Date posted: 1/02/2018 10 min read

Chris Jordan’s Tax Office: The Big End of Town and beyond

Five years down the track, the ATO is getting on better with taxpayers – but it’s still exchanging friendly fire with tax agents.

In Brief

  • Chris Jordan is widely regarded as having had a successful first five years as Australia’s Tax Commissioner.
  • The ATO is turning its focus from multinationals to individuals and small businesses.
  • Jordan intends to keep pursuing tax system automation.

Anyone who accepts the job of tax commissioner will face doubters. When Chris Jordan FCA took the role in 2012, he recalls with a grin: “I had a lot of friends and colleagues quite helpfully saying: ‘Are you mad? What do you think you’re doing?’”

Yet after five years in the job, he has a better reputation than any Australian tax chief in living memory; Chartered Accountants ANZ’s tax leader for Australia, Michael Croker, calls him “highly regarded”. That sort of reputation made it easy for federal treasurer Scott Morrison to reappoint Jordan last year.

Politics eased Morrison’s path too. In a Coalition sometimes suspicious of public servants, Jordan is a moderate conservative who worked as an adviser in former Prime Minister John Howard’s office in the 1980s.

Then there are Jordan’s personal qualities. He started his working life as a policeman, retains the friendly no-nonsense style of good cops, and excels at developing allies. It was then Labor treasurer Wayne Swan who first picked him for the job, and Labor has supported him since. So has the crucial Sydney business community, where he cultivated deep connections during his KPMG years.

(Pictured: Chris Jordan FCA, Commissioner of the Australian Tax Office)

In fact, those relationship skills seem the defining quality of his time in the top job. Chris Jordan’s Tax Office gets on better with people. Most of the time, anyway.

Taking on the multinationals

What was Jordan doing when he took the job? As chairman of KPMG’s New South Wales office for 12 years, he’d won friends and influenced people. Now he wanted to run something. “When you’re CEO,” he explains: “you say something and people just get on and do it.”

He arrived in the job just as the issue of multinational tax evasion was coming to the boil. The timing was ideal, a chance to show he could pursue people he’d previously thought of as potential clients. When Apple, Google and Microsoft told a Senate inquiry they were not profit-shifting, Jordan returned to the committee to publicly question their claims.

A career public servant might not have gotten away with such a rebuke. But Jordan’s CV effectively immunises him against claims he is anti-business.

Just like dentistry

While pursuing multinational tax avoidance, Jordan set about an even bigger task: improving the ATO’s customer service expertise. He announced in 2013 that he wanted dealings with the Tax Office to be more like dealings with today’s dentists – “infrequent, quick and painless”. Many doubted he could do it.

Jordan is clearly proud of his progress towards this goal. He leans forward, talking with the enthused fluency of a man working hard to sell his own and his organisation’s achievements. He talks of removing over-engineered processes, unnecessary checklists and guidance. He also stresses “early engagement”, a basic but powerful principle of effective customer service that requires staff to quickly begin conversing with customers – and especially, listening.

“I wanted to make some very clear statements of behaviour and expectations,” he says. “Get out of your office. Get out of behind your desk. Go and talk to people. Pick up the phone; don’t write long letters no-one can really understand.”

He argues this has both freed up ATO staff and made them happier. “Their jobs are more satisfactory; our engagement levels are the highest they’ve been since we’ve been measuring it; our unplanned leave, which is a public service thing, but it’s a measure of engagement, is the lowest in 15 years, since we’ve been keeping the records.”

Reinventing the ATO?

The grand talk of “reinventing the ATO” may be a touch immodest. The ATO Jordan joined in 2013 already had a history of reshaping itself and its systems to meet customer needs. In the 1990s and 2000s, for instance, the ATO was among the first adopters of an idea called “responsive regulation”, which asks regulators to respond to rule breaches with the least intrusive strategy first and escalation only if the offender doesn’t respond.

Jordan appears mostly unaware of this history, even though it’s in line with his philosophy. Indeed, in the early days he repeatedly voiced his surprise at the ATO’s enthusiasm to embrace change, seeming to unconsciously imply he expected his new colleagues to be a bunch of stick-in-the-muds. He’s now trying to drop that phrasing.

These issues aside, there are clear signs that Jordan is doing something more than just blowing his own horn.

Take Acuity photographer Sean Davey, who found himself listening to Chris Jordan’s customer service plan as he photographed him for this article. Coincidentally, Davey had just experienced the ATO’s service, when he rang up the ATO to explain a payment delay. Rather than working robotically through a script, the ATO representative listened as he explained the source of the delay, asked how much he could pay upfront, and arranged for another call a few weeks hence. “We could actually talk like we knew each other,” says Davey. “The way in which he conversed with me made me so much more at ease.”

Anecdote is not data, but Sean’s pleasant surprise suggests the ATO’s customer service improvement is not just PR puffery.

Michael Croker sees it too; Chartered Accountants ANZ now interacts more with senior ATO officials, he says. Croker also praises Jordan’s empowerment of staff and his communications work, aimed at boosting public trust and confidence in the ATO.  

The fundamental goal that I have is for interactions with the Tax Office to be infrequent, quick and painless
Chris Jordan FCA Commissioner of the Australian Tax Office

One group that Jordan’s never quite won over, though: is tax agents. They’re fundamental to the system, but he finds them “a difficult segment to satisfy” and knows the relationship still needs fixing.

When he arrived, many agents were already angry about shortcomings in ATO IT systems, notably the online tax agent portal. Even as the ATO was trying to address those problems, the 2015 introduction of the MyGov site caused a new problem that Jordan still regrets: when people registered for the service, correspondence would be sent directly to them, in some cases cutting their tax agent out of the loop. “I don’t think there was proper consultation on our behalf to understand the impact that that might have,” he says now. “It’s taken a bit of time to try to rebuild the trust that we are trying to work with them.”

On top of all that, in December 2016 a hardware fault took the ATO’s tax agent and business portals offline. The work to repair it accidentally knocked it offline again in February 2017. Jordan’s been apologising for the problems ever since, while trying to emphasise that ATO systems have performed well through the traditional tax time. Some tax agents are not yet ready to forgive the ATO or him.

What future for tax agents?

But beneath these difficulties lies a deeper problem that is coming to the surface more frequently over time. Jordan has always spoken enthusiastically about technology’s potential to ease small business interactions with the ATO. But that leads inevitably towards a future where more businesses can tie their accounts directly into ATO systems. And that raises the question: over time, won’t tax agents play a smaller and smaller role in the process?

Jordan argues that the ATO must be able to use the technologies that are transforming service businesses everywhere. The ATO’s myTax service prefills individuals’ returns with interest, dividends, salary and medical payment details; the myDeductions app lets taxpayers upload receipts into their tax returns.

“I get a lot of agents saying that ‘this is unfair to us’. Well, go to New Zealand. Most people, wage and salary earners don’t lodge a tax return in New Zealand. You would not have a business in New Zealand.”

He also points out that Australia ranks second highest in the world for the use of tax agents. “Why is that?” he asks. “And is that right? Probably not.”

“So if your practice is reliant on high-value, low-margin simple tax returns, you have to question the viability of that business model into the future.”

Automating small business tax

Jordan plans to continue down the same path. “If we can tap into natural systems so that small businesses can comply with their obligations without doing anything special, that’s a great outcome.”

First might come contractors with bank accounts containing all their income and deductions. “We might be able to do their quarterly [BAS] instalments based on actual figures,” he suggests. But the ATO’s longer-term goal is to automate reporting for a wider range of businesses, using standard business reporting. 

(Pictured: Chris Jordan FCA, Commissioner of the Australian Tax Office)

The response from populating individual tax returns has encouraged him. “The feedback is: ‘I never thought I’d be saying anything positive about a government department but that was a pretty good experience.’ ‘My tax return took me 10 minutes – I couldn’t believe it.’ This is the sort of thing that we’re getting time and time again.” 

There’s little doubt that the ATO is in relatively good standing right now as an institution. But it is also clear that Jordan would like just a little more recognition for what the organisation has been doing.

Related: ATO hitlist targets smaller tax avoiders

ATO commissioner Chris Jordan spells out his new agenda for 2018, where he sets small business and big spenders in his sights.

He admits the ATO will never be widely loved. “We start out relationships in a somewhat awkward fashion, because our primary role is to take money … Some people really don’t want to pay it, and therefore you might have a dispute.”

But the ATO is trying to minimise those disputes, to explain its positions more clearly; to have those conversations with people before things get out of hand. And he feels frustration when the media and politicians claim one-off ATO incidents show systemic problems. “We try so hard to help and to have a different culture in terms of more service,” he says, his tone for a moment losing its optimism.

The likeability test

Jordan’s communications and relationship skills faced their toughest test last year. The process of extracting more tax from large corporations and multinationals has, in his view, gone just about as far as it can go. In October the ATO published its estimate of the “tax gap” between large businesses’ actual tax payments (A$41 billion) and the ATO’s estimate of what the sector should pay. That gap – A$2.5 billion – sounded huge to many ordinary taxpayers, and the ATO has plans to shrink it further. Yet for an organisation which gathers more than A$350 billion a year, additional work may be producing diminishing returns. “Two and a half … that’s not going to really fix the budget deficit,” says Jordan.

The next ATO target is the little guys – cash-only businesses with undeclared income, unpaid superannuation guarantee contributions, salary- and wage-earners wrongly claiming deductions. The ATO reckons the “tax gap” here is a multiple of the large corporate tax gap. It has built substantial data analytics capabilities and is using online signals like Facebook posts to cross-check taxpayers who report $75,000 incomes but buy expensive cars and luxury holidays.

Jordan adds that he tells people they can’t trust anyone, due to the proliferation of information online that the ATO can access for cross-checking. 

“Hackers [sell data] to certain countries, who then give it to us. We don’t have any policy on buying this; we haven’t had to because we can get it for free from other countries.

“In one case, it was a Singapore trust company, and it held all the confidential agreements and the piece of paper that says, ‘I really own this’ – you know, the structure and understanding, all the nominees and all that.

“They needed to update their IT system, so the IT contractor downloaded everything before they installed the new system. And then he sold it.

“You get all these providers saying: ‘Your secrets are safe with me.’ Well, they’re not.

“LuxLeaks was a disaffected employee ... The Panama Papers and Paradise Papers, we don’t know exactly who, or how, but ... employees or hackers or contractors, they’re willing to do it. So ... you can’t trust anyone anymore.”

The new hitlist

Jordan points out that he went after the big guys first. “Small business and individuals wouldn’t accept a greater focus on them unless they were confident that we’d done our work … on large corporates.”

Nevertheless, his new hit-list is unlikely to be as popular as the pursuit of Apple. Convincing Australians to get real about their deductions – now that will test anyone’s likeability.

Five years in, he’s made his peace with these problems. “I suppose I’ve come to the realisation that the Tax Commissioner or the Tax Office is not going to be the most popular person or organisation in our society,” he says with a resigned smile.

“But we try. And the job’s not done yet.”

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