ATO unveils next steps for Tax 3.0

Commissioner of Taxation Chris Jordan said while the ATO has already put in place strong foundations for its digital transformation in recent years, further incremental changes will still be required in coming years.

Speaking at the Tax Institute Tax Summit, Mr Jordan said while there wasn’t the need for another radical reinvention of the ATO, the ATO will look to invest further in areas such as data analytics in coming years.

“You can have one big data lake as it’s called but unless you match it to someone or an entity its’s useless. So, there’ll be a lot more investment in that space,” said Mr Jordan.

The ATO also remains focused on ensuring the Australian tax system remains “future focused” where tax is digital and data driven, he said.

“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,” said Mr Jordan.

“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.”

Mr Jordan said tax professionals will also play an important role in helping shape the future of the ATO’s systems.

“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?” he said.

High-volume, low margin businesses to become ‘unviable’

The Commissioner also warned tax agents on the importance of 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 three to five years. Well, I’ve been saying that for at least 5 years now,” said Mr Jordan.

“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.”

The ATO wants to see increased uptake of its digital services with the Tax Office still 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,” said Mr Jordan.

“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.”

The ATO also wants to reduce the number of calls from tax professionals coming into its 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,” said Mr Jordan.

“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.”

Tax agent frustrations with ATO interactions

The Commissioner also addressed some of the complaints raised by tax agents around difficulties in accessing the right people in interactions with the ATO and a time consuming and inefficient complaints system.

“The vast majority of things do go through the systems but there will always be the exception and typically it is something more complex or out of pattern with everything else we do,” said Mr Jordan.

“Hopefully we are getting better and we’re trying to resolve that and we’re ensuring that we’re measuring the right things. It used to be how quick is the average phone call, but it should be how quickly can you resolve the problem rather than palming it off onto someone else.

“I apologize if people are still finding friction and difficulties but we are trying to streamline.”

Mr Jordan said it would be impossible for the ATO to maintain the current level of phone calls and the staff servicing those calls when the ATO already had other channels.

“It’s up to us to make sure that this new platform for our web system provides a better look and feel and an easier search,” he said.

Mr Jordan acknowledged that the wait times for ATO web pages had been getting longer with the ATO’s resources facing constraints at the moment.

“We don’t have the resources as much as we used to do certain things. We have to continue to invest in cyber security and identity theft,” he said.

“IT theft was always a bill but it’s now becoming industrialized,” he said.

As the ATO increasingly digitalizes its systems, Mr Jordan said it was vital that tax professionals know their 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,” he said.

“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.”