Small Business Debt Helpline Sees Call Surge
The Small Business Debt Helpline reported a 21 percent increase in calls for the 12 months ending December 31, 2025, assisting 6,205 cases. The majority of these cases involved small business owners struggling with alleged tax debts owed to the Australian Taxation Office (ATO).
Financial counsellors noted an increased level of distress among callers.
ATO Debt and Collection Methods
The ATO indicated that its total collectable debt has surpassed $50 billion, identifying debt reduction as a key priority. The office stated that it would escalate actions against taxpayers who do not engage with their obligations.
Data shows an increase in the use of Director Penalty Notices, making individuals personally liable for tax debts, and garnishee notices, which allow the ATO to directly withdraw funds from bank accounts. The ATO is also reporting business debts to credit agencies.
Concerns Over ATO Flexibility and Interest Charges
Financial counsellors and Australia's tax ombudsman, Ruth Owen, have expressed concerns about the ATO's intensified debt collection approach and a perceived lack of flexibility in considering financial hardship.
The ombudsman is finalizing a review into the ATO's application of general interest charges (GIC), which add 10.5 percent interest to outstanding tax debts.
Complaints indicate that these charges can rapidly increase debt to unmanageable levels, despite efforts by businesses to engage with the ATO for repayment.
The ATO initiated its own review into taxpayer relief provisions, including GIC remission, in March 2024, and expects to release its findings soon. Interim improvements have been implemented to enhance consistency and streamline remission requests.
Other Debt Challenges for Small Businesses
Beyond ATO debts, the Small Business Debt Helpline identified other significant issues for small businesses, including:
- Business loans (from banks and non-bank lenders)
- Home mortgages tied to business operations
- Motor vehicle finance
- Debts owed to suppliers
- Lease of business premises
Financial counsellors observed new and unusual problems, such as directors leveraging personal homes for business loans, which places families at risk.
The helpline provides assistance across various sectors, with the construction, accommodation and food services, and personal and other services industries generating the most calls related to distress.
Since its inception in 2020, the helpline has assisted 16,254 businesses over 18,533 cases.