For many Australians, tax time is a yearly ritual that brings a mix of dread, confusion, and—if you’re lucky—a little extra cash in your bank account.
But if the Australian Taxation Office (ATO) has its way, the days of poring over receipts and double-checking every figure could soon be a thing of the past. The ATO is considering a major overhaul to the way we do our tax returns, and it could make the process simpler than ever before.
The ATO’s new idea, called ‘assisted assessment’, is set to take the hassle out of tax time for millions of Australians with straightforward financial affairs. Instead of the traditional ‘self-assessment’—where you gather your paperwork, fill in your details, and hope you haven’t missed anything—the ATO would use the vast amount of data it already collects to pre-fill your tax return with all the information it has about you.
When July 1 rolls around, you’d be presented with a comprehensive summary of your income, investments, and other relevant details. If everything looks correct, you’d simply hit ‘confirm’ and your tax return would be lodged.
You might be surprised by just how much the ATO already knows about your finances. Thanks to advances in technology and data sharing, the ATO now receives information from a wide range of third parties.
These include banks and financial institutions, which provide details such as interest earned and account balances; employers, who report salary and wages; investment bodies, which share information on dividends and trust distributions; health insurers, who supply private health cover details; and government agencies, such as Centrelink, which report on payments and pensions.
This data is already used to pre-fill parts of your tax return, but the ATO’s new plan would take it a step further, creating a near-complete picture of your financial year.
The new system is designed for people with simple tax affairs—think employees with one or two jobs, a savings account, maybe a few shares or managed funds, and private health insurance. For these taxpayers, the ATO’s data will likely cover almost everything needed for an accurate return.
However, if your tax situation is more complex—say, you run a business, own multiple investment properties, or have significant deductions that aren’t reported by third parties—you’ll still need to lodge your return the old-fashioned way. The ATO simply can’t access all the details required for more complicated cases.
‘Third-party data gives administrators the ability to feed information into the system that makes complying easier, and importantly, not complying harder,’ Mr Hirschhorn says.
By relying more on data from banks, employers, and other institutions, the ATO can reduce errors, catch under-reporting, and make the whole process more efficient.
Traditionally, the tax system relied on four pillars: registration, lodgement, payment, and correct reporting. This put the onus on individuals to get everything right.
But with the rise of third-party data, a fifth pillar has emerged—third-party reporting. This new approach shifts some of the responsibility away from taxpayers and onto the organisations that already hold much of the relevant information.
If you’re someone who dreads tax time, this could be a game-changer. Imagine logging in to the ATO’s online portal, seeing all your details already filled in, and simply clicking ‘confirm’. No more late nights with a calculator, no more worrying about missing a crucial document.
Of course, it’s still important to check that all the information is correct. Mistakes can happen, and you’re ultimately responsible for your return. But for most people, the process should become much smoother and less stressful.
With all this data flying around, it’s natural to wonder about privacy. The ATO is subject to strict laws around data protection and privacy, and any new system would need to meet high standards for security. Still, it’s a good reminder to keep your own online accounts secure and to be wary of scams, especially around tax time.
The ATO hasn’t set a firm date for rolling out ‘assisted assessment’, but the trend is clear: more automation, more data sharing, and less paperwork for taxpayers.
What do you think about the ATO’s plan for ‘assisted assessment’? Would you welcome a simpler, more automated tax return process, or do you have concerns about privacy and accuracy? Share your thoughts in the comments below!
