ATO’s approach to artificial intelligence use
We outlined our current and emerging use of artificial intelligence (AI), including internal adoption of Microsoft Copilot and enterprise-protected Copilot Chat.
Members discussed:
- AI governance
- security
- staff training
- responsible use of AI
- transparency and controls that have been implemented to prevent inappropriate use of AI tools.
We noted that AI use cases are being identified, prioritised and adopted where the core tests of explainability, defensibility and auditability are proven before broader deployment.
Members discussed challenges associated with large volumes of AI generated content and emphasised the importance of human oversight over work produced by AI.
We are considering how future guidance, transparency statements or disclosure expectations may apply to AI use within the tax system.
Co-chair updates
The ATO co-chair provided an update including an overview of the recently released ATO strategy and corporate plan highlighting the strategic shifts that will transform how we will administer the system into the future and key priorities for 2026–27. The upcoming release of the annual Findings Reports and corporate tax transparency data was noted.
The external co-chair commented that this meeting's agenda covered a range of topics pertinent to members and acknowledged the efforts of the group secretariat in organising speakers at short notice across the wide range of content.
Large market reporting review
An update on an open action item to address 3 key themes regarding the views of large businesses with respect to reporting obligations as discussed at previous LBSG meetings was provided. Feedback is being considered in relation to reporting materiality thresholds, perceived duplication of reporting by Top 100 taxpayers and requests for greater transparency in relation to how data reported is used in ATO compliance programs.
Findings will be shared with members at the next meeting.
Board of taxation
The Board of Taxation, 'the Board' provided an update on secretariat changes, its revised placement within Treasury and current review activity.
The red tape reduction review has been provided to the Treasurer and includes themes covering complexity, reporting, systems and fringe benefits tax (FBT).
The thin capitalisation review has received a substantial number of submissions, with emerging themes including uncertainty in the rules, increased compliance costs and unintended outcomes. The Board is continuing consultation, including further engagement in Sydney and Melbourne, with the review due by the end of January.
Uplifting ABN authentication
An overview of the uplift to Australian business number (ABN) authentication requirements was provided with an explanation of the changes for online applications, maintenance and cancellation processes.
From November 2027, individuals applying online will need to use a digital identity. From May 2028, people named in an ABN application will receive notifications to help identify and prevent fraudulent activity.
Members discussed the practical impacts for large business, including:
- notifications to directors
- foreign directors
- company secretaries
- public officers
- authorised contacts.
We are working closely with Australian Securities and Investments Commission and will continue to engage with stakeholders as implementation progresses.
Public Country-by-country reporting implementation
An update on the implementation of public country-by-country reporting was provided, noting significant engagement before 30 June and lessons for future lodgment peaks.
Members discussed:
- registration requirements
- authorised contacts
- proof-of-identity issues for foreign reporters
- opportunities to clarify guidance and instructions.
We noted that the first reports have been received and publication is being planned for October/November, with further work underway on presentation, data usability and contextual information.
Private capital program
An overview of the private capital program was provided, including its focus on foreign private capital investment and the integration of several related strategies into one program.
The program considers ownership structures across the investment lifecycle, with ongoing focus on disposal risk and broader holding-period risks.
Members discussed Foreign Investment Review Board interactions and the ATO's role in the process.
We noted that security requests are considered carefully and prioritised where there are dissipation risks or other high-risk features.
Mutual agreement procedures and the advanced pricing arrangement program
An update on mutual agreement procedures and advanced pricing arrangement (APA) practices was provided, including alignment with the revised manual on effective mutual agreement procedures and the governance arrangements supporting competent authority independence.
Also provided was a brief APA program update, noting a focus on improving taxpayer experience, early engagement timeframes and timely decision-making on collateral issues.
Pillar Two implementation
An update on the implementation of the Pillar Two regime was provided with a focus on key milestones reached since the last update. An overview of the risk-based approach to Pillar Two implementation was given, noting that first-year compliance activity will focus initially on non-lodgment and data matching across available information sources.
We advised that we are engaging internationally to share implementation experience and learn from other jurisdictions.
Members discussed Organisation for Economic Co-operation and Development administrative guidance, safe harbours, outstanding guidance issues and channels for raising complex implementation questions.
Diverted profits tax
Members discussed recent updates to PSLA 2017/2 relating to Diverted Profits Tax (DPT) assessments. The ATO highlighted the controls and oversight mechanisms that support the administration of DPT assessments.
Advice and guidance
We provided an overview of our approach to anonymising edited versions (EVs) of private binding rulings. We confirmed that there has been no change in our approach to redaction or anonymising content. The purpose of EVs is to ensure transparency in ATO decision making and EVs should not be relied upon for precedential value.
We will be developing public advice and guidance to support legislative changes proposed in relation to Australia's capital gains tax (CGT) rules for foreign residents, outlined in Division 855 of the Income Tax Assessment Act 1997. Members were asked to provide feedback on topics relevant to the changes where any public advice and guidance should be prioritised.
Large market dispute resolution
The ATO has been considering the effectiveness of dispute resolution approaches for businesses which included undertaking a review of all the ATO’s independent review services. Due to ongoing low uptake and conclusion of the review that the large market independent review service is no longer achieving its intended outcomes, this service will be discontinued from 30 September 2026. We will ensure a smooth transition for large businesses who have a final audit position paper issuing around this timeframe.
As part of the ATO's continued commitment to efficient dispute resolution for large business, consultation was undertaken with members on a proposed arbitration pilot for certain cases with characteristics outlined in the pilot framework. We are seeking to consult on design of the pilot. Members were invited to express interest in contributing to the development of the pilot to ensure that it is fit-for-purpose and achieves its intended outcomes.
Treasury
Treasury provided an update on current priorities, including the tax reform agenda, AI policy work, the next Intergenerational Report and topical legislative measures.
Members discussed:
- non-resident CGT reforms
- renewable asset measures
- the news bargaining incentive
- negative gearing and CGT exposure draft consultation
- the High Court decision in Bendel.
Members also discussed FBT changes, AI-related tax touchpoints, data centre investment, state-level inquiries and treaty negotiations.
Productivity enhancement measures
An update on productivity enhancement measures and the development of a compliance cost framework was presented, following the Commissioner of Taxation’s advice at the Economic Reform Roundtable that the ATO was developing a framework to estimate compliance costs across market segments and tax types in a way that better identifies cost drivers and opportunities to reduce burden.
We note that the framework is being developed independently of the ATO’s work on behalf of Government to estimate compliance costs and its broader regulatory reform work, although it is expected to support both once finalised.
We are seeking member input on potential data sources that can assist with the work beyond what is already being utilised.
Attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Michelle Sams (co-chair), Public Groups |
|
ATO |
Lara Cavanough, Public Groups |
|
ATO |
Michael Ingersoll, Public Groups |
|
ATO |
Nadia Alfonsi, Public Groups |
|
BHP |
Andrew Cornish |
|
Big 4 Representative |
Alex Lamb |
|
Board of Taxation |
Darren Kenedy |
|
Chartered Accountants Australia and New Zealand |
Mark Bradford |
|
Coles Group |
Adalene Pandeli |
|
Corporate Tax Association |
Paul Suppree |
|
CPA Australia |
Jenny Wong |
|
Insurance Australia Group |
Sarah Pang |
|
Microsoft |
Reagan Gruenthal |
|
National Australia Bank |
Steve Southon (Co-chair) |
|
Origin Energy |
Catherine Feng |
|
Property Council of Australia |
Robert Ward |
|
Resmed |
Christian Chan |
|
Rio Tinto |
Jasmine Leonard |
|
Telstra |
Kelly Heezen |
|
Treasury |
Marty Robinson |
|
Uber |
Kelvin Ng |
Guest attendees
|
Organisation |
Attendee |
|
|---|---|---|
|
ATO |
Aaron Bennett, Public Groups |
|
|
ATO |
Amy James-Velagic, Objections and Review |
|
|
ATO |
Andrew Watson, Smarter Data Program |
|
|
ATO |
Blake Sly, Public Groups |
|
|
ATO |
Cassandra Franklin, Litigation and Legal Services |
|
|
ATO |
Deb Durnan, Public Groups |
|
|
ATO |
Hayley Evans, Frontline Risk and Strategy |
|
|
ATO |
Isaac Callaway, Public Groups |
|
|
ATO |
Jess Wright, International Support and Programs |
|
|
ATO |
Jonathan Hill, Public Groups |
|
|
ATO |
Malcolm Thornton, Public Groups |
|
|
ATO |
Martin Jacobs, Frontline Risk and Strategy |
|
|
ATO |
Paul Beohm, Policy Analysis & Legislation |
|
|
ATO |
Philip Akroyd, Policy Analysis & Legislation |
|
|
ATO |
Rebecca Saint, Litigation and Legal Services |
|
|
ATO |
Renae Ali, Objections and Review |
|
|
ATO |
Rob Micevski, International Support and Programs |
|
|
ATO |
Stephanie Long, Public Groups |
|
|
ATO |
Tim Smith, International Support and Programs |
|
|
ATO |
Trent Jakubowski, Policy Analysis & Legislation |
|
|
ATO |
Vy Tran, Public Groups |
|
Apologies list
|
Organisation |
Member |
|---|---|
|
Australian Energy Producers |
Michael Fenner |
|
Business Council of Australia |
Pero Stojanovski |
|
Law Council of Australia |
Judith Taylor |
|
Treasury |
Diane Brown |