Special report · Published 18 August 2026

Two Tax Systems

How the ATO fights the small and settles with the big.

Seven years of the ATO's own annual reports describe two tax systems: one that audits, penalises and pursues the people who can't fight back, and one that negotiates, discounts and settles with the ones who can. Every figure in this report is the ATO's own.

Download the report (PDF) See the key findings
21 pages · free · every figure sourced from the Commissioner of Taxation's annual reports, 2018–19 to 2024–25
FREE · 21 PAGES Two Tax Systems — report cover
The headline numbers

What the ATO's own data shows

Read on their own, each of these is remarkable. Read together, they describe a pattern.

$9.29b
disputed tax discounted through settlements over 7 years. 86% of it went to public & multinational business.
$8.5m
total settlement discount to individuals not in business, across the entire country over 7 years — 0.09%.
109
of 2,794 settlement cases went to individuals (3.9%). In 2024–25: three.
94.4%
of all audit-related assessments fell on individuals and small business. Public & multinational: 0.4%.
$15.5m vs $78k
average settlement discount: a public/multinational business, versus an individual.
8.8×
the debt public & multinationals are fighting through objection/appeal, relative to what they hold as collectable. Small business just pays.
57% → 19%
taxpayers who said the dispute process was fair — then the ATO stopped reporting the measure entirely.
$5.0m
total compensation for harm from defective administration over 7 years. Median payment: $787.
$700.7m
spent on ATO legal services over 7 years. Costs recovered: 5.5%.
The pattern

Two systems, one agency

System one · the many

Audited, penalised, pursued

Individuals and small business absorb 94% of audits, are adjusted at scale by "advanced analytics and automation", and almost never reach the settlement table. They simply pay, or collapse — small-business insolvency debt nearly tripled to $10.8b in six years.

System two · the few

Negotiated, discounted, settled

Public companies, multinationals and privately wealthy groups take 86% of the settlement dollars, average a $15.5m discount per deal, and fight $10.5b of debt through objection and appeal. The obligation to consider settlement operates in near-perfect inverse proportion to need.

Inside the report

Charted, sourced, footnoted

Twenty-one pages. Every number carries a superscript to the source table and the calculation behind it.

Report page: who gets settlements Report page: who gets audited Report page: the fairness score collapsed

Read the full report

Two Tax Systems: how the ATO fights the small and settles with the big. Free, 21 pages, built entirely from the ATO's own published data.

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