“I was raised by my parents to believe that you had a moral obligation to try and save the world. You sent money to the Red Cross, you registered people to vote, you marched in rallies, stood in vigils, picked up litter.” ~ Anne Lamott
1982-2004
"The poor and the middle class pay taxes, the rich pay accountants, the very rich pay lawyers - and the ultra-rich pay politicians." ~ George Monbiot in the Guardian, originally by Mohammed Saha
Kemi Badenoch: I was perfectly clear. What I said was not what you heard; what you heard was not what I meant; and what I meant is whatever I now say I meant. I am always right. Put another way: I am never wrong.
KPMG Australia chief operating officer Eileen Hoggett steps aside as audit leak fallout widens
Good lord. Their corruption, criminality, cruelty knows no bounds
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The leadership of an organisation may profess a certain set of values and set these down in writing (most of us have been part of an organisation that talks about “Openness” or “Boldness” or “Authenticity”).
These may be created in good faith but are often nonsense; and the attempt to codify them is generally futile. The true values of an organisation are evident in the behaviour and unspoken standards of the people who work there. The critical posts on “social media” is brought about in precisely the same way – in fact, it’s informed by these unspoken values.
After eight years in this mad house, I’ve seen it all – including surprising friendships
“Your children are not your children. They are the sons and daughters of Life’s longing for itself,” Kahlil Gibran wrote in his poignant verse on parenting. And yet we are, each of us, someone’s child — physiologically or psychologically or both — and they sing themselves through us as we sing ourselves into our longing for life, whether we like the melody or not.
The early-retirement trap: How to avoid loneliness, boredom and ‘wet leaf syndrome’
The early-retirement trap: How to avoid loneliness, boredom and ‘wet leaf syndrome’ Quitting work earlier in life is the ultimate goal for many. But the reality can be a brutal letdown.
Sue Williams
Social media is more of a habit than an addiction
In evidence, Mr Malone, Assistant Commissioner in the Fraud Prevention and Internal Investigations area, gave an overview of the number of integrity complaints received by the ATO on an annual basis. He indicated that 295 integrity complaints had been received in 2011-12; followed by 187 in 2012-13; and 241 in 2013-14.[15]Of the integrity complaints received, Mr Malone explained that approximately 20 per cent are substantiated.[16] This equates to a range of approximately 36–60 established integrity breaches per annum over recent years.
Matters relating to the ATO, ASIC and the AGD
This Sydney councillor calls himself the ‘1 per cent accountant’. Now he’s been caught
Tax office hides failure behind ‘hollow’ audit wins, says ex-executive
The ATO tries to talk up its audit success but the debt data shows it is failing to collect, writes ATO insider Liam Malone.
Any Australian Taxation Office auditor worth their salt cares about debt collection. Otherwise, what is the point of conducting audits and issuing amended assessments?
Despite the rhetoric of ‘One ATO’, the compliance and audit area works in almost complete isolation from the debt area. Whilst there are referral mechanisms, the compliance and audit business line can complete a lengthy (sometimes a couple of years duration) complex audit and with the result of no revenue being collected. So, the compliance and audit business line will trumpet an audit result of several million dollars of revenue. However, the real situation is this result is just hollow revenue reporting – no actual revenue collected and no prospect of collection.
I have seen numerous cases being undertaken and completed with significant resources over several years and with no actual revenue collected. Nevertheless, the ATO compliance business line reports the results and boastfully claims credit. The i’s have been dotted and the t’s crossed. The revenue result looks great on paper but there was never a chance of collection.
In fact, if there had been a reasonable recovery appraisal at an early stage, then a decision could have been made that either the case would be discontinued or very limited, targeted action may have been taken.
A good early holistic assessment considering tax compliance and debt recovery issues would enable a targeted approach, for example a focus on an individual or one or two entities where there is a chance of collection or some debt enforcement action like insolvency.
Debt owed to the ATO is out of control. The latest ATO annual report for the year ended 30 June 2025 reports collectable debt at $54.6bn. The total debt was actually over $105bn when insolvency debt and disputed debt is included.
Collectable debt was reported at $26.5bn as at 30 June 2019. So, it has more than doubled in only 6 years. In recent times, The Australian National Audit Office and the Inspector General of Taxation have both pointed out ATO shortcomings in this area.
The vast majority of the $54.6bn of collectable debt was self-reported by taxpayers via lodgement of income tax returns and business activity statements. The ATO still cannot collect it.
The $54.6bn of collectable debt would fund the NDIS for 2025-26 ($52bn) or mostly fund Defence ($59bn) for 2025-26.
The ATO is the main revenue agency for Australia. The revenue is required to fund government services. The taxman has failed as a tax collector.
ATO Senior management are all about case numbers, audits and reviews completed. During the Covid era there was an explosion in tax fraud often related to promotion on social media. The ATO was slow to react and deal with the revenue threat. This was all well documented in the media at the time. Indeed, some tax agents and accountants contacted the Treasury department directly as they were so frustrated and concerned about ATO inaction.
A common fraud involved an innocent taxpayer being the victim of identity takeover/fraud or having their MyGov account compromised or hacked. A fraudulent income tax refund may have been paid to a bank account controlled by the fraudster. In many of these cases, offenders were not identified and the innocent taxpayer needed ATO action to have their account remediated and fixed.
The remediation process was essentially an administrative process. However, the ATO dealt with these fraud mop up cases by creating a multitude of audit compliance cases and allocating them to auditors.
So instead of undertaking genuine audits, auditors had to spend considerable time doing cases which were just administrative mop up with no chance of revenue collection. However, these cases were reported as audits completed. Revenue results were reported, despite no real result and no revenue actually collected.
For example, a fraudster may have claimed a fraudulent income tax deduction in an innocent taxpayer’s name. The fraudster gets the money and disappears. The ATO audit disallows the deduction which gives the revenue result. The ATO then remediates the innocent taxpayer’s account to remove the debt obligation. So, there is no net result. Why are these cases reported as audits?
This indicates a lack of organisation integrity and transparency, also a waste of ATO audit resources. The result was that many genuine audit cases were not undertaken at that time due to audit resources tied up on fraud mop-up cases. Such cases should have been dealt with as administrative cases by lower level non audit staff and not reported as audits.
Liam Malone was an ATO auditor for 19 years across two periods of service. He spent 11 years in senior positions at the ATO. His experience included leading audits and reviews of multinational company groups and serious non-compliance audit cases, including a secondment to the AFP investigating tax schemes. He also worked on small and medium business cases.
Veteran ATO auditor reveals why the tax office is failing Australians
Despite collecting taxes from millions of Australians, the ATO values corporate buzzwords over genuine performance in its core business, writes former auditor Liam Malone.
The ATO senior executive service is primarily concerned with corporate reputation. Enormous failures are often characterised as “challenges”. The bureaucracy is overly risk averse.
Senior management are constantly telling staff how “excited” they are about the latest supposed innovation, change, success etc. Staff naturally become cynical about artificial, shallow corporate strategy and the common use of buzz words.
In the past few decades, the ATO and the wider Australian public service have entrenched more power at the SES level. The director level, Executive Level 2 – the level immediately below SES – has a much-reduced autonomy for decision making compared with several decades ago.
In practice, directors are largely just communicating SES requirements to the lower levels and reporting back up. Promotion and appointment to the SES is in the political sphere these days. Anyone perceived to have potential to “rock the boat” would not become a member of the SES.
Innovation is a particularly favourite buzz word and often involves an old idea being dressed up and presented as some newly introduced organisation-transformational change.
There is rarely any real engagement with the staff at the coalface – the ones doing the core business, such as compliance and audit staff – with a view to how management can be of real assistance to enable staff to do the job better. Instead, there is the appearance of engagement with staff when most decisions are made beforehand. SES site visits are announced well in advance and presented as if a management guru were in attendance. Real management gurus would regard their management position as finding a way to enable the doers, the staff, to increase performance in core business. Sadly, in the ATO and public service generally, this approach is virtually non-existent. The management culture is top down.
When the organisation is subjected to public criticism, the ATO defensive rhetoric often includes irrelevant and inappropriate verbiage about 20,000 hardworking staff. What about millions of hardworking Australians paying taxes and expecting the ATO to collect taxes from those who are not paying their fair share? The focus should always be on how well the tax system is serving the Australian population – approximately 28 million people – not the 20,000 supposed hardworking ATO staff.
Staff can be busy but what are they actually doing? What about core business?
The ATO Commissioner is paid around a million dollars per year, considerably more than the Prime Minister. It is reasonable to expect outcomes from highly paid government bureaucrats.
In his early days, several years ago, the current commissioner said a couple of things which I thought were positive, but I was somewhat cynical. Firstly, he mentioned the importance of core business and secondly he mentioned that he believed in listening to and cultivating different points of view.
However, my experience is that nothing changed in the organisation. It remained the same bureaucracy. There was a continuing culture that everything was as important as everything else. There was no focus or understanding of what in the organisation constitutes core business and what constitutes support services which enable the core business.
There was no true focus on results, outcomes, truly adding value. In addition, the organisation is dominated by group speak, and conformity is valued far more than consideration of a wide variety of views. Any type of perceived maverick view would be rejected.
Of course the ATO is not alone, many other federal government organisations have the same problems and lack of focus producing real outcomes. The government bureaucracy machine has become very effective at self-justification, and pointing to supposed outcomes and successes. The focus is more often on organisation image and public relations than the achievement of true outcomes.
Any ATO response to my criticism will likely be dismissive – possibly treating me as a “voice in the wilderness”. I note the Australian National Audit Office has reported some critical areas of concern about the ATO in recent reports: IT governance and security, fraud control failures, debt management and Financial Risks,
Procurement and contract management
The ATO is often let down by poor management, culture and systems. Despite this, some good work does get done.
The successes are often trumpeted in ATO media releases. The failures are missed opportunities and everything in between fades into nothingness. The ATO, the main revenue agency for Australia, needs to lift its game.
Liam Malone was an ATO auditor for 19 years across two periods of service. His experience included leading audits and reviews of multinational company groups and serious noncompliance audit cases, including a secondment to the AFP investigating tax schemes. He also worked on small and medium business cases
ATO Insider: The tax man isn’t looking at those who don’t play the game
Former ATO insider Liam Malone warns the ATO is too focused on those who engage with the tax system and not those who don’t.
If you don’t play the game, then the ATO is less likely to play you. The ATO’s audits are frequently generated by the data fed into its risk engines, but this data is largely based on compliant taxpayers who lodge their taxation returns and business activity statements. Risk engines often place too much emphasis on mere statistical labels in income tax returns.
Those who don’t play the game and don’t lodge are not included in the data. There is a bias towards selecting taxpayers who are somewhat to mostly compliant and there is a lack of human intelligence. One only needs to look at the intelligence failures surrounding various terrorist attacks to realise the value of human intelligence and the limits of system based intelligence.
A couple of decades ago, there was much more input and scope for auditor involvement in case selection. For example, an auditor may be auditing a taxpayer and gain good intelligence regarding a tax risk that involves wrongdoing by a tax agent, accountant or lawyer. There may be tax avoidance schemes in use that are being promoted to clients. However the ATO has grown more bureaucratic and there are now more risk engines and intelligence officers, many of whom have no audit experience.
The ATO compliance and audit process is a dog’s breakfast. It’s all over the place. The auditor must follow a large number of policies, procedures and processes etc. The emphasis is on compliance with these by the auditor. Auditors are afraid to miss a requirement in the audit process. There is frequent quality assurance to enforce the standards. However, the standards do not properly align with the achievement of outcomes. Despite this, auditors can be subject to strong criticism and possible management and discipline action for relatively minor noncompliance. There is not much room for sensible discretion.
This audit process and the culture that goes with it creates an auditor mindset of just following the next step rather than a focus on the big picture and possible outcomes. The organisational culture is that the automatic response to any perceived problem or issue is the introduction of more process, procedure and policy.
Senior management never saw a new policy, process, or procedure they didn’t like. There is no consideration of the overall ever increasing administrative burden, no attempt to streamline or consider along with the achievement of outcomes. ATO business lines operate in practice as empires that are more focused on their own internal agendas and objectives rather than what is best for the wider organisation. There is much bureaucracy and duplication of effort.
Profiling a taxpayer and relevant entities is an important early step in the audit process.
There is no overarching system to bring all this information together. Instead, the auditor is required to engage with and interrogate multiple internal and external systems and databases of varying quality and age.
The ATO legacy systems are poor quality, not user friendly and archaic. The Siebel case management system was introduced in 2006, the GST and activity statement systems in 2000 and the income tax system in about 2010. There have been updates to these systems but essentially they remain unchanged with the same archaic functionality and limitations.
The systems in use often are unable to properly transfer, communicate and reconcile important data. For example, during an audit, an auditor may be required to raise amended tax assessments for income tax and GST. Two different legacy systems would need to be used in this case. If two years of income tax were amended, then two separate year amendments would need to be made. If the taxpayer had been lodging monthly BAS for this period and amendments were also required, then up to 24 BAS may need to be individually amended. Amending income tax returns is more archaic, and less user friendly. Multiple pages must be traversed for each income year and sub totals and totals often needed to be manually calculated.
At the completion of the onerous amendment procedure for income tax and GST, then there is also the required reporting for the case management system, Siebel. There is no link-up between the income tax, GST and case management reporting systems. For the case results to be reported, it is necessary for the auditor to reinput the income tax and GST results for each period into Siebel. This is double data entry and a risk to the integrity of the figures. To say that the systems in use are not user friendly is an understatement. The systems in use are not fit for purpose in 2026.
AI has been trumpeted in importance by the ATO and other government departments. They would have you believe that they are using cutting edge technology. The reality is that AI is presently not adding much value. The predominantly legacy IT systems in use are multiple, aged and privacy/security requirements mean there is little use of AI.
Liam Malone was an ATO auditor for a total of 19 years across two periods of service. His experience included leading audits and reviews of multinational company groups and serious non-compliance audit cases, including a secondment to the AFP investigating tax schemes. He also worked on small and medium business cases.
