Digital and data – and digital mindset – key in taxing future

Published on the 07/09/2023 | Written by Heather Wright

Tax 3.0_ATO Chris Jordan_The Tax Summit 2023

ATO boss urges ‘transformation-as-usual’ for all…

The future of taxes is digital and data driven – and a world where everything is built into a ‘wider system and is instant’ – even if taxpayers still need encouragement to change their mindset to get to that place.

That’s according to outgoing Australian Commissioner of Taxation Chris Jordan, who used his final speech to the Tax Institute to call for improved digital uptake and for the whole tax system to move towards a ‘transformation-as-usual’ mindset, together.

“We need to continue down a data-driven pathway as we strive together towards the OECD’s Tax 3.0, where tax ‘just happens’.

Jordan, who will leave the role early next year, 10 years after being appointed the first commissioner from outside the organisation, has been a strong advocate for digital pushing the ATO to digitally transform its services and harness new technologies to deliver a seamless digital experience for users.

He’s repeatedly said Tax 3.0, where reporting, payment and real-time compliance checks coincide with the taxable event, continues to be the ‘North Star’.

“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?’

Last year he noted the Australian Taxation Office’s plans to be ‘fully digitalised’ by 2030, providing a service where tax ‘just happens’.

Speaking at the Xerocon conference a year ago, he told attendees: “We want businesses and their representatives to be able to interact with us through the software or tools they are already using to run their business and manage their finances.”

Tax 3.0 relies on seamless, integrated and automated systems enabling data to flow from the systems taxpayers already use to the ATOs without any extra effort, he says. But it would also involve ‘reimagining’ other systems so businesses are no longer required to do monthly or quarterly GST reporting. 

“If digital systems can bring together point-of-sale, banking and eInvoicing data at the time of purchase or sale, can their systems report the GST paid or collected to the ATO in real-time too?” Jordan says.

This week, however, he noted that a mindset shift is still needed for increased digital services to take off, with close to one million paper activity statements still being received by the ATO and cheques still being sent.

This mindset shift must also include tax professionals themselves, with Jordan revealing that more than one in five of the 1.4 million calls the ATO answered this financial year – around 220,000 calls – have been from tax professionals, many regarding activity that can be self-served through the ATO’s online services. 

Improvements are on their way to make this easier, including a new website coming later this year, providing improved access to information.

“Now it’s up to us to make sure that the new modern platform for our web system has the easiest search,” Jordan says.

“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’.

“However, tax ‘just happening’, won’t just happen, it will required intelligent co-design, and thoughtful collaboration and delivery,” he says.

“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.” 

Extended digital security to help tax professionals address issues such as identity theft and fraud is also planned.

“Our client-agent linking is soon to be rolled out to all companies, trusts and partnerships with an ABN,” he says.

“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 their clients, can be confident only authorised people have access to client information.”

He challenged tax professionals and advisors to ensure they were fit for the future, with strong data literacy alongside ethics and integrity, financial intelligence 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 cyberthreats.”

He noted some of that protection falls back onto the tax professionals themselves, with a need for appropriate safeguards bolted onto their systems, and the ability to do due diligence as identity theft fraud rises.

Jordan also noted the importance of measuring the right things. In response to mention of complaints that the ATO call centre complaint system can be ‘challenging’ and time consuming, he noted that while the vast majority of things ‘just go through the system’ those that are more complex or out of pattern can prove the exception. 

“Hopefully we’re getting better.

“We’re making sure we’re better and we’re trying to resolve it. We’re making sure we’re not measuring the wrong things. It used to be how quick can you get off the phone? I said but no, it should be how quick can you resolve the problem, rather than palming it off to someone else.”

Looking forward, Jordan says he believes there will be continued investment into data analytics for the ATO under its new leadership. 

“You could have have great data lake but unless you can match it to someone or some entity, it’s useless. So there will be a lot more in that space.”

While he says he’s proud of all that’s been achieved over his 10 year tenure, and that strong foundations are now in place, he acknowledged that there were ‘a whole lot’ of IT projects still to be completed and urged his successor to ensure they are completed and to build on them.

“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.”

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