Australian Taxation Office Corporate Plan 2024-25: key focus areas for the coming year

The Australian Taxation Office (ATO) released its 2024-25 Corporate Plan on 13 August 2024. The Plan provides coverage of the functions of the ATO, highlighting its key activities, capabilities, partners and risks. It also details the measures by which the ATO will assess and report on its performance.

It is clear from the Plan that compliance activity continues to be a focus of the ATO. More than ever, taxpayers will need to proactively prepare to engage with the ATO and respond to requests in relation to the tax treatment of their day-to-day activities and key tax risk areas.

Key Focus Areas

The ATO have set out a number of key focus areas for 2024-25. Of particular interest to taxpayers will be the following:

a) Strengthening Debt Collection – a new payment strategy will be implemented tailored to different client segments. We can expect to see an increased focus on the collection of business debts, and in particular, superannuation guarantee, PAYG witholding, and GST.

Taxpayers who fail to engage with the ATO or who purposefully avoid payment obligations will face increased scrutiny and ‘decisive and swift’ recovery action.

b) Enhancing Counter Fraud Measures – efforts will be made to strengthen systems and protect clients from fraud in the Australian tax system. This will include increased monitoring and fraud detection, as well as a commitment to take ‘firm action’ where fraud is suspected, or in cases of intentional deceit or reckless behaviour.

c) Sustaining Multinational and Large Taxpayer Performance – the ATO will continue their pursuit of new priority tax risk areas with the goal of improving the compliance of multinational enterprises, and public and private businesses and groups. It is expected that improved public reporting will boost tax transparency, particularly in light of the proposed new public country-by-country reporting rules which will require taxpayers to provide the ATO with certain tax and financial information, and the ATO is in turn required to publish.

The ATO will commit to supporting large businesses through the timely provision of tailored advice and guidance. It will also collaborate proactively with other tax jurisdictions to ensure international tax challenges are overcome.

d) Strengthening the Value of Data and Digital – the ATO will seek to expand its use of automation and artificial intelligence (AI) in order to increase operational efficiency.

Performance Targets

For the 2024-25 year, the ATO has set a total revenue target from all compliance activities of $16.0 billion. This is slightly increased from the $15.7 billion target for 2023-24, but represents less than the latest results from 2022-23, being $20.3 billion.

Broader Operating Context

It has also been noted that in 2024-25 the ATO will be reducing the outsourcing of core work, particularly service delivery and data analytics. This is in line with the broader trend being adopted by the Australian government of reducing its spend on external labour.

Conclusion

While the ATO has not identified any key industries or programs of focus for 2024-25 in its Plan, it is clear that there will be continued scrutiny over multinational and large taxpayers. This will likely take the form of continued review and audit activity by the ATO while it continues to administer its justified trust programs and identify areas of industry-specific risk.

Cases of recklessness or intentional deceit, amounting to potential fraud will be dealt with firmly. The strengthening of the ATO’s digital platforms, automation, data matching and use of AI will assist with the identification of such cases.

In line with recent trends, taxpayers with outstanding ATO debts can expect to face increased efforts by the ATO in respect of recovery, especially as approximately $50 billion in debt is currently owed to the ATO. We anticipate that next steps may include the use of formal recovery action such as garnishee notices, director penalty notices, statutory demands and winding up proceedings.

This has been echoed in recent comments made by representatives of the ATO, including the Commissioner of Taxation, Rob Heferen in a speech before small businesses in April 2024. It is also reflected in figures provided by the ATO, who confirmed that 26,702 director penalty notices and 6,150 garnishee notices were issued in the 2023-24 financial year.

Stay tuned for our further succinct update on the ATO’s 2023-24 Annual Report once released.