Rob Heferen, Commissioner of Taxation
Commissioner’s address at the Australian Chamber of Commerce and Industry event
Melbourne 13 September 2024
(Check against delivery)
Introduction
Thank you David for the kind introduction and for having me today.
I’d like to acknowledge the Traditional Owners and Custodians of the land that we meet on, the Wurundjeri people here in Melbourne. I acknowledge the continuing connection to land, waters, and community, and pay my respects to the people, the cultures, and the Elders past, present, and emerging.
I’ve enjoyed the opportunities I’ve had with many of you since becoming Commissioner, and I’m looking forward to today’s session.
I really value being able to meet with our partners in the system and hear firsthand about your experiences and expectations.
Conversely, I think this type of open dialogue is also incredibly useful for us as the regulator to make our own expectations clear to you.
Observations of the ATO
I thought it might be valuable for me to start today’s session with some high-level observations from my first 6 months in the Commissioner of Taxation role. I’m asked about my first impressions a lot, and a few things that have really stood out to me are:
- As an institution the ATO is well positioned to deliver its core remit, collecting the right amount of tax in accordance with the law in the most efficient way for the government and the taxpayer.
- There are well established oversight, assurance and decision-making structures that support me in executing my role and give me great confidence in the work that’s done by the ATO.
- The digital landscape continues to throw up new and emerging risks, particularly around digitally enabled identity crimes and fraud.
- It’s no secret that we have a way to go in addressing the levels of collectable debt that have almost doubled since 2019 and we continue to address this through a range of differentiated strategies.
- There is a culture of integrity and an appreciation for expertise by the approximately 20,000 employees.
The ATO has many successes, but that’s not to say we are perfect. And that’s why sessions like today’s are so valuable for me – so I can hear from you.
A fair system
Returning to my opening reflections, I want to talk a bit more about how we engage and why it is important for us to have a shared understanding of our mutual expectations and mutual interests.
To do that I think it’s important to start with the expectations and interests of the Australian community.
At my Tax Institute address yesterday I spoke about how the unfolding PWC scandal over the past 18 months has made it abundantly clear that the public will not accept or tolerate behaviours that seek to game the tax system, or circumvent taxes owed under Australian law.
Throughout recent history there have been varying degrees of societal acceptance, and in some instances admiration, for finding clever ways to avoid obligations. But the tides have shifted. Paying tax isn’t optional, and it’s our responsibility to enforce a level playing field.
The community should and do hold the ATO to a high standard in ensuring that the tax that is owed under the law is collected. Taxation revenue is a national asset and the critical role it plays in benefitting all Australian’s is in sharp focus.
One of the key elements of the Australian taxation system is fairness.
The system needs to be and be seen to be fair, and intentionally deceptive behaviours do not meet community expectations. They are rightly perceived as unfair.
I don’t need to tell this audience that Australian business come in all shapes and sizes, across all segments of the economy. And fairness may look and feel different depending on your perspective, depending on the service you offer or the type of business that you run.
So, what are the common ‘fairness threads’? To my mind the concept is actually quite straight forward.
For the ATO it means that we will treat people fairly and with respect. We will act in accordance with the law, with integrity and in a way that meets the community’s expectations as outlined in our taxpayer charter.
And for our partners in the system - it means acting with the same eye on integrity, conformance with the law and in a way that meets community expectations. In the simplest of terms:
If you collect GST on behalf of Government, you have an obligation to pay this amount to the Government.
If you withhold tax from someone’s wage, you have an obligation to pay this amount to the Government.
Where superannuation is due under the law, it must be paid into your employee’s superannuation account.
And, if you are advising a client, we ask that you encourage and support them to meet all their obligations, on time.
Our obligation
In recent years, the ATO have focussed on the taxpayer experience, on our digital systems and front-facing services. These are important and we need to maintain them.
But as the nation’s principal revenue collector we can’t shy away from the fact that collectable debt is now over $50 billion (with our broader debt book over $100 billion, compared to total collections in 2023–24 of around $600 billion). This is the largest it’s ever been and almost double the $26.5 billion of debt owed in 2019.
This debt is not disputed, most of it has been self-reported, and it’s largely made up of amounts that have been withheld from employees’ wages and collected from consumers as GST – but not passed on to Government. Even more worryingly, it includes some employee entitlements, such as superannuation.
The ATO understands the difficult economic environment many Australians are facing.
Where businesses are struggling to meet their obligations, we have range of education and support tools, including to assist businesses to get back on track with their tax and super obligations.
But we are equally mindful of the impact on the community when money is not being paid appropriately through taxes. Taxes pay for critical services that benefit all Australians, including the most vulnerable, and the contribution from every taxpayer matters.
While growth of collectable debt is slowing down, we see some businesses who cannot afford to pay on time, but who are not engaging with us to put in place payment plans and take steps to get on top of their obligations. We are also seeing businesses who have capacity to pay, choosing instead to deprioritise payment of their tax and super obligations. There is also a small subset of the business community who are deliberately concealing their income in the shadow economy.
We know that many businesses operate in a tough environment, and we’re committed to ensuring businesses that do not comply with their obligations are not getting an unfair competitive advantage over other businesses who do pay on time. And keeping it fair for those businesses that do the right thing by their employees.
You can expect that we will be firmer and faster in dealing with unpaid GST, PAYGW and super. We will be looking more closely at remissions and deferrals and will tighten up payment arrangements.
And for the small number of businesses that operate in the shadows we will continue to focus our efforts on using data and industry insights to improve our detection and prevention strategies.
Where we see unpaid tax and super obligations, it’s common for us to also see broader non-payment behaviours. There is a contagion effect that extends beyond tax and super.
The approaches we take are critical for supporting other creditors and businesses who themselves can often be left out of pocket, for supporting the broader community and for narrowing the unfair advantage.
Turning our attention to the future
There are more than 4.6m active small businesses - plus a further 2.1m linked individuals. These businesses are diverse in size, structure and the services they offer the community.
And we’re aware that for many, tax is not front of mind as they got about their days.
But we also know that digitally engaged small businesses with good record keeping practices, and support from good tax professionals, are more likely to not only be compliant with their tax obligations but get it right the first time.
We have been working with small business, tax professionals and digital service providers to consider a fully digitalised tax system.
This year, as we have called out in our 2024-25 corporate plan, a key focus area for us is blueprinting a future digitalised tax experience for small businesses that is seamless, and supportive.
In this future, small business can get their tax right from the start, allowing them more time to focus on their business and less on tax.
While we are investing in this longer-term vision, we’re also committed to making immediate, impactful changes within our current systems. This year we will be piloting a number of new initiatives, including:
a. encouraging more frequent payment and reporting.
b. reducing tax complexity by embedding rules and logic into software small businesses use to provide greater certainty.
c. empowering small businesses with data through exploring how the evolution of tools like small business benchmarks could better help businesses understand and manage their tax and business performance.
Through leveraging existing technologies and digital solutions we aim to make tax easier and more manageable, offering practical support where it’s needed most.
Our approach balances being future focused while delivering immediate and meaningful changes that help small businesses to meet their obligations today.
Conclusion
I’ve made it clear since commencing as Commissioner that I see us all as partners in the tax and super systems.
We have a shared interest and a shared commitment to improving the experience of taxpayers, while ensuring we never lose focus on broader community outcomes and expectations.
I value your perspectives and welcome your views today as part of our Q&A session.