How Is Making Tax ‘’Just Happen’’ Possible By 2030?

Before we know it, the eight years to 2030 will have zipped by. If you are thinking about all the things you want to accomplish by the new decade and feel there is not enough time, spare a thought for the ATO’s very ambitious target to make tax ‘just happen’ by 2030.

At a recent conference, ATO Commissioner Chris Jordan outlined the 5 principles that would guide them in their future plans.

1. Leverage natural systems

When the ATO says natural systems, they mean they want business and tax agents to interact with them using the software and tools already used to run their businesses and manage their finances.

This means that cloud accounting apps such as Xero will play an even bigger role in how you interact with the ATO in the future. We have already seen the start of this interaction with single touch payroll, as discussed in our blog 2030, the year when tax will just happen through digital transformation.

With real time data coming into your accounting software (for example through eInvoicing as discussed in our blog 2030, the year when tax will just happen through digital transformation), and with app links to the ATO, you can start to imagine what tax just happening might look like. Reporting and payment mechanisms will be built into the software you already use.

2. Imagine the possible

With integrated systems and real-time reporting and payment, the future is BAS free. This will reduce red tape the compliance costs of businesses.

3. Sustainable digitalisation and benefits

Sustainable digitalisation and benefits means that wherever possible, the ATO will re-use existing systems and capabilities. New systems will be designed with re-use in mind. JobKeeper was a perfect example of this, where the ATO used STP reporting to verify data before making payments.

Sustainable digitalisation is also about taking a whole-of-system approach to solving problems and delivering services and programs to the community. The ATO currently shares STP data with Services Australia and the Department of Employment and Workplace Relations to help them deliver welfare payments and improved services to their customers. In the past, they have shared de-identified data with the Australian Bureau of Statistics, and economic stimulus information with the Treasury to see how the Australian economy tracked in real time during the pandemic.

4. Integrity by design

Ever-evolving cyber threats and fraud attempts will present one of the biggest challenges to all stakeholders. The ATO currently receives, on average, 2.5 million attempted cyber intrusions each month. It is not just large organisations being targeted. Small businesses are often the preferred target of cyber criminals, as they don’t have resources and know-how to protect data in the same way that large organisations do, making them a much easier target.

eInvoicing is one of the ways secure data transfer mitigates cyber threats from the supplier’s accounting system to the customers, thereby eliminating the possibility of bank account details being changed.

Another initiative to prevent fraud is the introduction of director IDs. A director ID is a unique 15-digit identifier given to a director or someone who intends to be a director. All directors will need a director ID by 30 November 2022. The implementation of director IDs will bring together more than 30 ABR and ASIC business registers. Our blog Director ID deadline looms contains more information, including how to obtain yours.

Measures are also underway to strengthen the tax agent - client linking process to stop unauthorised access to taxpayer information. A pilot program has been initiated, whereby a taxpayer must nominate a tax agent before the agent can link the client to their practice. This may present a small barrier when a taxpayer wants to change their tax agent, particularly those less digitally savvy.

5. Design for the user

The ATO is committed to working with tax agents (those who will ultimately be at the forefront of this digital transformation) and software providers such as Xero to ensure that the systems designed are for the user.

For example, there is a proposal to transfer the PAYG instalment system so that business software (e.g. Xero) will calculate the instalment based on real-time data, rather than past performance. The Treasury is leading this transformation, but the ATO has already held feasibility discussions with software providers.

After listening to the commissioner, I formed the view that business has now reached the digitalisation tipping point. Within the next 8 years, any business that doesn’t get onboard will cease to exist. Feeling uncomfortable with the way data is collected and used will be irrelevant in the discussion. Digital transformation will be mandated in the same way that STP and director ID’s have, business owners simply won’t have a choice.

If you would like to read more about what digitalisation means for your business, check out our blog When tax ‘’just happens’’. What does this mean for business?

If you would like specific advice tailored to your business and circumstances, Accounting Heart offers affordable service packages where you can work with Sonia one-on-one to help you get your business where you want it to be. Book your FREE Discovery Call to find out more.

Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.