ATO fails on risk management and tax collection, as ‘friends’ mark tax office’s homework
Billions lost to fraud, collectable debt doubled – and the Australian Taxation Office has somehow awarded itself a gold star for performance.
Liam Malone
Captain Kirk said ‘risk is our business’. At the ATO the mission is the same but the tax office fails to collect. Picture: CBS via Getty Images
James Tiberius Kirk, captain of the USS Enterprise in the hit TV show Star Trek once said: “Risk is our business.”
Risk is also the main business of the Australian Taxation Office.
Effective risk management is central to all organisations in the public and private sector.
The ATO’s main job is to protect the revenue. Fraud controls, fraud protection and investigations are central.
In recent years, the ATO has failed in preventing and responding to fraud, with the result that several billion dollars has gone out the door to fraudsters.
In addition, the ATO has failed in debt collection. The ATO collectable debt more than doubled in only a six-year period. Collectable debt as at June 30, 2019, was $26.5bn, and as at June 30, 2025, was $54.6bn. The ATO has largely tried to blame the Covid years for this blowout, but this is not credible, or acceptable.
Yet the Tax Commissioner, in a recent speech posted to the ATO website, stated that: “An APS review last year confirmed the ATO is a high performing agency.”
Mr Tax Commissioner, with respect, are you serious?
ATO commissioner Rob Heferen and ASIC commissioner Kate O'Rourke. Picture: John Feder
Approximately $2bn have gone out the door to fraudsters in 2022-23, and collectable debt has doubled.
I guess it helps when your mate marks your homework, in this case an Australian public service review of an Australian public service agency – the Australian Taxation Office. What a convenient arrangement. Don’t worry about what taxpayers, tax agents and businesses think about your performance, just get a big tick from another part of the government bureaucracy.
After the massive fraud on the ATO by tens of thousands of individuals, the ATO was rightly subject to much attention and criticism in the media. The ATO rejected this criticism.
Indeed, in early 2022, an ATO senior executive service officer was quoted in the media that the ATO had “swooped in quickly” and stated that a “10 out of 10” effort was put in to stop fraudulent attempts.
If such a massive failure had occurred in the private sector, then it is highly likely that senior management would have been held accountable. Senior managers may have lost their positions. However, in the cosy world of the Australian public service this is not going to happen.
Perhaps it may be referred to as a “challenge” before, in due course, the self-congratulation culture continues. So, in 2025, only a few years after a massive fraud failure, the ATO is “a high performing agency”. What a remarkable turnaround.
The problem with the ATO and the wider APS is that the central focus of risk management is reputational risk. This is mostly about the organisation having a good public image, hence the frequent use of positive rhetoric – bureaucratic spin.
The loss of billions of dollars to fraud in recent years is due to a failure of systems, culture and most importantly, management.
The primary compliance products of the ATO are audits and reviews. The ATO tracks all information on audits and reviews through its case management system.
However, the ATO does not want the public to know those numbers and outcomes, as it refuses to report the information in its annual reports. So much for transparency.
ATO senior management concerns are all about the numbers of audits and reviews. The Inspector-General of Taxation (now known as the Tax Ombudsman) has made frequent criticism of a lack of ATO transparency.
In 2024, the Australian National Audit Office audit issued a damning report on the ATO, stating the ATO fraud framework was “not fit for purpose”.
The report made a number of recommendations. The ATO stated it was adopting the recommendations and hence all good, nothing to see here.
In fact, now only a few years later, the ATO is an alleged high performing agency.
Perhaps young people should consider pursuing a career in the APS senior executive service. The jobs are very well paid, and your career will be pretty much risk-free.
Good work if you can get it, so why take a risky path in business.
The silver medal for fraud failure goes to the ATO. The gold medal, of course, goes to the NDIS.
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 noncompliance audit cases, including a secondment to the AFP investigating tax schemes. He also worked on small and medium business cases.
