IGTO makes 9 recommendations following review into future of tax

Of the 28 parts of the recommendations made by the IGTO, following its research into challenges and opportunities presented by new and emerging digital technologies, a total of 19 were directed at the Australian Tax Office (ATO). 

The ATO agreed with 11 parts and disagreed with eight.

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) report, Future of the Tax Profession, was in response to requests from a broad range of stakeholders including the Commissioner of Taxation and examined the impacts of emerging digital technologies, along with the accompanying social, policy and regulatory effects on the administration of the tax system and the tax profession.  

The IGTO report observed that the relationship between the ATO and tax practitioners has been tested at times and made recommendations for improvements. Recommendation was also directed at the ATO’s identification and management of emerging tax issues and cyber security risks. 

The report also found that technological innovation is a key driver of the future of the tax profession and tasked the ATO with the critical role of preparing the tax system for the future. 

"The ATO, Tax Practitioners Board (TPB) along with tax practitioners and professionals collectively need to have strong working relationships to realise this future," said the acting IGTO, Andrew McLoughlin.

In a separate statement issued by the Tax Office, it welcomed the release of the report and said that a number of the recommendations were already underway. The ATO, however, judged that several fall outside of its remit. 

"We are constantly undertaking research into new and emerging technologies to assess their impact on the tax and super ecosystems and our clients. We will continue to communicate, co-design and consult with the profession when considering new technology," deputy commissioner Alison Lendon said.

The IGTO also observed that the role of the TPB may need to expand in the future to keep pace with developments in the tax profession and workforce more generally. Specifically, the flexibility of the regime, established by the Tax Agent Services Act 2009 (TASA), will likely need to deal with a wider range of professionals in future.

“The government has announced an independent review, chaired by Mr Keith James, into the TPB and its legislation and we are pleased to have assisted,” Mr McLoughlin said.

A risk for the TPB, the IGTO said, is that new technology enables more people to provide unregistered tax agent services, needing address directly or by the ATO, Australian Securities and Investments Commission and Australian Competition and Consumer Commission.

“Recommendations were made for government to consider reforms which would enhance the whole-of-government digital transformation and bolster sanctions upon unregistered tax service providers,” Mr McLoughlin said.

The TPB agreed with all parts of the IGTO's recommendations.