What's emerging? Principles guiding the ATO's digital strategy and what it means for employer obligations

Employers need to ensure that they are across the travel diary requirements to support the treatment of travel benefits as ‘otherwise deductible’ in the 2022 FBT return.

On 8 September 2022, the Commissioner of Taxation, Chris Jordan AO, announced that the Australian Taxation Office (ATO)’s Executive Group had endorsed a new digital strategy, which sets out the 2030 vision for enhanced digital administration of tax compliance, through integrated, real-time reporting.

The ATO’s digital strategy is aligned to the Organisation for Economic Co-operation and Development (OECD)’s “Tax Administration 3.0: The Digital Transformation of Tax Administration” discussion document, which was published in 2020. That document includes a digital maturity model that outlines recommended steps to achieve digitisation for tax administration.

Although the ATO’s documented digital strategy might not be released to the public for some time, it is expected that the strategy will be underpinned by the following five key principles  - broadly, these principles are based on integrating tax administration into taxpayer’s existent systems, focused on real-time compliance coinciding with the relevant taxable event:

Principle 1: Leverage natural systems

Building tax administration (such as assessment and reporting mechanisms) into the systems, software and tools currently used by taxpayers, with the aim of facilitating integrated/seamless compliance.

Principle 2: Imagine the possible

With the adoption of a transformation mindset, the digitisation to be developed is aimed at cutting the administration burden by utilising a single data source and reducing risk of errors and fraud. Ideally, digitisation developed ensures synchronicity with taxable events in real-time, all facilitated through one source. 

Principle 3: Sustainable digitalisation and benefits 

Where possible, the ATO will seek to re-use systems and capabilities, and keep dual-purpose in mind when new systems are designed. This means taking a whole-of-system approach, including sharing data with other government agencies to enable administration of separate regimes/services which rely on the same/similar inputs. 

Principle 4: Integrity by design 

In an increasingly digital environment, the ATO will seek to embed fraud prevention and cyberthreat measures into its systems as part of the design process. This is important given the sensitive nature of the data being transmitted.

Principle 5: Design for the user

The ATO will work together with tax professionals and digital service providers to ensure its revamped systems are “designed for the user”, and allows for ease of use. In this regard, the ATO has flagged consultations and feedback programs as being key in implementing its strategy