ATO Enforcement Tightens on Small Business Clients

A survey of 330 accountants finds most have seen increased Australian Taxation Office contact over debt recovery and compliance.

Updated on Nov. 8, 2026 in Taxes

ATO Enforcement Tightens on Small Business Clients

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Do you trust the federal government to enforce tax rules fairly on small businesses?

A survey of more than 330 accountants nationwide found that 87 per cent believe the Australian Taxation Office has become somewhat or significantly more aggressive in enforcement and compliance. Real estate professionals were among the most scrutinised, and the ATO separately announced an 80 per cent jump in non-lodgment prosecutions over the past two years.

Why it matters

The findings suggest the ATO's enforcement activity is reaching a broad base of clients, particularly smaller businesses, which may face higher compliance pressure. The rise in non-lodgment prosecutions points to a tougher stance on businesses and individuals who fail to file on time.

The survey of more than 330 accountants found 7 in 10 had clients contacted for debt recovery, and 76 per cent said businesses under $2 million turnover were most affected. Whether these responses represent the broader client base is not established in the source.

The players

Australian Taxation Office

The Australian Taxation Office is the federal agency responsible for administering Australia's tax system and collecting revenue.

Accountancy Insurance

Accountancy Insurance is an Australian provider of professional indemnity insurance for accounting practices, which conducted the survey.

The details

Survey respondents said 59 per cent of their clients in construction and trades faced ATO activity in the first quarter of the 2026-27 financial year, with professional services and real estate clients each making up 28 per cent. Accountants also shared free-text reflections on the ATO's current approach.

August 2026: The survey of more than 330 accountants was conducted nationwide.
September 2026: The ATO announced an 80 per cent jump in non-lodgment prosecutions over the past two years.

Big Picture

The ATO's 80 per cent rise in non-lodgment prosecutions over two years, which produced more than $2.7 million in fines, forms the backdrop to the survey's finding that enforcement contact has grown across client types. Taken together, the two data sets point to a sustained tightening rather than a one-off spike.

Businesses with clients in construction, trades, professional services or real estate may face more ATO contact over debt recovery and lodgment obligations. Staying current with lodgment deadlines and payment arrangements can reduce the risk of enforcement action.

The takeaway

Lodging on time and keeping tax debts under control are the clearest ways to avoid ATO contact, given the rise in prosecutions. Businesses should review their filing calendars and payment plans now.