Expanded ATO powers to address tax fraud

The Government will commit $86.3 million over four years from 1 July 2026, with ongoing funding of $9.7 million per annum from 2030–31, to implement Phase 2 of the Counter Fraud Strategy. This will modernise fraud prevention and detection in the tax and superannuation systems, including strengthened real‑time ATO detection capabilities, enhanced individual protections, and expanded live monitoring of fraudulent account access involving tax agents, businesses, and high‑risk superannuation activities.

Fraud by tax agents and intermediaries

The ATO’s powers will be strengthened to combat fraud by tax agents and intermediaries, including proposed measures that would allow the ATO to pause and waive tax debts for victims of intermediary fraud, and to pursue recovery action against intermediaries responsible for that fraud. Existing garnishee powers will be expanded to cover jointly held assets used to shield funds from recovery.

At present, while the ATO has administrative discretion to defer payments, remit interest, and waive penalties, it does not have a general power to waive primary tax liabilities for victims of fraud, nor to substitute recovery from a victim with recovery from a fraudulent tax practitioner.

Tax secrecy exceptions

Further targeted exceptions to tax secrecy and enhancements to tax regulators’ information-gathering powers will be introduced to support system integrity, compliance, and effective administration.

Under current law, tax secrecy obligations bind taxation officers in relation to ‘protected information’, being information obtained or generated under a taxation law that relates to the affairs of an identifiable entity and is not already lawfully public. Disclosure is prohibited unless one of the existing exceptions applies, such as disclosure for the administration or enforcement of a taxation law, disclosure with taxpayer consent, disclosure pursuant to court or tribunal proceedings, or disclosure expressly authorised under other laws.

Impact on tax receipts

These counter-fraud measures, in conjunction with additional targeted compliance activities, particularly in relation to the R&D Tax Incentive, are expected to increase receipts by $217.8 million and increase payments by $72.9 million over the five years from 2025-26.