January 2026 Restructuring and Recovery Insights

As 2026 commences, the Australian Taxation Office (ATO) is again reminding Australians that their efforts to recover the outstanding $50 billion taxation debt are continuing. In combination with an increase in winding up actions taken, the ATO is taking a targeted approach to debt management and exploring alternative avenues for recovery.

On 7 January 2026, the ATO released a statement advising that the ATO is actively using Departure Prohibition Orders (DPO) as part of a broader shift towards strengthening payment performance and debt collection. In this regard the ATO have issued twenty-one DPOs this financial year to date, stopping individuals from leaving the country. These actions follow a recent uptick in compliance blitz operations, increased department and industry data sharing and targeted crackdown on the “shadow economy” looking to ensure that Australian businesses are correctly lodging and paying their taxation debts on time.

It is apparent that the ATO is showing no signs of slowing down when it comes to recovering taxation liabilities.

Key Trends

• Both ATO-initiated and non ATO-initiated winding up applications are continuing to increase, with over one-third of winding up actions are taken by the ATO.
• This is reflected by recent comment made by ATO Assistant Commissioner Anita Challen that “Putting your head in the sand is not an option.”
• In late-2025, as a result of a “tax dodging tip-off” initiative, the ATO listed the following industries as “under the microscope” following a surge in red flags raised:
  • building and construction;
  • cafés and restaurants; and
  • hairdressing and beauty services.
• Interestingly, this data aligns with the largest industry groups subject to court ordered insolvency appointments in the 2025 Calendar Year.

2025 Count Ordered Liquidations (3 Largest Industry Groups)

September 2025 to December 2025 Insolvency Appointments (by Industry)

The above chart includes insolvency appointments (Court ordered Liquidations, Voluntary Liquidations and Voluntary Administrations) only. The total insolvency appointments for this period were 4,391. The key industries within appointment data for September 2025 to December 2025 (Q2 FY26) remains consistent with prior periods.

2025 vs 2024 (Calendar Years) Insolvency Appointments

The above chart includes insolvency appointments (Court ordered Liquidations, Voluntary Liquidations and Voluntary Administrations) only. Insolvency appointments are continuing to increase year-on-year with an 11% increase from 2024 to 2025.

Emerging Risks

• With underlying inflation remaining outside the RBA’s target range, economists currently consider that a cash rate rise is likely to occur in February 2026 in an effort to ease inflation. Accordingly, borrowers are unlikely to receive any noticeable relief for the foreseeable future. Businesses must remain aware of this position and have consideration for reduction in discretionary spending from consumers.
• Unemployment remains at 4.3%, with the labour market still considered tight. We anticipate that staffing will remain challenging for businesses in 2026.
• As detailed above, the ATO appear to be keeping a “watchful-eye” over Australians, looking to ensure that the $50 billion taxation debt does not continue to increase.
• We anticipate that insolvency appointments will continue to increase throughout 2026.

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