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The question of whether Australia is truly ready for tax reform is front and centre for the profession. After the Australian Labor Party’s (ALP) landslide victory in May 2025 and a speech from Treasurer Jim Chalmers in June, many were asking for changes to the tax system. But as we move into 2026, the reality is more nuanced – and perhaps more incremental – than expected.

Reform hopes vs regulatory reality

The ALP’s strong majority provides the opportunity for change. The Productivity Commission was tasked with identifying reforms to increase productivity, including corporate tax changes to boost investment. The government further convened an economic reform roundtable in August 2025.

However, the Productivity Commission’s interim report – Creating a More Dynamic and Resilient Economy – proposed a 5% cash flow tax for all companies with a reduced corporate tax rate for those under A$1 billion turnover, quickly ran into resistance. Businesses of all sizes expressed concern about its negative impact on funding, uncertainty, and compliance costs. The final inquiry report was handed to the government on 10 December 2025.

The shift: from reform to regulation

The outcome of the economic reform roundtable was support for “a better tax system” and, in September 2025, the Board of Taxation was commissioned to review ways to reduce red tape in the tax system that are substantial, material, measurable and directly support productivity. On the table is duplicative reporting, outdated paper-based processes, confusing guidance and complex compliance requirements. The board is expected to report back to the government by 30 June 2026.

Working in the background has been the ATO, which is focused on “integrating tax administration with taxpayers’ natural systems and data, reducing the need for the ATO to hold large volumes of information” and opportunities to share information with other regulators. Massive investments in the ATO’s technological infrastructure are required to achieve this, with many ATO systems experiencing difficulty communicating with each other and rapid advances in technology leaving government departments behind.

Advancing the digitalisation and automation of data, especially when paired with policy changes that minimise repetitive requests for similar information, has the potential to deliver significant productivity gains. For large corporates, the prospect of streamlining extensive and duplicative reporting obligations is a welcome development, and many will be pleased to see this area receiving focused attention.

However, any plans to integrate taxpayer accounting systems with tax administration warrant careful consideration. The potential increase of sharing tax-protected data between government agencies, as highlighted by the 2024 Treasury Review of Tax Regulator Secrecy Exceptions, could signal the beginning of a significant shift away from established taxpayer privacy norms. Any such change should be approached thoughtfully and be the subject of robust debate to ensure that privacy and trust remain at the forefront of our evolving tax system.

Looking ahead: election positioning

The government is focusing on regulatory changes, rather than wholesale reform. The senate, where the government requires the support of either the Greens, all the independent senators or the Coalition to pass legislation, has announced select committees on the capital gains tax discount, housing inequity and productivity, keeping the debate about tax reform alive.

There’s a growing sense that the government is positioning itself to take tax changes to the next election, but what those changes will encompass is still unclear. How the senate inquiries play out will be closely monitored.

What does this mean for tax professionals?

Tax reform in Australia is not currently happening in a sweeping sense. Instead, we’re seeing a shift toward regulatory improvements and digital modernisation that may raise significant issues about privacy and transparency. The public reaction to the senate committees will be closely monitored to see whether the Australian public is ready for a more robust tax reform debate.