Australian Taxation Office’s compliance threats are all bluff that pick off low-hanging fruit
Australia’s tax enforcers have swapped boots on the ground for media releases and morning TV – and a former ATO executive says the bluff and bluster no longer works.
Liam Malone
June 9, 2026
The tax office talks tough but in reality compliance measures mostly target small PAYG taxpayers, while the real problems are in the too-hard basket The tax office talks tough but in reality compliance measures mostly target small PAYG taxpayers, while the real problems are in the too-hard basket Back in the day, I was pounding the beat as a 19-year-old rookie cop on the streets of Fortitude Valley, Brisbane. I was part of a highly visible deterrent enforcement strategy
The Australian Taxation Office is not the police, but it is responsible for administering the taxation system and enforcing the relevant legislation. The ATO has formal powers under legislation but mostly operates under a “co-operative compliance” model.
Does the ATO have an active deterrent and enforcement presence in the community?
The ATO likes to play a game: pretend you are everywhere when you are not. This game can also be called “bluff”.
Some of the ATO’s weapons of choice are the media release, system mass-generated letters to taxpayers and, at tax time, having some friendly assistant commissioner doing a round of interviews on national morning television.
Audits and reviews are mostly desk-based – conducted by ATO staff in the office without an accompanying field visit. Modern technology is used, including meetings being able to be conducted via video conferencing.
Field visits are uncommon these days. The ATO terminated many regional field sites in Australia around 2013-14. For example, in Queensland alone the ATO discontinued sites at Toowoomba, Southport, Bundaberg, Rockhampton and Cairns. There had been compliance staff at all these regional field sites who conducted most of their audits and reviews in the field.
In Queensland now there is an ATO physical presence only in Brisbane and Townsville.
In addition, itineraries for regional areas to conduct compliance activities such as audit are now uncommon compared with a decade or two ago. For example, a group of ATO auditors would travel to a regional location for a week to conduct compliance activities and audits. This sort of activity provides a visible deterrence. Word certainly gets around regional towns when the ATO is in town.
In recent years, tax agents, accountants and taxpayers are well aware that the ATO is no longer out there and that it commonly results in lower rates of compliance due to a lack of ATO presence. The fact is that to really conduct effective compliance, particularly to combat serious noncompliance, there must be a reasonable field presence.
A largely desk-based audit program will not be enough. The serious non-compliant taxpayers have contempt for the ATO. Their attitude is “come and get me”. And that is precisely what is required.
But there are so few itineraries to regional areas these days. The ATO would have you believe that it has adapted its operations to meet the digital age etc. I beg to differ. A big motivating force in this move was just saving costs – costs that are often just blown in another area.
Compliance staff are frequently informed by management that there are no funds available for regional travel, field visits or itinerary. However, there are always funds available for one type of travel. Senior executive service individuals fly around the country at will to conduct meetings.
I remember, only about a year ago our SES officer was visiting our Brisbane office from interstate. At a meeting, she informed us that there were funds available for travel. Senior management did not want to lose that funding as the end of the financial year was coming up – the old public service “use it or lose it” action. If you don’t use what is allocated to you in a financial year, then the risk is next year you might get a smaller allocation.
The SES officer cheerfully informed us that an SES conference would be held in Perth so all the travel funds would be used. Of course, that funding would have been highly useful for audit teams.
Commissioner for Taxation Rob Heferen and ASIC commissioner Kate O'Rourke. Picture: John Feder
Returning to those three common ATO strategies, they can be useful – up to a point. There needs to be a lot more substance beyond these strategies.
ATO media releases are frequently used to trumpet some successful ATO action; perhaps there has been an operation to disrupt tax fraud in a regional area. This is fine but it is implied that the ATO is always there to deal with noncompliance.
The truth is that most of the time the ATO is not there.
The system-based letters to taxpayers are often directed at PAYG employees, who are the low-hanging fruit in revenue collection. Perhaps work deduction claims are high. The implied threat is that there is a high risk of being audited if the taxpayer does not deal with the issue.
The ATO does not follow up with the vast bulk of these letters, which are attempted compliance by bluff.
The assistant commissioners on morning TV at tax time provide useful information. The motivation is to ensure that the PAYG taxpayers and other largely compliant groups stay engaged. The low-hanging fruit must be preserved because it is easier than going after the seriously non-compliant taxpayers.
Liam Malone is a former ATO executive.
