ATO fines 97-year-old widow $1,650 for late tax return after husband’s death

The Australian Taxation Office imposed a $1,650 fine on a 97-year-old Brisbane woman for failing to “prioritise her tax obligations,” despite the recent death of her husband, who had managed their financial affairs.

The penalty was reversed only after the woman’s accountant posted details of the case on LinkedIn, drawing attention from industry associations and the tax ombudsman, who issued a sharp rebuke to the ATO.

According to accountant Nathan Watt, the elderly resident had submitted tax returns on time throughout her life until her husband died in mid-2023.

Her situation was further complicated by the sale of the tax practice the couple had previously used.

She was subsequently charged $1,650 for the late lodgement of her 2025 returns.

Watt outlined the extenuating circumstances to the ATO and requested the penalty be waived.

The ATO responded: “Your remission has been considered, we’ve decided not to remit.”

“You have not prioritised your tax obligations. It is your responsibility to manage your affairs to ensure lodgment by the due date,” the response said.

“Remission would not be considered fair or reasonable when other taxpayers have taken steps to lodge on time.”

In his LinkedIn post, Watt said he wondered “how the person at the ATO who wrote this felt when they were doing it”.

Ruth Owen, the ombudsman who oversees complaints against the ATO, said such decisions had become systemic.

“In too many circumstances that I see, they fail to see the human being behind the tax return,” Owen said.

“We then get examples like this where clearly this is an elderly person who’s been recently bereaved. They should start there.

“It is really important that these things are raised as complaints because the ATO won’t learn unless people highlight the mistakes that they make.”

A report published by the ombudsman’s office in March found that the tax office routinely failed to account for personal circumstances when making decisions about penalties and interest charges on tax debts.

The ATO has taken a hard-edged approach to debt collection in recent years amid concerns that some taxpayers were lodging returns late on the assumption they could get the penalty waived.

The agency said in 2023 that remission requests would only be considered in very limited circumstances.

Debt deemed by the ATO to be “collectible” doubled between 2019 and 2025, to more than $50bn.

The firm approach also meant that the ATO has failed to use discretion in a “fair and reasonable way,” according to the ombudsman.

An ATO spokesperson said the agency was improving how it supported taxpayers by “ensuring our approach reflects the expectations of the community.”

“The ATO acknowledges that in this instance our communication did cause unintended offence and we have both corrected the error and apologised for this communication,” the spokesperson said.

The $1,650 penalty has been reversed.

The ATO spokesperson declined to clarify how the initial decision came about, and whether it was made by an internal or outsourced worker.

The issue comes during a period of increased scrutiny on the tax office’s reliance on outsourced debt collectors and call centres, which have coincided with a rising number of complaints of a deteriorating service.

The ATO has referred hundreds of thousands of taxpayers to a private equity-backed debt collector, Recoveriescorp, in recent years, moving the sensitive practice outside the public service.