The ATO just admitted it’s been too easy on businesses with tax debt. Here’s what's changing.

On 9 April 2026, the ATO’s Second Commissioner Jeremy Hirschhorn said something that every Australian business owner carrying tax debt needs to hear.

Speaking at a Tax Institute event, Hirschhorn confirmed that the ATO has been “overly concessional” on interest remission – and that this is changing. In his exact words, the ATO’s stance:

“In practice, particularly in relation to interest remission, has been more concessional than our intended stance, and even our intended stance may have been overly concessional.”

In plain language: the ATO has decided it has been too lenient. And from here, it won’t be.

If you have been carrying ATO debt and hoping things might quietly settle – or assuming the interest would be remitted, as it often has been – this statement changes your situation. Not theoretically. Financially. Right now.

The number most people don’t know

The General Interest Charge (GIC) on unpaid ATO debt sits at 10.96% per annum for the April to June 2026 quarter, compounding daily.

That’s uncomfortable enough on its own. But since 1 July 2025, GIC is no longer tax-deductible. Previously, a business paying 10.96% in ATO interest could claim a portion back at tax time. That offset is gone.

When you factor in the lost deduction, the effective after-tax cost of carrying ATO debt is now closer to 18% for many businesses – depending on their tax position.

That is not a working capital strategy. That is a debt that is actively destroying the financial position of your business, every single day you leave it unaddressed.

And the ATO has now publicly confirmed it is no longer willing to quietly absorb that cost on your behalf through remission.

Why most businesses are approaching this wrong

Here is what we see repeatedly at AVA Advisory: business owners treating the ATO like a debt collector to be avoided, when the ATO is actually something quite different.

The ATO is a government institution with a publicly stated preference for resolution. It manages a debt book above $100 billion. It knows – and has said publicly – that liquidating businesses produces worse outcomes for everyone, including itself. When it assesses a restructuring proposal, it evaluates whether the plan delivers a better return than winding the company up.

That is a negotiating position.

The ATO is not waiting for you to fail. It is waiting for you to engage. And Hirschhorn’s statement last month was, in part, a signal about what that engagement now needs to look like: not informal, not assumed, not relying on historical generosity around interest. Structured. Formal. Presented with a clear case.

The businesses that understand this – that approach the ATO as a counterpart to be negotiated with rather than a threat to outlast – access outcomes that avoidance never produces. Payment arrangements built around real capacity. Restructuring plans assessed on commercial terms. Interest positions that can be formally argued rather than assumed to resolve.

The businesses that don’t understand this keep waiting. And the debt keeps compounding at an effective rate of 18%.

What the remission process actually looks like now

It is worth being direct about this, because there is a lot of outdated information circulating.

Remission requests still exist – but they have become materially harder. The ATO has introduced more formal processes, new standardised forms, and stricter documentation requirements. Requests now require specific evidence of the circumstances that caused the delay, how those circumstances prevented payment, and what steps were taken to minimise the impact.

Critically: there is no right of objection if a remission request is declined. If you submit and the ATO says no, that decision is final. Which means a poorly constructed remission request doesn’t just fail – it closes the door.

Knowing how to construct that case, what the ATO responds to, and how to frame your circumstances within its current policy settings is not something to leave to chance or to advisers unfamiliar with how the ATO operates internally.

The window question

Every day without engagement, two things happen simultaneously. The debt grows at an effective rate of around 18% after tax. And the available options narrow.

Businesses that move before enforcement escalates – before garnishee notices land, before Director Penalty Notices create personal liability – have room to negotiate. The ATO has said it wants businesses to engage early. It has said it will assess resolution proposals on commercial terms. That remains true.

But it is not going to extend the same informal patience it has shown since COVID. Hirschhorn was clear on that too.

If you are carrying ATO debt, the question is not whether to act. It is whether you act with enough knowledge to make the engagement count.

At AVA Advisory, this is the work we do. We understand what the ATO responds to, how to present a business’s circumstances within its current policy framework, and how to build a case that gives resolution the best chance of sticking.

If the numbers above land close to home, the conversation is worth having now.

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