As Australia enters the 2026 New Year, directors are still feeling the ongoing pressure from the Australian Taxation Office, which adds to their burden of meeting corporate governance responsibilities and ensuring tax liabilities and reporting
obligations are fulfilled.
In our conversations with industry and government agencies in 2025, it was stated by many senior leaders that the ATO would increase tax compliance measures in 2026 beyond what had been undertaken in 2025.
While many of our team would have liked the Christmas break, we experienced a significant increase in new client volume due to urgent Insolvency matters. Primarily, these were ATO-related and served as a good reminder to discuss what the outlook
will be in 2026.
There is no Light Touch approach by the ATO in 2026, but a Continued Targeting of Tax Compliance.
Since 1 July 2025, the Australian Taxation Office (ATO) has stepped up its debt recovery efforts, issuing 21 Departure Prohibition Orders (DPOs) – already exceeding the total issued in the previous financial year.
When a DPO is issued, it imposes a significant burden, especially for international travellers in business, as it prevents individuals with substantial outstanding tax liabilities from leaving Australia until they pay their debt or agree on a suitable payment plan. The ATO is increasingly using this enforcement tool when taxpayers who are able to pay attempt to evade their obligations. This is similar to the approach taken by countries like Singapore and the Inland Revenue Authority of Singapore (IRAS), which can prevent you from leaving the country if you have outstanding tax liabilities.
While the ATO’s preference remains early engagement, such as reminders, letters, and tailored support, it is also taking stronger action against those who continue to neglect their tax responsibilities. Recent examples include taxpayers being stopped at the airport and removed from international flights due to active DPOs.
The crackdown is part of the ATO’s ongoing effort to reduce the $50 billion collectable debt burden, concentrating particularly on unpaid employee superannuation, withheld PAYG, and GST collected but not remitted. Other enforcement measures being used alongside DPOs are still being used; however, we notice that the level of persistence by the ATO is increasing in 2026.
- Existing debts for overdue BAS lodgement payments, regardless of the amount, are being referred to the debt collection agency Recoveries Corp. We assume such action aims to lighten the workload of the ATO’s collection teams, but also involves more stringent enforcement measures externally.
- Director Penalty Notices continue to be issued to not only encourage directors to pay company tax liabilities but also to place directors in a compromised position of incurring the tax liability personally.
- Credit default listings have increased over the holiday period, notifying directors that their debt is now reported to the credit reporting agencies. This has caused significant issues, such as business credit card providers and trade credit providers closing facilities and limiting the business’s ability to trade.
- Garnishee Notices are primarily used to strip business bank accounts and recover tax debt liabilities. This method has also become more common through silent audits conducted on companies, with notification of the garnishee happening soon after the bank account is targeted.
- State-based Payroll tax audits are on the rise, prompting companies to carefully manage their contractor relationships, especially when contractors are deemed employees and incur Payroll Tax liabilities.
The message is clear: avoiding payment and contact with the ATO is no longer an option. The ATO is urging anyone struggling to meet their tax obligations to make contact early, before enforcement escalates.
Business Economic Outlook
The economic outlook for Australia in 2026 is mixed but generally points to a slow continued recovery for most business owners. Forecasts suggest steady, modest growth with some challenges, particularly around persistent inflation and potential
interest rate pressures.
In review of key data points from major sources Comm Bank, RSM, Morgans, OECD, and the RBA we note a number of points:
- GDP growth is expected to accelerate modestly to around 2.0–2.3% in 2026 (e.g., OECD at 2.3%, CommBank around 2.2%, RSM at ~2.0%, Deloitte at ~2.2% for 2026-27). This is an improvement from slower growth in prior years (e.g., ~1.8% in 2025), driven by stronger private-sector activity, household spending recovery, and business investment picking up after a period of weakness.
- Inflation remains a key concern, with underlying measures sticky or rebounding slightly (e.g., forecasts of 3.75–3.8% in some cases by mid-2026, above the RBA’s 2–3% target midpoint). This has shifted expectations away from further rate cuts toward the RBA holding rates steady (at ~3.6%) through much of 2026, or even potential hikes in early 2026 according to some economists (Morgans, & CBA). Higher-for-longer rates could increase borrowing costs, squeezing margins for debt-reliant businesses.
- Labour market stays relatively tight, with unemployment around 4.3–4.5% (low historically), supporting consumer demand but keeping wage pressures present.
- Business confidence and conditions, according to NAB’s recent data, are trending upwards through late 2025, remaining above long-run averages in recent surveys, with some sectors experiencing improvements in sales and profits, though not uniformly strong. Private non-mining investment is on track to reach record levels by 2026/27 in certain outlooks, indicating opportunities in housing, services, and technology.
Overall challenges include:
- Global uncertainties (Iran’s threats, Ukraine/Russia conflict, trade tensions,
- US/China dynamics).
- Sticky inflation potentially leading to tighter policy.
- Sector-specific pressures (subdued resources outlook, energy costs).
However, positives include a shift to private-led growth, easing supply constraints, real wage gains boosting consumption, and Australia’s resilience relative to many peers.
For most business owners, 2026 is unlikely to be “difficult” in a severe recessionary sense—more a year of balanced but finely tuned conditions, with opportunities in a recovering domestic economy offset by vigilance on costs, rates, and inflation. Sectors tied to household spending, construction, or services may fare better than those exposed to global trade or high debt.
Taking action in 2026
Many accountants in 2026 will still find themselves juggling client ATO payment plans and the difficulty of even trying to get a client to sit down and discuss their ATO debt liability issues.
Partnering with Corson Fiske to handle ATO and risk issues can be a strategic part of your practice. Our team can perform a risk review of the client’s compliance, financial, and debt position, and explore solutions to rectify the problems, including other legal compliance matters that may need attention, such as imperfect loan securities, shareholders’ agreements, and employment agreements where additional risks may also be present.
If you have a client with an insolvency scenario reach out and contact info@corsonfiske.au for a confidential discussion on the options available to get your client back on track.