Tax dispute with the ATO? Here's what to do

Tax complaints have surged 74% as more Australians clash with the ATO over debts, interest charges, delayed refunds and missing super. Here's what's behind the spike.

Australians lodged 2376 complaints with the Tax Ombudsman in the six months to September, a 74% increase on the same period in 2025, according to new data released by the independent agency.

Among the complaints that went on to be investigated by the ombudsman, the most common issues related to debt collection practices and interest charges applied by the ATO.

Australians were also frustrated by unpaid superannuation and refund delays.

"We continue to see an unprecedented demand for our services," says tax ombudsman Ruth Owen.

"At a time when many Australians are facing financial distress, we are seeing increased complaints about how the ATO is collecting tax debt owed and how interest is applied to the debt, often making the amount due impossible to pay back."

What does the Tax Ombudsman actually do?

Beyond receiving complaints, the Tax Ombudsman can investigate disputes and help taxpayers resolve issues with the ATO.

That doesn't mean that it investigates every complaint. Nor does the ombudsman seek favourable outcomes for individuals. In fact, it often confirms that the ATO has followed the proper process.

As Owen notes, though, intervention can help deliver real outcomes.

"Where the ATO has not taken action or that action has been delayed, our intervention can deliver tangible outcomes such as expedited payments, decisions to remove or remit interest charges, reduction of debt owed or a fresh look at the person's circumstances."

How a taxpayer recovered a $385,000 refund

In its latest report, the ombudsman cites a case in which a $385,000 tax refund issued by the ATO was transferred to the wrong bank account.

Sarah, the taxpayer, had accidentally provided incorrect account details to the tax office. Despite efforts to recover the money, the ATO was unsuccessful, but argued that it had met its obligations.

After Sarah lodged a complaint with the Tax Ombudsman, who investigated the complaint, the refund ended up being recovered and deposited into Sarah's correct account.

Five tax problems driving a surge in complaints

Given the sharp rise in complaints, it's clear that some parts of the tax system are causing more problems than others.

With that in mind, here are answers to some of the most common questions about ATO interest charges, refunds, audits, unpaid super and tax debts.

1. When does the ATO charge interest on tax debts?

There can be consequences for Australians who don't lodge their tax returns on time or fail to pay their outstanding debts before the due date.

These include Failure to Lodge penalties, interest and other charges imposed by the ATO.

Australians who prepare their returns themselves generally have until November 21 to pay tax owed to the ATO. If they don't, interest can be applied until the debt is paid in full.

The ATO applies what's called a General Interest Charge (GIC), which accrues daily. Currently, the annualised rate is 11.51%, and the daily rate is roughly 0.03%, so it can start to add up quickly.

2. Can the ATO reduce or wipe a tax debt?

It is possible for someone to have some, or all, of their tax debt removed. But only in a limited number of situations.

The tax office notes that they can only release someone from a tax debt if paying it would leave the individual in financial hardship.

In other situations, the ATO may be able to organise a payment plan for someone to pay off their debt, or consider cancelling or reducing any interest or penalties that have been incurred.

3. Why is my tax refund taking so long?

In most cases, the ATO says that online tax returns will be processed in 12 business days. After that (if you're due a refund) the money will be paid into your nominated account.

There are a number of reasons why it may take longer for your refund to come through. For instance:

• If you've attempted to lodge another return for the same income year
• If you've amended your return before the ATO has finished processing it
• If you lodge multiple returns (for different years) in one go
• If your bank account details aren't current
• If the ATO has requested or needs to check additional information

4. What can I do if my employer hasn't paid my super?

Australian workers are estimated to miss out on billions of dollars in unpaid superannuation each year, which was one of the driving factors behind the recent payday super reforms.

While the reforms already appear to be having an impact, it's likely that there will still be instances where employers aren't paying their employees' super on time, or at all.

Workers can report missing superannuation via the ATO's unpaid super reporting tool.

You'll just need to provide a few details, including your tax file number, the time period in which super hasn't been paid and some employer details, like their ABN.

5. How will the ATO contact me if I'm being audited?

You've submitted your tax return and are waiting for a refund to come in. The last thing you'll want is an unexpected message from the ATO.

This isn't necessarily a cause for concern. In many cases, what people think is an audit is actually a review where the ATO requests extra information to assesses a potential risk.

Sometimes it will go nowhere. If concerns remain, though, that's when a review can be escalated to an audit. At this point, the ATO will write to you to confirm that an audit has commenced.

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