Rob Heferen, Commissioner of Taxation
Melbourne 4 September 2025
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Introduction
Thank you Scott for that kind introduction, and thank you to The Tax Institute for having me again this year, for my second Commissioner’s address.
I’d like to acknowledge the Traditional Owners of the land that we meet on, the Wurundjeri and Bunurong people here in Melbourne, and the Traditional Owners of the lands of those joining virtually.
I pay my respects to the elders past and present, and extend my respect to any First Nations people here today.
I, of course, reiterate the Assistant Treasurer’s sentiment about the Tax Institute’s role as a strong advocate, and a thoughtful and constructive partner – one that helps to shape the way taxpayers interact with the tax system.
Having been in the Tax Commissioner role for over 18 months, and having the privilege of a unique view of the tax system a number of things stand out, but I want to mention 2.
First, the community as a whole is largely compliant with their obligations in the system as it stands.
Second, while there is a lot of public debate about fundamental tax change, my sense is that as the system administrators, we need to work with what we have and deliver accordingly.
So that suggests some areas of focus, and I will touch on those today.
ATO's vision and purpose
When I commenced as Commissioner last year it was apparent to me pretty quickly that the ATO was a high-performing agency with dedicated and skilled staff.
It had been over 25 years since I worked at the ATO (though I was fortunate to work closely with ATO colleagues during many years at Treasury), and throughout that time I have been genuinely impressed by how the agency has risen to meet the needs of the government and Australian community, time and time again.
In particular, and indeed over the last 5 years alone, the ATO has become increasingly agile in its administration of the tax system.
So where are we now, where are we headed, and what do we need to focus on to get there?
In considering these questions, the ATO Executive and I agreed it was important for us to revisit and refresh our purpose and vision – to make sure we’re focused on what really matters.
As Stephen Covey puts it: The main thing is to keep the main thing the main thing.
Our purpose is simple: we collect tax so the government can fund services for the Australian community. That’s our core job. Everything else we do supports that.
And when we do that well, we’re working towards our vision: an Australia where every taxpayer meets their obligations because:
- complying is easy
- help is tailored, and
- deliberate non-compliance has consequences.
We’re not just tax administrators – we’re stewards of a system that ensures we have a properly funded, and therefor properly functioning, society.
That means being proactive, adaptable, and staying connected to the people and professionals who work with us – including those of you in the room today.
Our vision defines where we want to be, and our strategy and actions will define how we get there.
Our performance evolution
Late last year, the Australian Public Service Commissioner reviewed the ATO as part of its broader push to lift capability across government. The reviewExternal Link showed we’re a high-performing agency – thanks largely to the dedication and skill of our people.
But it also pointed out areas where we can improve. We recently launched Our performance evolution – our plan to build on our strengths, sharpen our focus, and lift our capability even further.
It’s about aligning our efforts across the ATO so we’re ready for today’s priorities and tomorrow’s challenges. We will:
- think bigger
- act bolder
- and deliver together.
Corporate plan 2025-26
Our performance evolution is also front and centre in our current corporate plan, which we released last month.
Our corporate plan also lays out our focus on:
- improving payment performance and debt collection
- strengthening fraud prevention
- rolling out Payday Super, and
- making the tax experience simpler and more digital for small businesses.
These are big, complex challenges with real impact – not just for the tax system, but for the broader community.
Being transparent and accountable
As we deliver on these challenges, we must be transparent and accountable about our performance. This is key to maintaining trust with government and the community.
From time to time there are criticisms about a lack of transparency in our processes and actions. I would argue that this isn’t quite fair. But then again, I would.
Probably best to examine our record.
Annual reporting
Each year, in line with the PGPA Act, we release our annual report.
Now, you would be forgiven for not downloading the report for some light reading in October each year.
But this document holds the information the government, and the community, needs in order to determine how or indeed whether we are delivering on our stated commitments.
Included in our annual report are:
- Our annual performance statements – a detailed breakdown of our results against all of our performance measures.
- Our annual financial statements – official and verified reports of how our budget has been managed over the financial year.
- And importantly, as the nation’s principal revenue collector, an extensive breakdown of our revenue collection.
In addition, our annual report also includes an extensive range of data capturing everything from:
- our workforce profiles and salaries
- the tax debt owed
- the number of disputes that have occurred over the year
- the number and value of settlements, and
- the value of voluntary disclosures.
Pleasingly, our upcoming annual report will show strong progress towards our vision.
Transparency doesn’t begin and end with our annual report, however. It extends to those areas that are of greatest interest to the community.
Australians rightly expect that our largest taxpayers will also be transparent about meeting their obligations.
Corporate tax transparency
For our part, we report our findings on the tax obligations of corporate entities through a range of tax transparency reports, including the annual Corporate tax transparency report, and reports on the tax performance of the Top 100, 500 and 1000 business taxpayers.
We also report on the amount claimed in Research and Development tax incentives, and the industries claiming them.
These reports ensure we are delivering on the Government’s intention to improve awareness and increasing community confidence that most corporations are paying their fair share.
We are getting ready right now to release our eleventh annual Corporate Tax Transparency Report.
The report will provide information on over 4,000 large public and private companies and their total income, taxable income and tax paid for the 2023–24 financial year.
The report will show that the ongoing scrutiny and oversight of the Tax Avoidance Taskforce continues to have a positive impact on collections.
This oversight, together with increased engagement from many corporates, is helping to maintain large corporates as one of the most compliant taxpayer groups in Australia.
There are still a small number of multinationals that we are concerned are engaged in profit shifting and tax avoidance practices and we will continue to challenge these arrangements.
However, in the main, strong collections over a number of years should provide confidence that most large corporates are sustaining high levels of compliance.
Our gap work confirms this with our latest tax gap estimates for large corporates for 2022–23 showing that 94.1% of tax is paid on lodgment of returns, this further improves to 96.3% after ATO compliance activity. These estimates show improvement year on year.
Tax gap
Tax gap estimates the difference between what we expect to collect, and the amount that would have been collected if every taxpayer was fully compliant with the law.
Australia is one of 25 countries that has established a team to estimate tax gaps.
Most countries use their tax gap estimates internally to understand the overall performance of the tax system and to guide the design of tax administration interventions that are aimed at reducing the tax gap.
Australia is one of only 8 countries in the world that shares its estimates publicly. And we’re one of just 2 – alongside the UK – that does this comprehensively every year.
So why do we do it? Because we believe in transparency. Tax gap estimates help us explain to the public how well the tax system is working – where things are going right, and where there’s room for improvement.
We currently estimate 19 different tax gaps across various markets and types of taxes. Like other countries, we use a mix of approaches to do this.
To make sure our work is robust and credible, we’re supported by an independent advisory group.
This group includes 5 experts – researchers and academics – who bring deep technical knowledge and a critical eye to our methods, ensuring our estimates are sound and reliable.
The latest published tax gap estimate was released in October 2024, and relates to the 2021–22 year. For that year, we estimated a net gap of 7.5%, or $44.5 billion.
It is important to note that the largest 2 tax gaps relate to the income tax of small businesses (including individuals carrying on a business) and individuals.
These 2 gaps alone account for more than 60% of the total $44.5 billion.
For this reason, we like to look at the trends for each of the underlying gap estimates, as not all gaps move in the same direction as the headline measure.
The insights gained from our tax gap work guide us in determining priority risks and developing strategies (including administrative design, help and education, and audit).
These aim to both reduce the tax gap and improve voluntary compliance, and also to prevent any deterioration in tax performance.
I just mentioned our soon-to-be-released large corporates tax gap estimate and we will publishing our broader suite of 2022–23 estimates soon.
Welcoming challenge and scrutiny
In addition to being transparent, we need to be open to check and challenge. We need to welcome scrutiny.
Legislative interpretation
We know the tax system is complex, and we look to help navigate this complexity including through our advice and guidance, explaining how the rules work.
Sometimes, though, how we think the rules work is contestable, and often these cases will eventually end up in court for the arbiters to make a call.
Our disputes in the High Court, irrespective of the outcome, continue to play a vital role in effective tax administration by clarifying those aspects of legislation that are contested.
It is worth noting though, that even when cases do make it to a judgement in the highest court, there can be a narrow margin splitting the views of those making the final decision, like we saw in Commissioner of Taxation v PepsiCo.
Which is further evidence of the contestability of complex law interpretation and a demonstration that on matters of interpretation in these areas, reasonable minds differ.
And, as an aside, a case as finely balanced as PepsiCo is very informative for the ATO and taxpayers alike in understanding where the High Court draws the line between legitimate management of tax affairs and impermissible tax structuring.
As a large government agency with extensive powers, we must be open to the prospect of having our views and decisions challenged and reviewed.
And, in fact, we need to actively seek that review.
We are currently consulting on proposed amendments to the test case litigation program, a program aimed at supporting judicial consideration of contested precedential issues and to provide clarity for the tax system.
The proposed changes include adding new expectations to explicitly include cases in the ART as well as consideration of taxpayers’ capacity to pay litigation costs as well as emphasising the funding of small business clients where eligibility requirements are met.
We are appropriately subject to scrutiny in many forms. And we welcome that scrutiny, particularly from those sources whose expertise is essential to unearth areas for genuine improvement.
Tax Ombudsman
The Tax Ombudsman plays an important role here.
We have a positive and productive relationship with the Tax Ombudsman, Ruth Owen. Ruth is helping us understand where there are opportunities to improve the system and provide better outcomes for taxpayers.
Recent reviews (around identifying and managing financial abuse within the tax system, ATO letters, and an upcoming review of the ATO registered agent phone line) are all providing insights and supporting the direction of our change initiatives.
The Tax Ombudsman’s recent letters review observed the effort required to balance technical accuracy with plain language, while retaining clarity and tone.
The report acknowledged there is room to improve how we strike this balance, which is in line with our broader plan to improve our interactions with taxpayers.
Our services
The services we provide are critical in supporting the tax system, our taxpayers and tax professionals. We know that this is an area we have under invested in over the last few years.
The ATO Executive recently endorsed a plan to improve our digital services and drive opportunities to self-serve and integrate artificial intelligence (AI) technology into our business.
We have heard complaints from agents about the consistency, quality and timeliness of advice, and we’ll be piloting how we can use AI to improve communications in our contact centres.
We are already seeing improvements in our services.
In the 2024–25 financial year we answered 678,000 additional calls compared to the previous year – that is, up from 6.2 million to 6.9 million – and had a 21% reduction in general call wait times – from about 21 minutes to 16 minutes.
We also know that one of the most common complaint topics for tax professionals relates to the timeliness of processing requests.
Pleasingly we ended the financial year with about 180,000 processing items, the lowest backlog of processing for the last four years, with a 41% reduction on previous years.
Tax Time 2025
This tax time, as of 24 August, we’ve had over 6.1 million tax returns lodged and have issued over 4.5 million refunds, totalling $12 billion – with an average refund of $2,639.
One of the interesting things this tax time has been the drop in agent calls by 15%.
Contributing to this reduction are enhancements to our management of compromised identities. We have overhauled how we treat comprised identities to resolve and remediate accounts more quickly, not just financially but in restoring digital access.
Which means you as tax practitioners can spend more time with your clients and less time on the phone with us.
We have also improved the experience for tax agents, with improvements to prefill information.
We also continue to enhance services available via the ATO app. The myDeduction tool can help your clients organise their tax records, storing them onto their device and ready for upload when they see you at tax time.
Recently we updated the ATO app, providing functionality to send notifications where there might be suspicious activity on an account, this is a huge step forward in our ability to deal with identity fraud.
We are encouraging people, whether or not they use a tax agent, to do 3 simple things:
- get a myID (as strong as possible)
- use the myID to link their myID to their ATO account, and
- download the ATO app and register their device.
These are steps people can take right now to protect not only themselves from fraud, but also others.
Improving tax performance of small business
We’re also focussed on continuing to improve on the tax performance of the small business market for the benefit of all taxpayers and the community.
We know that most small businesses do the right thing. Just under 70% of small businesses pay their tax obligations on time.
And generally, small businesses who successfully manage their tax affairs and avoid getting into debt are digitally enabled, keep good records and have the support of a trusted advisor.
Where liabilities are not paid on time we want to support taxpayers – we know that leaving debts unchecked and unmanaged for prolonged periods of time often impacts the future viability of a business.
In our recently launched corporate plan, one of 5 enterprise priorities is implementing a small business digitalised tax experience to help small businesses get their tax obligations right from the start, and stay on track.
We're exploring ways to integrate tax administration into small businesses’ natural systems to reduce errors and strengthen system integrity.
We’re expanding our pilots of simplified instalment calculation in accounting software products to modernise Pay As You Go Instalments (PAYGI) for small businesses.
We're looking at how to better use third-party data to support small businesses in finalising their tax returns.
And the introduction of Payday Super will further support small businesses in meeting their superannuation obligations in real time.
And as we continue our journey towards integrated and real-time interactions, it’s not hard to imagine the possible improvements and benefits for small businesses.
By way of example, in the mid-90s it was estimated that individual taxpayers with simple tax affairs spent on average 8.5 hours to do their tax return using TaxPack.
In 2024 taxpayers in similar circumstances took less than 15 minutes to lodge their tax return using myTax. That was for around 2.4 million people.
Imagine if we were able to replicate that experience for small businesses. Ultimately, meaning they are able to think less about tax, and focus more on their business.
These important enhancements will contribute to our vision to make sure complying is easy.
Our approach to debt management
As outlined in our corporate plan, the ATO is focused on reducing unpaid tax and bringing down the $50 billion collectable debt book through our approach to debt management.
This debt is not disputed, most of it has been self-reported, and a significant portion is made up of amounts that have been withheld from employees’ wages, or collected from consumers as GST – but not passed on to government.
While the majority of tax is paid on time – about 90%, in dollar terms there is a significant amount that isn’t.
On multiple occasions I’ve made it clear that we need to do more to meet our obligation to recover this $50 billion of debt.
We have a comprehensive strategy to encourage on-time payment behaviour, with 4 key principles underpinning it:
- being firm, consistent and clear on the principle that those who can pay, must pay on time
- supporting those who have capacity to pay, but are struggling, to get back on track
- applying firmer actions for those who are choosing not to engage with us or are deliberately not paying their debts
- and supporting those who do not have capacity to pay to exit the system.
As an immediate first step, we’re directing our firmest efforts toward the 22,000 taxpayers who owe $11 billion – that’s just 1% of debtors, but they account for 20% of the total collectable debt.
It’s a significant priority for us, and we’re using every tool available to recover what’s owed from those 22,000 – using statutory demands for payment, wind up processes, director penalty notices, garnishee notices, and departure prohibition orders.
It’s always worth clarifying that the government will not be financing anyone’s ski trip to Colorado through unpaid tax obligations.
Again, in line with our vision, this debt approach will ensure that deliberate non-compliance has consequences.
Review of selected taxpayer relief provisions
We have heard concerns around fairness and consistency on General Interest Charge (GIC), and so this year we have initiated a review of:
- payment plans
- deferrals, and
- remission of GIC and failure to lodge penalties.
In tax administration, there is always a tension between consistency and discretion tailored to the individual circumstances – both desired goals but hard to balance in practice.
With my economist hat on, I would say that consistency inevitably means moving to a corner solution – likely very different to the posture we adopted during COVID.
The inconsistency inevitably arises when humans have a discretion to make a decision, and the review aims to achieve a framework that is sustainable, is more transparent, and importantly, supports those in genuine need.
Just this morning, we published some draft principles around our approach to these taxpayer relief provisions. I encourage you to have a look at those and consider any feedback you may have.
These principles are intended to support consistent decision making within the law, and to help ATO staff understand the relevant factors in making decisions.
We recognise that as tax professionals, you have a role to play in helping your clients navigate their tax obligations, and sometimes that means supporting them in times where something’s gone wrong.
Your feedback is invaluable in helping us shape and improve our processes to ensure we get this support right.
We are closely looking at our guidance material, our processes and workforces managing GIC remissions. We’re considering the best way to manage the volumes of requests while we focus on fairness, greater transparency, better communication and consistency on our decision making.
Regardless, we will be making our stance around these taxpayer relief provisions more transparent so that taxpayers and their advisers can be more confident in knowing the range of potential outcomes prior to engaging with us.
We also look forward to the upcoming review by the Tax Ombudsman on our management of GIC remission.
Vulnerability Framework
While we become increasingly firmer on our collection of debt, we recognise that that not everyone experiences the tax system the same way, which is why we have been developing a Vulnerability Framework (PDF, 242KB)This link will download a file.
Many have challenges, including:
- health issues
- financial literacy constraints
- language and accessibility barriers
- family and domestic violence
- financial hardship and financial coercion.
The ATO’s Vulnerability Framework – due for release next month – is designed to enhance our support for individuals experiencing vulnerabilities.
It outlines a commitment to fostering more inclusive and consistent interactions with the community, ensuring those in vulnerable situations receive appropriate assistance when dealing with their tax matters.
We share a goal with tax professionals to increase transparency, provide clear guidance, and facilitate constructive engagement with taxpayers.
As we implement this framework, we will endeavour to be clear about what is possible and not possible. Where the law provides the Commissioner with discretion, we will be transparent about how circumstances will be considered.
And while the framework cannot change existing tax obligations – that is, the law does not allow us to waive debts – it will serve as a guiding approach for how we listen, communicate, and connect individuals to the right support.
The framework aims to address gaps in understanding and accessibility, ultimately leading to a more supportive environment for those in need.
In implementing this framework, we are further embedding our vision to ensure that help is tailored.
Tax professionals as complexity brokers
There have been significant changes across the administration of the tax system in recent years. Changes not lost on this audience of tax professionals, I’m sure.
And as our role has changed, so too has yours.
As the 2025 financial year came to a close, there were more than 27,000 registered and active tax agents and more than 11,000 registered and active BAS agents.
With more than 19 million tax returns lodged each financial year, tax agents lodge more than 62% of returns for individual taxpayers, and more than 90% of trust, partnership, superannuation and company returns.
While these figures haven’t fluctuated significantly over the last few years, we understand that the environment in which you operate has changed.
The profession is shifting which requires new skills and tools, especially driven by technology.
While your role will continue to change, one constant is that the tax system is complex. Which is why the role of agents and intermediaries is so important.
Your role as the tax system’s primary complexity brokers will remain.
You take the intricate, often-changing rules of the system and help people to translate them into something they can act on.
That's not easy. And it's becoming more important than ever.
As the tax system evolves, simple tax affairs become just that – simple. Particularly for individuals.
And as this happens, the role of tax professionals becomes even more critical for those taxpayers with more complex affairs who need extra support.
We will continue to actively engage with the tax profession on administrative and implementation changes via our dedicated forums and stewardship groups.
Some of the key areas we’re currently engaging with the profession on include:
- implementation of the Payday Super regime and Division 296
- non-deductibility of General Interest Charges and Shortfall Interest Charges
- Client-to-Agent Linking for individuals and sole traders
- visibility of debts on hold, and
- lodgment of Not-for-Profit self-review returns.
Your input is valuable, and we are listening.
We see you as shared stewards of the tax system, and appreciate you working with us on our common goals.
Closing
As I’ve outlined today, the ATO is focused on delivering a tax system that is fair, transparent, and responsive to the needs of the community.
We are lifting our capability, strengthening our services, and facing into the challenges that come with complexity, digitalisation, and change.
And we’re doing this with a clear purpose and vision.
That vision is not just aspirational – it’s directional. It guides our decisions, our investments, and our partnerships.
Together with the tax profession, we are not just administering the system – we are shaping it.
Through shared stewardship, we are evolving the system to better serve Australians today and into the future.
Thank you for your continued engagement, and your commitment to making the tax system work for all Australians.
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Rob Heferen, Commissioner of Taxation (JPG, 1.8MB)This link will download a file