Maria: ATO officers don’t always understand or apply their full suite of powers, leading to worse outcomes for taxpayers.

Maria had a tax debt because her ex-partner’s tax agent lodged an unauthorised and fraudulent tax return on her behalf. The ATO told her to amend her tax return if it was not correct.

Maria’s financial counsellor contacted the Inspector-General of Taxation and Taxation Ombudsman about the ATO’s response. We confirmed that the ATO’s advice was correct and provided information about tax clinic services and options such as applying to the ATO for a release of the debt or to the Department of Finance for a waiver of the debt.

Maria and her financial counsellor contacted the ATO again, including the ATO Advocate Help Desk. They questioned why they should seek to waive a debt that was created from fraud and expressed concern that lodging an amendment would be an admission of liability. The ATO explained that lodging an amendment was not an admission of liability and provided information about seeking a debt waiver from the Department of Finance.

The ATO can release taxpayers from debts if certain criteria for serious hardship are met but, although it did discuss debt waiver by the Department of Finance, it did not consider whether they could release Maria from her debt themselves.

Elaine: Temporary relief is welcome, but only extends the uncertainty.

Elaine contacted the ATO to arrange a payment plan or other type of relief for her tax debt. She told the ATO that she was a victim-survivor of domestic violence, including financial abuse, and was unable to pay her tax debt in full as she was in financial distress.

The ATO officer acknowledged her situation and gave her details of external support services. They also discussed potential tax relief options that might apply in Elaine’s situation, such as placing the debt on hold or releasing her from the debt if she was in serious hardship. After Elaine provided her financial information, the officer transferred her to the ATO’s hardship area, which assessed her circumstances and placed her debt on hold. However, the debt remains and could be re-raised and offset against a future refund or credit later. The ATO provided Elaine with contact details for the National Debt Helpline.

Sam: Delays in information‑sharing disadvantage child support recipients

Sam tipped off the ATO that their ex-spouse had not lodged their tax returns. The ATO applied its usual lodgement enforcement actions and sent a ‘re-engagement letter’ to the ex-spouse, who failed to comply by lodging their tax returns.

Sam made further tip-offs to the ATO when the tax returns were not lodged, and the ATO sent a further re-engagement letter, a voice message, and a final warning letter to the ex-spouse, who still failed to comply. As the case did not meet the ATO’s parameters to proceed further, it took no further action. Without accurate tax returns, Services Australia and Child Support cannot reliably calculate child support payments, which may have resulted in under- or over-payments.

In the 2024 financial year, the ex-spouse appeared on the ATO’s risk radar for multiple reasons: a high number of outstanding obligations, evidence of income over a certain amount, and a child support referral from Services Australia. The ATO began enforcement actions, including creating a child support case and issuing a default assessment warning letter. This prompted the ex-spouse to lodge all outstanding tax returns.

The new tax information will allow Services Australia and Child Support to recalculate Sam’s payments. If Sam was underpaid, this will be corrected, but the impact of the delay and reduced payments will already have been done. If Sam was overpaid, Services Australia may raise a debt to recover those payments, which Sam will be liable for, reducing future payments as a result.

Mei: protecting a survivor of financial abuse from unfair director penalties

Mei, a survivor of physical, emotional and financial abuse, was coerced by her former partner into becoming a director of a company shortly before he resigned. After leaving, he opened a bank account in the company’s name without her knowledge, carried out transactions that benefited him, and left the company owing tax debts.

The ATO was preparing to issue Director Penalty Notices (DPNs), which would have made Mei personally liable for debts she did not create. She lodged complaints with both the ATO and the Tax Ombudsman at the same time due to the seriousness of her situation, and both agencies agreed to progress the matter concurrently.

We initiated an expedited investigation, accessed relevant ATO records, and liaised directly with the ATO complaint manager. Further evidence was gathered from Mei and exchanged with the ATO.

We also guided Mei on practical steps, including approaching ASIC and the company’s bank to challenge the unauthorised directorship and bank account. Importantly, the ATO agreed to pause all recovery activity—including DPNs—while the matter was reviewed.

During the investigation, the ATO advised that the company had since been deregistered, meaning Mei was no longer a director and the ATO would have to re‑register the company to pursue any further action.

The ATO determined it would not pursue DPNs or recovery action at that time, and given the company’s deregistration, it is highly unlikely that enforcement action will occur in future. Although some details remain confidential, Mei gained reassurance that she would not be held responsible for her ex-partner’s actions. She expressed deep gratitude for the support and clear communication throughout the process.