Good morning and thank you for having me. I would like to first thank Marg Marshall and the Tax Institute team for putting on another excellent event and program.
This year marks ten years since my first Tax Institute speech in 2013. The Summit was held in Perth, and I had been the Commissioner for 72 days. I was the first Commissioner to be appointed from outside the organisation in its over 100-year history, so I had a lot of catching up to do.
At the time, the ATO had a reputation for being rigid, difficult to deal with and behind in its client service. To many, it felt like a closed shop. So when I joined, I had a mandate from the government to change the organisation.
Looking back over my speech to you from 2013, I said I was unsure how I was going to go about improving things. I remember thinking I was faced with a huge task. In fact, some of my friends said it couldn’t be done.
“It’s a huge ship in the ocean,” they warned me of the ATO, “It’s going to be impossible to turn it around.” But I’m glad that didn’t turn out to be the case.
And I can confidently say, we have gradually changed our course and I believe we have strong foundations to succeed in another decade of progress.
My reinvention journey
When I joined in 2013, after a period of consultation internally and externally, I set out my vision for what came to be known as ‘Reinventing the ATO’.
The following decade has seen the ATO successfully modernise and bring our service in line with the community’s expectations. My key priority as Commissioner has been to consistently build trust and confidence in the ATO’s professionalism, reliability, and fairness. Since 2013, that ‘trust and confidence’ has been boldly enhanced at all levels and across all major stakeholders.
We’ve vigorously scrutinised large public and private groups and wealthy individuals via the Tax Avoidance Taskforce.
Since the Taskforce commenced in 2016, it has helped secure more than $26 billion in additional tax revenue up to 30 June 2023. We have been planting these seeds for many years and this work is now bearing fruit with significant outcomes for the Taskforce’s compliance and assurance programs.
Locking in tax outcomes for the future has become an important feature of our settlements with multinationals. It provides us, taxpayers, and the community with certainty that multinationals are meeting their tax obligations and avoiding disputes into the future.
Publicly disclosed settlements will typically show significant payments being made for finalisation of the dispute. But these amounts do not reflect the additional revenue that will often be payable in future years as a result of locking in tax outcomes.
Using the momentum from the legal precedent established in Chevron, we’ve been able to resolve a range of disputes removing more than $40 billion in excessive interest charges from related party dealings which would have otherwise been deducted.
These results wouldn’t have been possible without our early interventions in the oil and gas sector. Our intervention, paired with strong commodity prices, mean some oil and gas companies are making a stronger contribution to our tax base.
The true monetary impact on the system is much higher than the initial Chevron court case and we continue to see its impact flowing through the system now.
The efforts of the Tax Avoidance Taskforce have seen several significant taxpayers publicly state they have settled their affairs with the ATO, promoting unprecedented transparency. This includes the likes of Chevron, as I mentioned, and Rio Tinto, Google, BHP, Apple, ResMed, and Microsoft.
We’ve moved away from a ‘gotcha’ mentality to a preventative mindset when it comes to multinationals. We’ve shifted focus away from audit yields to improving tax performance and closing the tax gap.
Even before ATO interventions, Australia’s large corporate taxpayers are significant contributors to the tax system. In our most recent Tax Transparency Report, the 2,468 entities reporting paid almost $69 billion in income tax, almost 20% more than the previous year.
Since 2013, we have also established the ATO as an international leader in championing effective global multinational tax compliance at the OECD’s Forum of Tax Administration, including chairing a network of over 40 countries to allow real-time collaboration.
But it’s not all about multinationals. At the beginning of my tenure, I wanted the ATO to be known for its contemporary service, expertise, and integrity – across the board. A decade later, we have delivered services to the community that are connected, trusted, and easy to access. It has been our driving focus for 2024, and I am proud of our progress toward that goal.
And the proof is in the pudding. Last year the ATO was rated the most trusted APS agency in the 2022 Trust in Australian public servicesExternal Link report which is a survey of 12,000 citizens over 12 months. We scored the highest rating for trust, at 81%, and were also the highest with 82% of people being satisfied in their dealings with us. These scores show the huge shift we have undertaken since 2013.
This shift hasn’t occurred overnight. It has happened through an effective partnership with the tax profession and a willingness from us all to embrace change. Our task now is making sure we maintain this standing with the community.
Current state of play
I still have 6 months left, and I am determined not to take my foot off the pedal. My focus is on making decisions to set the ATO up for continued success and maintain the strong foundations we built.
I understand we’re currently operating in a challenging economic environment. Many individuals and small businesses are doing it tough, and I know this puts additional pressure on you as their advisors. The ATO’s priority is designing systems that make it easy to comply and hard not to, and to be fair and empathetic in our administration.
Having said that, we are cracking down on deliberate attempts to defraud the Australian taxpayer, which is nothing more than theft from the community. In response to increasing fraud attempts, we are embedding fraud prevention methods into our systems, and increasing our detection capabilities.
We have bolstered the number of our people focused squarely on tackling fraud attempts. We have established the Fraud and Criminal Behaviours Group with 500 dedicated staff on the case.
Integrity is also front and centre for us. I welcome and support any actions that strengthen the integrity of the tax system. Particularly further review and consideration of current limitations within tax secrecy laws and our investigative powers.
Integrity matters and the public’s desire for integrity in the tax profession is likely to only increase. Recent events are a reminder of the important and trusted role all advisors have and the important role we all play in building trust and confidence in the system.
This focus needs to be grounded in strong legal and ethical frameworks. We look forward to working with the Government and advisors as reforms are progressed.
Also front of mind is addressing collectable debt. I am unapologetic about our shift to exercise firmer debt collection actions when appropriate.
Most collectable debt is self-assessed. It includes GST a business has collected and received credits for but hasn’t remitted. It includes unpaid pay-as-you go withholding and superannuation guarantee charge that has a direct impact on employees.
Small businesses continue to be over-represented in our debt book, owing over $33 billion of the $50.2 billion of collectable debt. $23 billion of that is unpaid business activity statement debt.
I want to make this point clear: although small business is overrepresented here, we obviously are very focused on every group in the tax system.
There are a growing number of profitable businesses who have the capacity to pay their bills but are choosing not to. Businesses appear to be de-prioritising payment of tax and super.
This is concerning and is out of step with what we know, which is that the vast majority of taxpayers pay on time, and it’s unfair for them that some choose not to. This needs to stop.
We are hearing more and more from tax professionals that some businesses are rolling the dice, treating ATO liabilities like a free loan. This is not acceptable.
I am calling on the tax profession for support. You can reinforce to your clients they are only the temporary custodians of GST, pay-as-you-go withholding and super guarantee – it’s not theirs. You know the signs when a business is struggling, on the brink of insolvency or perhaps needs to be told the time has come to exit gracefully.
Sparking change together
I could not have asked for a better theme than ‘Spark Change’ for what will be my final address to you as Commissioner of Taxation. Change has been the one constant in my tenure as Commissioner. I’m pleased to stand in this room today and say because of our collaborative effort working with you the Australian tax system of 2023 is leading the way internationally.
Ten years ago, I would get heckled from the profession and from business with ‘why’ questions – ‘why are you changing things?’, ‘why do I need to change how I do my job?’, ‘why do my clients need to go digital?’
Today, I get ‘how’ questions. ‘How can we do it best?’, ‘how can I make sure my clients are ready?’ and ‘how can we achieve it together?’
Ten years on, these ‘how’ questions are what fuels us working together to improve the system. This is our mutually held interest – a concept I spoke to you about in 2013 – that the tax and super systems work for us all.
The biggest lesson I have learned about change is that when it’s done well, change doesn’t stop. To stay a leader internationally, we need to keep improving incrementally and maintain our constructive and collaborative relationship.
Unfortunately, my job doesn’t come with a crystal ball. So, while I can’t predict the future, what is clear is together we need to ensure the Australian tax system is ‘future focused’. We know the future of tax is digital and data driven.
We need to continue down a data-driven pathway as we strive together towards the OECD’s Tax 3.0 where tax “just happens”. Tax 3.0 is our “North Star” – where reporting, payment and real-time compliance checks coincide with the taxable event.
The closer we get to real-time, event-based reporting and payment, there will be more certainty and less burden for everyone. Through the introduction of Single Touch Payroll we have brought tax reporting to the point of event, so while Tax 3.0 might seem a distant future we’re already on the journey. However, tax “just happening” won’t just happen, it will require intelligent co-design, and thoughtful collaboration and delivery.
In my 2013 speech, I challenged you to reflect on your part in creating a more effective, efficient, and fairer system. And that challenge remains. 10 years ago, I said the nature and quantum of taxation is a perennial policy debate, and I stand by this statement today. There won’t come a point where it’s “finished” – the nature of the game is we have to stay responsive to what the community needs and evolve with expectations.
And because there is no benefit to the ATO designing a system that doesn’t work for tax professionals, the future is also collaborative. Together, we need to keep focusing on the ‘how’ questions: ‘how can we do it best?’, and ‘how can we achieve it together?’
Recently a journalist described the ATO has having a “transformation-as-usual” mindset, and this is true. But what I want to see is the whole tax system move towards a “transformation-as-usual” mindset, together. This, as ever, is a two-way street so we rely on your feedback.
My challenge to you
Today, my final challenge to you is that you are fit for the future. Tax professionals and advisors of the future have strong ethics and integrity, financial intelligence, data literacy and professional acumen.
As we increasingly digitalise the system, you need to know your clients, ask the right questions, give high-value advice, and verify their data and information. You will also need to protect yourselves, and your clients from fraud and cyber threats.
We can only do so much on our end. You need to also play your part. It’s imperative you have appropriate safeguards bolted on to your own systems. You need to do your own due diligence. We have seen an increase in identity theft fraud which is concerning.
We have flags within our system that alert us for things like bank account changes and but we cannot be the only checkpoint. This is one of the biggest issues we face as a revenue authority, but tax agents face it too.
We are actively trying to assist you in this. Our client-agent linking is soon to be rolled out to all companies, trusts, and partnerships with an ABN. While it adds an extra step to the agent-linking process, it’s about strengthening the security of our online services by making sure all parties – including agents and your clients – can be confident only authorised people have access to client information.
What does the future look like?
So what does the future look like? The future looks like us all being open – and ready – for change. Most of you will have heard me say – if your business model is high-volume, simple tax returns with no value add and low margins, your business will not be viable in 3 to 5 years. Well, I’ve been saying that for at least 5 years now!
The role of agents and other intermediaries is already changing. We’ll do everything we can to support the evolution of the role of agents and others in the system. But the reality is the system is changing and we need to embrace the opportunities.
I’m pleased with our progress so far. But there’s always more to do. There needs to be an increased uptake of our digital services – it’s 2023, we can’t still be receiving close to 1 million paper activity statements and sending out cheques.
Together, we need to get taxpayers to change their mindset around going digital and getting to a point where everything is built into a wider system and is instant.
As tax professionals, your manual effort is better spent where you can add the most value – which should be providing guidance and advice and making sure your clients are meeting their obligations.
In the future, there should be fewer calls from tax professionals coming into our call centres. Today, more than one in 5 of the 1.4 million calls we answered this financial year – that’s around 220,000 calls – have been from tax professionals. Many of the calls are for things professionals can be self-serving through our online services. We are making the improvements we need to make to ensure you can fully utilise our online offerings.
I know the onus will be on the ATO to make sure we provide easy access to clear, helpful information and guidance. This is something we are continuously on the journey of doing. We have a whole new website coming later this year, with a much better look and feel which will make it easier for people to find the answers they need.
On our service more generally, we know we need to do better. But this means we will need to make some changes. We aren’t alone. The HMRC is trialling a seasonal model where they have turned off the self-assessment helpline for 3 months to take priority calls and reduce processing backlogs. We won’t go that far, although we have changed some of our service windows. We are actively exploring how we manage our workloads and improve performance.
As of today, I have been Commissioner for just shy of 4,000 days – as I’m sure you can imagine, I am getting ready to pass on the baton! I believe I have worked hard to improve the system and together we have made change happen through considered, deliberate effort.
I’m not under any illusions that the ATO of 2023 is perfect. I hope you would agree with me that it’s in better shape than it was in 2013. And we will continue to improve.
My vision for the ATO is not just to be the best revenue authority in the world and not even just to be the best Australian public service agency. It is to be considered the best when measuring ourselves against the best aspects of the best companies with a complex client base. Achieving the highest satisfaction rating of 82% of people dealing with us is a good indicator of us moving towards this vision.
I will look back on my time as Commissioner with great pride. I would like to personally thank you for your support and genuine collaboration over the years, and thank you for joining me on this journey – it would not have been possible without you.
I hope the lessons of the last decade will mean in future we will all be faster to adapt, more willing to innovate, and ready to continue moving forward together. I would like to see us prioritise building trust and confidence in the administration of the Australian taxation system, together.
Thank you.Seeing the future of tax: plotting a course in the right direction, together.