Rob Heferen, Commissioner of Taxation
The Tax Institute's Tax Summit 2026
Sydney 3 September 2026
(Check against delivery)
Good morning, everyone.
Thank you to The Tax Institute for the invitation to be here again this year.
It is always valuable to be in a room with people who understand the tax system not just as a set of laws, forms, and obligations, but as a living system – one that affects every Australian, business, adviser, and section of the community.
Many of you spend your professional lives helping people navigate that system. You see its complexity, where it works well, and where it creates friction. You also see, very directly, the difference good advice, administration, and system design can make.
And these things become ever more important when we are dealing with a system like ours, growing in complexity.
I often reference Stephen Covey’s 'the main thing, is to keep the main thing the main thing'; however, today, and especially in the discussion about tax, I want to start with another line from Covey:
'Begin with the end in mind.'
It’s simple advice – understand the desired outcome before determining actions. Something particularly useful when we talk about tax.
In public finance, when people talk about what makes a good tax system, they usually focus on a handful of familiar criteria.
Is it efficient, that is, does it minimise the extent to which the tax system influences the underlying investment decisions?
Is it fair, treating people in similar circumstances consistently and asking those with greater capacity to contribute more?
And is it simple enough for people to understand and comply with?
These are important tests, and they have shaped the tax policy debate for decades.
But there is another criterion that is often overlooked.
And that is, revenue adequacy – is the government getting enough cash to fund the services, institutions, and infrastructure that Australians expect and rely on?
Often in tax, it is very easy to begin with the machinery.
We can begin with legislation, rulings, lodgment dates, payment plans, disputes, compliance programs, digital systems, Budget measures, and administrative settings.
And all of these things matter, but they are not the end.
The end is why the tax system exists in the first place.
And the reason it exists is simple: it funds the society Australians expect and rely on.
Hospitals. Schools. Roads. Defence. Disability support. Aged care. Income support. Emergency services. The institutions and infrastructure that allow people to live with security, opportunity, and dignity.
That is the end we need to keep in mind.
Because if we lose sight of that, tax can start to look like a technical exercise. A contest between revenue and deductions, a compliance burden to be minimised or, worse, a game to be beaten.
But tax is more fundamental than that.
It is one of the practical ways a society gives effect to the social contract.
Thomas Hobbes famously warned that without an authority capable of maintaining order and enforcing the rules, life could become 'solitary, poor, nasty, brutish, and short.'
Jean-Jacques Rousseau approached the social contract differently, arguing that legitimate authority rests on the consent of the governed, but he also saw organised society as depending on mutual obligations and rules that people recognise as legitimate.
In modern Australia, tax is a fundamental part of that contract.
We each contribute according to law so that government can provide the services, infrastructure, and security that none of us can sustain alone.
So that means the legitimacy of the system depends on people understanding the end.
Why do we ask people to comply?
Why do we collect revenue?
Why do we invest in system integrity?
Because the system only works when people have confidence that it is fair, effective, and sustainable.
That’s the frame I want to use today.
Begin with the end in mind.
And the end is a tax system that enables the Government to fund the services that Australians demand.
So, at the ATO, our purpose is simple: we collect tax so government can fund services for the Australian community.
That purpose isn’t abstract, it’s real, and it’s tangible.
And when we do it well, we move towards our vision – an Australia where every taxpayer meets their obligations because:
- complying is easy
- help is tailored, and
- deliberate non-compliance has consequences.
That vision is deliberately balanced.
It recognises that most people want to do the right thing. They want to meet their obligations, and they want certainty and guidance that is clear, timely, and practical.
It also recognises that some people need assistance, and it might be quite specific assistance.
But it also recognises that some people deliberately do not comply.
They seek to avoid their obligations, promote schemes, exploit gaps or use complexity to obscure what is really happening.
And some seek to defraud the system outright.
A fair system must respond differently to those different behaviours.
It must support those trying to comply to get things right from the start and it must take firm and proportionate action where people deliberately do the wrong thing.
It is not just about revenue. It is about fairness. Fairness to the community and each other, because if you are paying your share, you expect others to do the same.
Because every dollar not paid by someone who should have paid does not disappear from the system. It shifts the burden.
It places more pressure on those who do comply by weakening confidence in the system and undermining the level playing field that honest taxpayers, businesses, and advisers rightly expect.
It can also push the government of the day to go to the bond market to ensure revenue adequacy. While necessary, this is not a long-term, sustainable solution.
For tax professionals, this is not an abstract point.
You are helping taxpayers get it right. You help translate complexity into practical decisions. You help your clients understand not just what the law requires, but why compliance matters.
That role is central to the health of the system.
Last year I spoke about Our Performance Evolution – our commitment to build on the strengths of a high-performing organisation while continuing to improve and adapt for the future. That work challenged us to:
- think bigger
- act bolder
- deliver together.
Those words are deliberately simple.
And that commitment has become increasingly important as Government expectations grow, technology changes, fraud and cyber threats become more sophisticated, and community needs continue to change.
Which brings me to the ATO Strategy and our recent Corporate Plan.
Together, they provide a clear direction for how we will continue delivering our purpose, pursue our vision, and become more effective.
They help us focus our effort, prioritise our resources, and remain accountable for delivering outcomes for government, taxpayers, and the broader Australian community.
Our Strategy sets out our longer-term direction, the choices we are making, and the strategic shifts that will help us deliver a fair, and effective tax system into the future.
It’s also explicit that our choices need to be disciplined, we cannot do everything at once and not everything can be transformed at the same pace.
Some things we will maintain, because they are working well and must remain stable.
Other things will evolve, because they need to improve over time.
And some things we will transform, because incremental change will not be enough.
The Strategy sets out 5 shifts:
- Simplifying the tax experience
- Closing the payment gap
- Strengthening the system
- Partnering across the ecosystem
- Equipping a future-ready workforce.
Together, those shifts describe the system we are trying to shape.
A system that is easier to engage with, where obligations are clearer, compliance happens by design, and deliberate non-compliance is harder to hide.
Tax professionals and advisers are integral to that system. The ATO Strategy recognises that advisers support taxpayers to understand their obligations, navigate complexity, and comply with the law. Partnering across the ecosystem is critical.
And your role will continue to matter. And matter deeply.
But for now, I want to focus on one key shift, closing the payment gap.
Unpaid tax is not a debt owed to the ATO. It is money owed to the Australian community, that is not an abstract loss. It denies community revenue, which would otherwise fund services.
Too often, tax is considered a cost of doing business. And I think I understand why. From the perspective of a business owner managing cash flow, wages, rent, energy bills, and supplier costs, tax can feel like another expense competing for sometimes limited resources.
But not all tax liabilities arise in the same way as ordinary business expenses.
I was recently on a panel discussion at the COSBOA National Small Business Summit. Anna Booth, the Fair Work Ombudsman, made a comment which I think has a lot of meaning behind it – that paying wages shouldn’t be considered ‘red tape’ for a business – it’s an obligation.
The same applies to tax and superannuation payments.
They are an obligation that comes with operating a business and, in many cases, businesses play an important role in collecting and remitting funds on behalf of government.
That includes amounts that have already been collected from others.
In the ATO, we often talk about the tax gap as a broad measure of overall system performance, and that measure remains important.
But today, I’m focused on the payment gap. That is the difference between the tax that has been reported and is owed, and the tax that is actually paid.
Closing the payment gap focuses on improving payment outcomes, particularly for businesses, by supporting earlier and more consistent payment of tax closer to when income is earned.
This requires a deliberate change to how payment operates across the system, shifting from managing debt after it arises to aligning payment and reporting settings more closely with economic activity.
Tax obligations occur on known dates and follow established cycles. These obligations don't arrive unexpectedly, and most know when they need to pay.
And the vast majority of Australians do the right thing. Around 90% of tax is paid voluntarily, reflecting a system built on willing participation, community trust, and a shared understanding that everyone has a role to play.
But when tax that has been correctly reported remains unpaid, the payment gap grows.
Which is why payment performance matters.
The 30 June 2025 data for activity statement collectable debt, shows that $34.7 billion across GST and PAYG liabilities has been reported but not paid.
And $2.1 billion in superannuation guarantee, owed to workers.
This is not simply about a business’ own tax bill. It is about money paid by customers, withheld from employees, and in the case of superannuation, owed to workers.
Businesses that meet their obligations and pay on time should not be placed at a competitive disadvantage compared with those that hold on to that money to support their cash flow.
Maintaining a level playing field means ensuring everyone plays by the same rules.
Employees should be able to rely on their superannuation being paid into their account, and withholding amounts deducted on their behalf being remitted.
And the community rightly expects that money collected under the tax and super systems reaches its intended destination.
Not paying on time may reflect financial hardship, mistakes, poor record keeping, misunderstanding, deliberate under-reporting income, shadow economy behaviour, tax avoidance or even tax evasion.
So, our response must be tailored.
We are continually improving guidance, systems, and support for those experiencing hardship or those who make honest mistakes.
Where obligations are not being met, we need to improve payment performance and intervene earlier.
We’re developing a range of mechanisms to support engagement and better payment outcomes, and you play a key role in helping your clients understand their obligations, engage early, and stay on track.
Where there is deliberate non-compliance, we need to act.
And where the design of the system creates too much opportunity for error or misuse, we need to work with partners to improve the system itself.
Understanding where these gaps arise helps us make better choices about where to focus our resources, how to address emerging risks, and where changes to the system can have the greatest impact.
During COVID, we deliberately took a more permissive approach to payment, but that resulted in our debt book increasing.
In 2019, the debt book was $60.5 billion.
In 2023 it had increased to $96.3 billion.
Then, in 2025, it was $115 billion.
This is made up by an estimated:
- $54.2 billion in collectable debt
- $22.6 billion in dispute
- $18.4 billion insolvent, and
- $19.8 billion on hold because it is not economical for the ATO to pursue.
We will publish our next Annual report in October, and while the numbers haven’t been finalised yet, we expect to see that those figures have continued to grow.
Where debt is collectable, we will continue to take firmer actions.
To restore greater rigour in the system and ensure more people are paying on time, a key tool at our disposal is the General Interest Charge, or GIC.
There has been considerable discussion about GIC. At its simplest, when tax remains unpaid after its due date, the interest applies.
After the government abolished the ATO’s priority creditor status in corporate insolvencies in 1993, there was concern that tax collection would reduce.
As policy evolved, the focus shifted from relying on preferential treatment when a business failed, to encouraging payment and engagement before insolvency occurred.
Against this backdrop, the modern GIC was introduced in 1999 to simplify a complex array of penalties and interest charges applying to late payments.
The purpose is not to punish taxpayers experiencing genuine hardship, and it is not designed to raise revenue in its own right.
Rather, it is a mechanism that helps maintain fairness in the system by encouraging timely payment. Ensuring taxpayers who defer payment do not gain a financial advantage over others who meet their obligations on time.
The Tax Ombudsman’s review into the ATO’s administration of GIC remission concluded greater consistency was needed in our approach. And we agreed.
The key issue here is about consistency and fairness.
Every taxpayer should be treated alike and decisions about remitting interest charges should be based on a taxpayer’s circumstances and the merits of their case, not on who happens to answer the phone at the ATO on a particular day.
That’s why we’ve limited over the phone GIC remissions to amounts up to $2,500 and centralised more complex decisions with specialist officers.
Given the wide variation in circumstances that lead people to seek a remission, having a smaller group of trained specialists making those decisions is the most effective way to achieve consistent and fair outcomes.
The trade-off is that this approach can take longer. We acknowledge that and we're working hard to improve processing times.
So, while a more decentralised approach may deliver faster decisions, it also increases the risk of similar cases being treated differently. For us, getting the decision right, and applying the rules consistently, matters.
The scale of the challenge is also worth reflecting on.
Looking at the chart, the $54.2 billion in collectable debt is in fact only around $43.6 billion of underlying primary collectable debt. And $9.7 billion of the remainder is GIC.
That's not the debt itself; it's the interest that has been imposed because obligations haven't been paid.
I also appreciate that many of you are dealing with clients under significant pressure. In those situations, the decisions aren't always easy, and the considerations extend beyond tax.
For businesses under pressure, we understand that circumstances can change. Cash flow can tighten. Markets can shift. Even otherwise viable businesses can find themselves facing difficult decisions.
But using withholdings as a source of working capital is not fair to those businesses that are meeting their obligations, and it is not sustainable for the system as a whole.
That's why our message to taxpayers is engage early, and our message to tax agents is to encourage those conversations before a problem becomes a crisis.
If a business has the capacity to pay but chooses not to, that’s fundamentally a fairness issue. And I know very few, if any, professional advisers would have a different view.
That said, I recognise that many taxpayers who fall behind are not acting deliberately. They’re dealing with genuine cash flow pressures and difficult choices.
As trusted advisers, you are often best placed to help your clients prioritise their obligations and make informed decisions when times are tough.
Australia, of course, has a very sophisticated financial sector with banks, credit unions, and other lenders whose role is to assess risk and provide finance where it is commercially viable.
And I think that's important. If a business requires additional funding to continue operating, the first place to go is the financial sector.
If a bank, credit union or other financier, after carefully assessing the risks, is not prepared to provide finance, that tells us all something important.
It is worth emphasising that closing the payment gap is about more than debt collection and we all have a role to play. It is about maintaining confidence in the tax system.
A well-performing system is one where obligations are reported accurately, paid on time, and where those who do the right thing can be confident that others are expected to do the same.
And, as with all aspects of tax administration, our objective is to facilitate willing compliance while ensuring that those who deliberately choose not to meet their obligations do not gain an advantage over those who do the right thing.
I’d like to turn now to briefly discuss corporate tax transparency.
Corporate tax, especially that paid by large corporates, remains an important part of that confidence story.
Our largest corporates are among the most scrutinised taxpayers in the system.
And for Australia, that’s appropriate.
These taxpayers make a significant contribution to Australia’s revenue base. Given the scale of that contribution, the community rightly expects these businesses are paying the right amount of tax under the law.
Confidence in the system is strengthened when people can see large businesses are subject to appropriate scrutiny and transparent reporting.
This is why the parliament has compelled us to publish corporate tax transparency data for the last 13 years.
It helps improve community understanding of the corporate tax system, supports informed public discussion about corporate tax performance, and reinforces confidence that Australia’s largest taxpayers are meeting their obligations.
This year, the parliament has taken this a step further with the introduction of public Country-by-Country reporting for large multinational groups.
It will provide the community with greater visibility of where multinational enterprises operate, generate profits, and pay tax, further strengthening transparency and confidence in the integrity of the system.
Of course, it would be remiss of me not to acknowledge some attention in the room on the Government’s recent tax changes, and how we’re placed to ensure they’re delivered.
I’m sure there will be plenty of opportunity to discuss this during the Q&A, but I would like to acknowledge our shared interest and the value we place in collaborating with the tax profession as we implement these measures.
That brings me back to the audience in this room.
The tax profession plays a critical role in the system.
For many taxpayers, you are their most trusted source of advice.
You help people understand their obligations, navigate complexity, and get things right.
You also give the ATO valuable insights. You see where taxpayers are finding things difficult, where uncertainty exists, and where our guidance could be clearer.
That's why your role is not just to help people comply. It's also to challenge us when something isn't working.
We won't always agree. There will be different views on how the law applies or the best way to administer it. That's part of a healthy system.
Constructive challenge makes us better. It helps us improve our administration, sharpen our guidance, and make better decisions.
At our best, the relationship between the ATO and the profession is based on openness, respect, and a shared commitment to a system that people can trust.
Where taxpayers are genuinely trying to do the right thing, they should be supported. Where concerns are raised, we should listen. And where people deliberately undermine the system, they should expect consequences.
So, let me return to where I began.
Covey said, 'Begin with the end in mind.'
For the tax system, the end is not a form lodged, a debt collected or a dispute finalised.
It is not even a tax gap reduced, although each of those things matter.
The end is a system that funds the services Australians rely on.
A system that enables the Government to fund the services that Australians demand, gives honest taxpayers confidence that others are doing their part, is easy to comply with, and hard to misuse.
The end is a system that applies the law fairly, while raising adequate revenue for the government.
Hobbes reminds us what is at stake when societies lack an authority to enforce the rules.
Rousseau tells us that legitimacy depends on the obligations we accept as members of a community.
And Covey tells us that clarity about the end should shape the choices we make along the way.
For the ATO, that means staying focused on our purpose: we collect tax so government can fund services for the Australian community.
And it means working with you – the tax profession – as essential partners in the system.
Because the tax system is not sustained by the ATO alone.
It is sustained by the millions of Australians who meet their obligations, the businesses that pay what they owe, the advisers who help clients get it right, and the institutions that safeguard the integrity of the system.
Most importantly, it is sustained by the shared understanding that tax is not simply money paid to government, it is a contribution to the society we choose to build together.
That is the end we should keep in mind.
And that is the work ahead of us.
Thank you.
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