Hockey defends Lee family : The annual tax time crackdown and the myth of enforcement

 

Hockey defends Lee family, saying ATO chases ‘every wealthy person’

Mark Wembridge and Primrose Riordan

Former treasurer Joe Hockey said it was normal for wealthy people to be embroiled in disputes with the Australian Taxation Office as the businessman defended his role as chairman of the Lee family office, which had been pursued by authorities over $273 million in unpaid taxes.

Hockey, who launched his own consulting firm Bondi Partners after a long political and diplomatic career, suggested criticism of the Lee family office, and in particular its chief executive Felix Lee, could be fuelled by racism.

Former Treasurer Joe Hockey has come to the defence of Felix Lee, following reports that Anthony Albanese attended a fundraising dinner with the Lee family. Michaela Pollock

The family first came to prominence after it was revealed that Phillip Dong Fang Lee had gambled more than $2.2 billion through Star Entertainment’s Sydney casino over 15 years. Attention returned to the family this year after The Australian Financial Review’s Rear Window column revealed that Felix Lee had hosted a fundraiser for Prime Minister Anthony Albanese.

Guests at the fundraiser, held in the Lee family’s Point Piper mansion in July, included Commonwealth Bank boss Matt Comyn, the bank’s former boss David Murray and HSBC’s former Australian CEO, Antony Shaw.

On the sidelines of the Diggers & Dealers Conference in Kalgoorlie, where he was a keynote speaker, Hockey said he was not concerned about the source of the Lee family’s wealth. “I wouldn’t have been part of it [if he was]. It’s totally above board. I know it’s totally above board,” he said.

“Just be very careful about racism here,” he added. “[Felix Lee] is Australian-born, an Australian citizen, he has one passport. I and others wouldn’t be involved in this process if we weren’t absolutely sure that, you know, [the source of Lee’s wealth] is very genuine, very real.”

“His family made money out of infrastructure in China. So what? What’s wrong with that? Everyone over here is making money out of China. It’s getting a bit out of control. I’m worried that there’s a sort of racism that’s driving things, and that’s really regrettable.”

Albanese has repeatedly refused to answer direct questions about the fundraiser hosted by Felix Lee, 25, or how much money had been donated to the Labor Party. Last month, asked on the ABC’s Insiders program whether he had dined at the Lee family’s house, Albanese said: “I attend lots of dinners in lots of places, and I don’t talk about private dinners.”

When asked about the donation and whether it had been paid to the Labor Party, Hockey said: “Oh, I don’t know anything about that.”

The donation and the dinner have been controversial because the Lee family has been embroiled not only in the Bell review into money laundering at Star Sydney, but in a long dispute with the ATO over $273 million. A settlement was secured in 2022, although the ATO appeared on the deed of security for the Point Piper home, known as Mandalay, one year later.

“Every wealthy person in Australia seems to have had a disagreement with the ATO. So what?” Hockey said in Kalgoorlie on Monday.

The former treasurer made a number of other remarks at the conference, a major event for the mining industry in Western Australia, suggesting that the Coalition should learn from the rise of populist politicians in the United States and the United Kingdom on how to deal with One Nation.

“Governing a country is very different to being, you know, a popular movie. I’ve had this conversation with Nigel Farage as well. Donald Trump learnt it in his first term. It’s easy to get elected. It’s hard to govern,” he said.

“If the Coalition needs to have a partnership with One Nation to change the government ... they’ve got to respond to that.”

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Mark Wembridge covers resource companies for The Australian Financial Review, based in Perth. He formerly worked for the Financial Times in London and Hong Kong. Connect with Mark on Twitter. Email Mark at mark.wembridge@nine.com.au

Primrose Riordan covers private companies and family offices from the AFR’s Sydney newsroom. Primrose was previously a correspondent for the Financial Times and worked in Canberra. Message Primrose on Signal: Primrose.55 or https://tinyurl.com/PrimroseSignalConnect with Primrose on Twitter. Email Primrose at primrose.riordan@afr.com

The annual tax time crackdown and the myth of enforcement

A former ATO insider says the usual crackdown on expenses is just a nod to protecting revenue, as the agency’s epic enforcement powers are wasted in the fight against multinational tax offenders.

Liam Malone

August 2, 2026 

The ATO has a serious lack of field presence in the tax non-compliance space. Picture: NewsWire / Josie Hayden

We are in tax time now and the ATO is busy spruiking the message to the salary and wage taxpayers in particular. They are the bread and butter, the low hanging fruit. The base and easier revenue must be collected as going after the non-compliant taxpayers, who pay no or too low tax, is hard work. Tax agents and accountants are willing participants in the annual scare campaign as there is an opportunity to increase their own revenue. 

It is interesting to read the feedback comments when such tax time articles are published with the theme of the ATO cracking down on some particular expense. The average punter is rightfully cynical and commonly refer to multinational tax avoidance and evasion and others ripping off the system.

The ATO rarely uses its formal access powers. These legislative powers enable the ATO to access taxpayer’s premises to inspect documentation, records – paper based and electronic. The ATO annual reports state the number of occasions that access powers were exercised: In the 2024-25: 32. In 2023-24: 58. In 2022-23: 52.

So in Australia with a population of 28 million, the ATO is basically using its formal access powers a few dozen times a year. This indicates a serious lack of ATO field presence in the tax non-compliance space. Auditors are conducting mainly desk based audits. There are thousands of ATO formal information notices issued each year but most of these are bank information notices. 

The property, building and construction industry has the worse tax compliance record and the most dodgy practices. In recent years, there have been numerous cases of phoenix behaviour and phony labour hire companies. The revenue loss relating to income tax, GST and PAYGW (employee tax withheld) has been substantial. 

Such widespread tax evasion is frequently planned meticulously in advance in the way the numerous entities are structured. There is a network of dodgy accountants, lawyers and insolvency practitioners to facilitate such practices. Frequently, the ATO has been very overdue in taking any enforcement action. The ATO is not effective at using proactive intelligence actions to cut off the evasion. The debts are allowed to build without appropriate ATO action. 

If taxpayer self-reported tax obligations and ATO audit related obligations cannot be collected then they are just entries on a page. It’s reported as revenue, but if it is not collected it is useless. Effective debt collection is paramount. 

The Australian Taxation Office (ATO), Fair Work Ombudsman (FWO) and Australian Border Force (ABF) acting together.

In May 2026 the Tax Ombudsman released a report that complaints against the ATO are up 127 per cent compared to the same period in the previous financial year. This particular extract from the report caught my attention: “We continue to engage with the ATO to encourage them to differentiate between those who won’t pay from those who can’t pay their debts.”

This analysis is consistent with my own experience working in the ATO bureaucracy. The ATO fails at this basic stuff that is not rocket science. It involves the proper use of judgement. 

It is entirely reasonable to expect the ATO to be able to decide whether a taxpayer is genuinely engaging with the system or not. In the rare cases where it may be line ball, then give the taxpayer the benefit of the doubt. 

The ATO has several thousand staff who work entirely in the debt collection area. This is adequate staffing, however the outcomes are not there. Debt owed to the ATO continues to escalate out of control. The ATO annual report for 2024-25 puts collectable debt owed to the ATO at $54.6bn. This figure had more than doubled over the previous 6 years. 

ATO debt collection practices mean that the majority of cases are not individually allocated to a debt collection officer. This is unfortunate as case allocation means more personal accountability for outcomes. In a system where many necessary case actions are just streamed to the next available debt officer, then frequently the result is a less effective and efficient operation. 

The ATO’s own compliance model, a pyramid model, provides for firmer compliance strategies to deal with poorer taxpayer behaviours and attitudes to compliance. At the apex of the pyramid are the taxpayers that have decided not to comply. The model states that the ATO should use the full force of the law in these cases. 

In practice, the ATO makes scant use of the “full force of the law”. The ATO compliance model is a good document but there needs to be more enforcement action at the top of the pyramid.

The public expects the ATO to collect the tax that is due and to go after those who are doing the wrong thing. The ATO’s main goal is to protect the revenue. It needs to get better at doing that and lift its game. 

Liam Malone was an ATO auditor for 19 years across two periods of service. He led audits and reviews of multinational company groups and serious non-compliance audit cases, including a secondment to the AFP investigating tax schemes