The ATO has released a paper on how data and digitisation are driving the future of tax administration. The paper, delivered by Jeremy Hirschhorn, ATO Second Commissioner, Client Engagement was Paper delivered to the 2021 Pearcey Oration and Victorian Entrepreneur Award on 1 September 2021 and posted on the ATO website on 30 Sept 2021.
It covers the following themes:
- thinking about the tax return as a data set;
- insights from the COVID-19 response;
- observations on the ethical use of data;
- how data and digitisation are driving the future of tax administration; and
- the ATO’s role in taking a whole-of-government approach to data and digitisation.
While the ATO generally thinks about digitisation and data usage in the context of its compliance work, Mr Hirschhorn said that in most cases its best use of digitisation and data is in growing the voluntary compliance rate. Across the board, tax compliance in Australia is estimated at 93% after all ATO compliance activities. Of this 93%, about 90% (or just over $400bn) in tax comes in voluntarily, Mr Hirschhorn said. The ATO compliance activities bring in the 3% difference with about $15bn each year.
Mr Hirschhorn said the ATO now tends to think of data as on a curve, ranging from Level 1 (taxpayer provided data, where there is no bulk data set available, such as work-related expense claims where taxpayers keep their receipts) to Level 6 (where the data is so reliable that the tax system is actually designed around the data). The ATO said it is increasingly seeing “Level 6” as the future of tax administration. That is, to move the system to verifiable data, rather than bring the data to the system. [LTN 190, 1/10/21]