room to obtain appropriate tax and legal advice and manage the transaction properly.
Flash Conveyancing Advice
If you run a business and are planning to sell or refinance property, investigate any outstanding ATO liabilities well before settlement. Keep your lodgements current, speak with your accountant or tax adviser early and tell your conveyancer about anything that could affect settlement proceeds. Tax and conveyancing are different areas, but they can collide very quickly once property money starts moving.
Tax disputes themselves generally belong with a qualified accountant or tax lawyer. The conveyancing issue begins when an outstanding liability affects the sale, purchase, refinance, title or settlement.
That is where Flash Conveyancing, led by Julian & Renee, can help keep the property side of the transaction moving. For vendors, one practical priority is dealing with the ATO clearance certificate early. Since the property-value threshold disappeared in 2025, the process is no longer relevant only to high-value sales. Australian resident vendors disposing of relevant Australian real property generally need a clearance certificate if they want to avoid the purchaser withholding 15% at settlement.
Timing becomes even more important where a business owner is already under financial pressure. Garnishee action can potentially reach money otherwise payable through a real estate transaction, while lenders considering a refinance may have their own requirements around outstanding tax debts and repayment arrangements.
Flash Conveyancing takes a personal, hands-on approach to property transactions across NSW. Julian & Renee work with buyers, sellers and investors on contracts, title matters and settlement requirements. Where a tax issue falls outside the conveyancing scope, identifying it early gives the client time to obtain specialist advice rather than scrambling for answers with settlement around the corner.
Flash Conveyancing assists clients throughout Sydney, Newcastle and Wollongong, together with the Blacktown, Hawkesbury, Blue Mountains, The Hills, Hornsby and Parramatta areas.
Julian & Renee also assist with property transactions in Acacia Gardens, Angus, Arndell Park, Blacktown, Colebee, Glendenning, Glenwood, Grantham Farm, Kellyville Ridge, Kings Langley, Marsden Park, Melonba, Oakhurst, Parklea, Quakers Hill, Riverstone, Schofields, Seven Hills, Stanhope Gardens, Tallawong, The Ponds, Baulkham Hills, Beaumont Hills, Bella Vista, Castle Hill, Kellyville, Kenthurst, North Rocks, Northmead, Rouse Hill, Vineyard, Windsor, Annangrove, Box Hill, Cattai, Dural, Gables, Galston, Glenhaven, Glenorie, Maraylya, Middle Dural, Nelson, North Kellyville, Norwest and Winston Hills, as well as elsewhere across NSW.
Australia’s tax debt mountain is certainly large, but the headline number is not the most useful thing for property-owning business operators to focus on. The bigger risk is allowing a manageable tax problem to grow until personal liability, enforcement action or an approaching settlement leaves little room to manoeuvre. Deal with the tax issue early, prepare the property transaction properly and protect the equity you have spent years building.
