Time to bring tax system to the 21st century, says Andrew Mills, CTA

Published on: 19 Oct 2022

SYDNEY, Wednesday, 19 October 2022: Former ATO Second Commissioner, Andrew Mills, CTA (Life) today took the stage to deliver the Justice Hill Memorial Lecture in the opening keynote at The Tax Summit 2022, presented by The Tax Institute. Ahead of the Federal Budget on 25th October, Mills called on the urgent need for substantial changes, advocating a thorough, comprehensive reform to modernise the Australian tax system.

“At best, we see politicians fiddling around the edges and not recognising that real reform means reform of the system – all of it – not just some part. Opportunities to fix the system are regularly thrown away by tweaking one part only and, in doing so, exacerbating the problems that exist somewhere else. How many countries fail their families as Australia does by the punitive effective marginal tax rates that second-income earners face by virtue of the interaction of the tax and social security systems when working a fourth or fifth day? 

“Everyone talks about the problem, but a real and permanent solution requires addressing more than just one part of the system. It requires consideration of the tax system, the social security system and even the education system. Without considering the behavioural reaction to changes, throwing money at one part of the problem only is likely to be economically unproductive,” Mills said.

Tax policy development and tax administration

Critical to ensuring that the tax system is and remains fit for purpose is the way in which tax policy is developed, implemented and ultimately administered. Improvements in tax administration will improve trust in the overall system and result in improved support of, and compliance with, the tax system.

The failure to adequately engage and consult deeply when formulating tax policy, to seek and obtain the best advice from experienced experts, and the failure to maintain our tax laws has meant that we are saddled with some of the most difficult tax laws to comply with and to administer. 

Solutions: Give agencies a voice, allowing them to contribute to the policy of administration so that the relevant laws governing the operation of those agencies are suitable to allow for efficiency improvements that respond to community needs and expectations. 

Adequately resource treasuries and revenue agencies at both state and federal levels to ensure that users of the system are able to easily engage and meet their obligations. For example, while great strides have been made to enhance online interactions, there is still enormous room for improvement.

For Treasury: Tax policy development – it's about advice and consultation

Traditionally, governments have jealously guarded the development of tax policy as their domain. While it is true that policy is ultimately the decision and responsibility of government for which they will be held accountable, this does not preclude seeking and taking good advice. That advice has traditionally been the role of the public sector. Nonetheless, this has not prevented governments from seeking and relying on the advice of experts. A good example was in determining the health responses to the COVID-19 pandemic. That is appropriate and to be applauded. In fact, it should represent the model for all areas of government, but especially tax. 

For the ATO and Tax administration — focus on registration and lodgment 

Embrace modern, data-driven processes. The traditional construct was designed in a low-data era with the object of pushing responsibility for ‘getting it right’ onto taxpayers and their advisers. With higher levels of confidence in the data, the responsibility could shift back to sophisticated ATO systems that could allow a reversion to a full assessment environment. Why would I advocate this? Well, it would mean a lower risk of penalty for taxpayers and greater confidence in the finality of tax affairs. 

Correct reporting

Despite high levels of compliance, there are options to improve correct reporting in conjunction with improvements in lodgment. One significant opportunity for improvement is increasing the amount of information available as pre-filled data. 

Self-assessment and rulings

Correct reporting is reliant, in part, on self-assessment. Self-assessment is reliant on good quality and timely guidance from the ATO. 

The delays in the development of public rulings and the response to requests for private rulings can partly be found in inadequate resources being allocated to those areas by the ATO.

The ATO also issues other guidance material that does not constitute a binding ruling — fact sheets, practice statements, taxpayer alerts and other material published on the website are examples.

There are a number of possible solutions:

  • Abolish the current rulings regime and revert to a broader regime that existed pre-1992 (there is no guarantee, however, that this will result in more frequent or better rulings)
  • Make all advice (including all other ‘products’) issued by the Commissioner binding on the ATO 


  • If the current system is to be retained:
    • Consider outsourcing some or all of the rulings process
    • Provide for objections and appeals to be able to consider revised arrangements substantially the same as the original arrangement ruled on

On-time payments

More real-time payment, including GST, at point of sale or transaction, would help improve on-time payments across the system. Getting people into paying their business tax obligations early requires a fundamental rethink of our PAYG Instalments approach. Once in the payment system, then it should be possible to manage payments. However, the problem for many businesses in the early years is the delay in getting into the swing of payments in the first place. 

The Australian Taxation Office itself

The funding model for the ATO has been the subject of meeting political objectives of the relevant government at the time (this applies to both sides of politics) as well as a ‘one size fits all’ approach to so-called efficiency dividends. 

A better way of collecting tax might exist – the most obvious of which relate to investment in systems and technology to improve up-front compliance rather than audit. This would be much more valuable to the system and the government, having the added benefit of building trust in the system.

Organisation of the Australian Taxation Office (ATO)

The emphasis of the ATO should be less about ‘catching’ those who make mistakes and more about putting in place the infrastructure to support better education and participation, more accurate reporting (through better data collection and presentation to taxpayers) and better, more automated and more real-time collection mechanisms. 

Such an approach would require a fundamental shift in the way the ATO is funded as well as a shift in the way it is organised. It should result in the need for fewer auditors and in a change in culture from what often feels like a “gotcha” mentality to one of truly being of assistance. 


Australians have a relatively high level of voluntary compliance with the tax system. This is a valuable commodity in our system. However, it is a mistake to automatically equate that compliance with trust.

Despite the relatively high levels of voluntary compliance, there is a lack of trust between the administrator and taxpayers, which is evidenced by audit and debt collection approaches and efforts, and which adds to the compliance costs imposed on taxpayers.

Solution: Where there is trust, there can be a new and principled approach to the way law is drafted. This should mean simpler law. It should mean law that is adaptable to changing circumstances and new and emerging ways of doing business.

Mills concluded, stating: “I expect little fundamental tax reform to occur in the near term – I would love to be pleasantly surprised otherwise. Nonetheless, if it is not possible to get that kind of change then there are opportunities to change the policy development and administration of the system. I have sought to identify some today, and I am sure those in practice can identify other opportunities. I challenge all practitioners to be true professionals in the style of Justice Hill and advocate for such change.”

Mills joins other heavy hitters at The Tax Summit, including former Prime Minister, The Hon Malcolm Turnbull AC, and Independent MP Allegra Spender at The Tax Summit. Mr Turnbull will share his insights on our current economic climate and outlook, while Spender will be advocating for a wide-ranging parliamentary review on our tax system. 

The key to tax reform lies in a comprehensive understanding of the tax system as a whole. The Tax Institute will be releasing an introductory, video-based tax program that allows non-tax technical team members to better understand Australia’s tax system in November. Called Introduction to the Australian Tax System, the informative video works to increase tax literacy and appreciation for the role of tax practitioners outside of the profession. It’s presented by The Tax Institute’s own tax experts, Scott Treatt, CTA, Andrew Mills, CTA (Life), Robyn Jacobson, CTA and Abhishek Shekhawat, ATI.


The Tax Institute is the leading forum for the tax community in Australia. It is committed to furthering tax education, representing its members and continuously improving the tax system for the benefit of all.


About Andrew Mills, CTA (Life) 

Andrew Mills, CTA (Life) has over 40 years’ experience in the tax profession, including periods in the ATO, commerce and the tax profession. He is currently Chair of the Financial Reporting Council. 

From 2020 – 2022, Mills was Executive Director at The Tax Institute and drove a strong focus on tax reform. As the ATO Second Commissioner from 2014 - 2019, Mills had overall responsibility for the ATO’s law practice, including law interpretation, dispute prevention and resolution and the ATO’s role in policy and law design. He was a Director at Greenwoods & Freehills for more than 20 years and managing director of the firm from 2006 to 2011. Mills was President of The Tax Institute in 2006– 2007 and is a former Governor of the Taxation Research Foundation. In practice, Mills was an advisor to a number of Board of Tax reviews. He holds a Bachelor of Business, a Master of Laws and a Graduate Diploma in Tax Law. He is a Chartered Taxation Adviser (Life), a member of the Australian Executive of the International Fiscal Association, on the Advisory Boards of the Tax and Transfer Policy Institute at the ANU and of the Melbourne Law School Tax program, a graduate of the Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia. 



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