The Australian Taxation Office has stepped up its pursuit of overdue debt, and the growing pressure is showing up somewhere else too: in a sharp rise in taxpayer complaints.
In June 2026, Tax Ombudsman Ruth Owen told Senate Estimates that complaints to her office had risen 127% compared with the previous year. Much of that increase involved debt collection, penalties, interest on tax debts and payment arrangements. Owen linked the rise partly to the ATO’s stronger focus on recovering outstanding debts, although greater public awareness of the Ombudsman’s role has also contributed.
By late May, the Tax Ombudsman had received 2,989 complaints for the financial year to date, with debt matters making up roughly 23% of the total.
Those numbers should not be read as evidence that the ATO is getting most decisions wrong. In fact, its actions were considered reasonable in 67% of the cases examined. Still, there is another figure worth noticing: in 31% of complaints involving penalties and interest, the Ombudsman helped secure either a reduction in the tax debt or the removal of interest.
For someone facing a substantial tax bill, that distinction can make a very real financial difference.
Why GIC can make an overdue tax bill grow quickly
One of the biggest pressure points is the General Interest Charge (GIC). It applies to certain unpaid tax liabilities and is intended to encourage taxpayers to pay on time, while ensuring those who pay late do not gain a financial advantage over people who meet their obligations when they fall due.
Importantly, GIC is not necessarily set in stone. The ATO has discretion to remit some or all of the charge where the circumstances justify it. A remission request should explain what caused the delay, when the problem occurred and what the taxpayer did to resolve it.
The Tax Ombudsman’s March 2026 report, In the Interest of Fairness, showed just how relevant that avenue can be. ATO-supplied data indicated that 76% of GIC remission requests were granted in 2025, although the Ombudsman cautioned that those figures were indicative and had not been assured by the ATO for public release.
That does not mean taxpayers should assume their interest will simply disappear. It does mean a GIC liability should be understood properly before being accepted as the final position.
When tax debt starts getting out of hand, several issues deserve particular attention:
- GIC: interest can continue accumulating on qualifying unpaid tax debts.
- Refund offsets: future tax refunds and credits may be applied against outstanding amounts.
- Director Penalty Notices: directors can become personally liable for certain unpaid company PAYG withholding, GST and super guarantee charge liabilities.
- Garnishee action: the ATO can, in certain circumstances, require a third party holding or owing money to a taxpayer to pay it directly to the Commissioner.
- Legal recovery: serious unresolved debts can progress to court proceedings and enforcement against assets.
| Issue | What it means | Why property owners should care |
| ATO complaints | Complaints rose 127% over the previous year | Shows increasing friction around debt collection and payment arrangements |
| GIC | Applies to certain unpaid tax debts, although remission may be available | A growing debt can place additional pressure on a seller’s finances |
| Director penalties | Directors can become personally liable for specified company tax and super debts | Personal assets may eventually become relevant to recovery |
| FRCGW | 15% withholding can apply unless the required clearance or variation position is satisfied | It can have a major effect on the cash received at settlement |
| Garnishee notices | The ATO can require certain third parties to redirect money owed to a taxpayer | Funds connected with a sale may potentially become relevant |
| Legal enforcement | Unresolved debts can progress to court recovery | Real property may ultimately be exposed to enforcement processes |
Where tax debt and property settlement meet
There is an important distinction here that property sellers should understand.
Since 1 January 2025, the foreign resident capital gains withholding regime has applied without the former property-value threshold. For relevant Australian real property transactions, an Australian-resident vendor generally needs an ATO clearance certificate to prevent the purchaser from withholding 15% of the purchase price at settlement.
But having an outstanding tax debt does not, by itself, mean the ATO will refuse to issue a clearance certificate simply as a debt-collection measure. The certificate is primarily concerned with confirming the vendor’s Australian tax residency. Applying early is sensible because it reduces the risk of paperwork becoming a last-minute settlement problem.
If the required certificate is not provided, however, the consequences can be substantial. The purchaser may need to withhold 15%, and where an Australian-resident vendor later claims the withholding as a credit, any resulting refund may be affected by other outstanding tax debts.
An unpaid ATO debt does not automatically put a caveat over every property a taxpayer owns either. Enforcement is more complicated than that. The ATO can pursue court proceedings, garnishee funds and, after obtaining judgment, use enforcement processes that may ultimately reach real property.
The takeaway is fairly straightforward: sort out tax issues early, not when settlement is already around the corner.
Flash Conveyancing Advice
If you are selling property, organise your ATO clearance certificate early rather than leaving it until settlement week. If you also have an outstanding tax debt, deal with that separately with your accountant or tax adviser. A clearance certificate, an ATO debt and a disputed assessment may all involve the Tax Office, but they are not the same legal issue.
Property settlements have enough moving parts without introducing an unresolved tax issue at the eleventh hour.
For Australian-resident vendors, one of the easiest ways to reduce that risk is to deal with the FRCGW clearance certificate well ahead of settlement. Since 1 January 2025, the old $750,000 property threshold has disappeared and the withholding rate has increased to 15%. The regime therefore matters to a much wider range of property sales than it once did.
The numbers make the point. On an $800,000 sale, 15% is $120,000. On a $1.2 million property, it is $180,000. That withholding is not necessarily the vendor’s ultimate tax liability, but it is still a sizeable amount to have diverted at settlement because the necessary documentation was not ready.
Tax debt itself calls for a different kind of advice. A conveyancer does not replace an accountant, registered tax agent or specialist tax lawyer when someone is challenging an assessment, seeking GIC remission or dealing with a Director Penalty Notice. The conveyancer’s job is to understand where the tax position intersects with the property transaction and make sure the settlement itself is handled correctly.
That distinction becomes particularly important for company directors. Certain unpaid company liabilities — including PAYG withholding, GST and super guarantee charge — can become the director’s personal responsibility in relevant circumstances. Once the statutory requirements are satisfied, recovery options can include offsets, garnishee notices and legal proceedings. In other words, a company tax problem can become very personal.
Flash Conveyancing, led by Julian & Renee, specialises in property transactions across NSW, with a practical, hands-on approach to the details that can otherwise become expensive surprises. For sellers, that includes keeping relevant clearance requirements on the radar and making sure the legal side of the transaction keeps moving rather than becoming a settlement-day scramble.
Buyers need the same level of care. If a vendor has not provided the required clearance certificate, the purchaser’s obligations under the FRCGW regime cannot simply be overlooked. Getting the withholding position wrong can create problems for both sides of the transaction.
Flash Conveyancing also takes a broader view of the transaction: the contract, title, settlement figures and any issues that may affect the transfer. Where a tax matter sits outside the conveyancer’s role, the sensible approach is to coordinate with the client’s accountant, tax adviser or solicitor rather than allowing the underlying problem to drift towards settlement.
Flash Conveyancing assists buyers, sellers and investors throughout Sydney, Newcastle and Wollongong, with experience across Blacktown, Hawkesbury, the Blue Mountains, The Hills, Hornsby and Parramatta.
Julian & Renee also assist clients 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 handling property transactions elsewhere across NSW.
The surge in Tax Ombudsman complaints is a useful reminder that an ATO notice needs to be taken seriously — but also understood in context. Some ATO decisions can be reviewed, GIC can sometimes be remitted, and owing tax does not automatically mean your land title is frozen or that an ATO clearance certificate will be refused.
For property owners, the best strategy is refreshingly uncomplicated: deal with tax issues early, get the right specialist advice, organise the necessary property paperwork well before settlement and make sure everyone involved knows what needs to happen before the money moves.
