The tax office says it is taking a more aggressive stance on small businesses that may not be financially viable, in an attempt to protect tax revenue and other creditors.

After rising corporate insolvency rates were blamed partly on the taxman putting firms into administration, Tax Commissioner Michael D'Ascenzo today said the ATO was applying more scrutiny to firms that were struggling to pay their tax bills.

Since the global financial crisis, the ATO had introduced software tools that provided a "more objective assessment" of small firms' viability, he said.

"What we have done that's probably different is be a little bit more rigorous in our evaluation of whether or not a business is viable and, whether the issues are short term or longer term," Mr D'Ascenzo said in Canberra.

"That has meant that in some situations we have said 'no we really cannot give you a payment arrangement or defer further action, because in some way we actually think that you might be trading in a position of perhaps insolvency."'

Mr D'Ascenzo said it was not in the interests of the business owners or their creditors to be granted ongoing relief if they were unlikely to survive in the long term.

In the year to June, the number of corporate insolvencies jumped 25 per cent nationally, with east coast states taking the biggest hit.

Despite this increase, Mr D'Ascenzo said the ATO had an "empathetic approach" and it tried to help firms "over the line" where possible.

"Where in doubt, we have genuinely tried to support the tax paying business," he said.

The ATO's decisions to put small businesses into liquidation were independently assessed, and those probes had shown the ATO was not acting too quickly, he said.

"The feedback has always been that we're not too quick, if anything we might be a little slow," he said.

At the end of June, he said there were 152,007 small businesses with arrangements in place to help them pay off their tax bills in instalments. As well, there were 33,270 firms who had received relief on interest repayments on their outstanding tax bills.