14/12/2025 • 17 min read
ATO Fully Digital: Preparing Your Firm (2025)
ATO Fully Digital: Preparing Your Firm (2025)
Australian accounting firms should assume the ATO will continue moving toward an effectively “fully digital” administration model—where most compliance interactions, evidence collection, verification, and client communications are digital-by-default—and prepare now by hardening digital identity controls, implementing ATO-integrated workflows, and automating high-volume compliance tasks (bank reconciliation, BAS/GST, working papers, Division 7A and depreciation). This is inevitable because the ATO has already embedded digital channels across Online services for agents, Standard Business Reporting (SBR), Single Touch Payroll (STP), myGovID/RAM (now evolving to myID and Relationship Authorisation Manager), and eInvoicing/Peppol, and it increasingly relies on third‑party data matching and near real-time reporting to assure compliance.
What does “ATO goes fully digital” actually mean for accounting practices?
It means the ATO’s primary channel for administration, verification, and compliance will be digital-first, with increasing reliance on system-to-system data, automated cross-checking, and online interactions rather than manual, paper-based or ad hoc processes.
In practice, “fully digital” typically involves:
- Digital identity and authorisation as the gatekeeper for access (agents, businesses and individuals)
- Machine-to-machine reporting and lodgment (SBR, STP-enabled, APIs)
- Pre-fill and cross-verification from third-party data (banks, employers, government agencies, payment platforms)
- Greater expectation of digital evidence and audit trails (source documents, transaction-level support)
- Shorter time-to-respond windows because data is already in the system and discrepancies are flagged sooner
From a risk standpoint, the firms that struggle are those with manual working papers, fragmented client data, and inconsistent governance over who can access what and why.
When is the ATO likely to be “fully digital” in Australia?
The ATO’s trajectory indicates the direction is set now, not later: digital identity, digital lodgment, and data matching are already core operating models. The more relevant question for firms is not “the date,” but “what capabilities will become non-negotiable during 2025–2028 as the ATO expands digital compliance and assurance programs?”
As of December 2025, the strongest indicators are:
- Identity and access controls are tightening, not loosening, via myID (formerly myGovID) and Relationship Authorisation Manager (RAM) style authorisations for business and agent access
- Lodgment ecosystems remain digital-by-default through SBR-enabled systems and Online services for agents
- Data matching continues to expand in breadth and timeliness (a consistent ATO strategy over many years)
- Digital recordkeeping expectations are increasing as audits become more data-led and evidence is requested electronically
Authoritative sources to cite and monitor regularly:
- ATO Online services for agents and digital services guidance (ATO website)
- ATO guidance on myID (formerly myGovID) and Relationship Authorisation Manager authorisations (ATO website)
- ATO data matching program protocols and updates (ATO website)
- ATO recordkeeping guidance and substantiation expectations (ATO website)
- Legislative framework for administration and record retention including the Taxation Administration Act 1953 (Cth) and associated recordkeeping obligations (as applicable to your client types)
Why is the ATO pushing digital compliance, and what does it change in risk?
The ATO is pushing digital because it improves integrity, reduces administrative friction, and increases the effectiveness of assurance through automated cross-checks and third-party reporting.
What changes for your firm is the risk pattern:
- Errors are detected earlier (often before or immediately after lodgment)
- “Explain the variance” requests become more frequent but narrower and faster
- Evidence requests become transaction-level and time-bound
- Identity compromise becomes a major practice risk (client takeover, fraudulent refunds, unauthorised portal access)
This shifts the firm’s competitive advantage from “who can lodge” to “who can produce clean, traceable, defensible data quickly.”
How should your firm redesign workflows for a digital-by-default ATO?
Your firm should redesign around three principles: straight-through processing, audit-ready evidence, and controlled access.
A practical target-state workflow looks like this:
- Acquire data digitally (Open Banking feeds, bank statements, eInvoicing exports, payroll files, merchant settlements)
- Reconcile and code with automation (AI-assisted categorisation, mapping rules, bulk actions)
- Generate working papers automatically from the ledger (GST/BAS, Division 7A, depreciation, tax recon)
- Tie every key balance to source evidence (invoice, contract, bank proof, ATO statement)
- Lodge and respond from an ATO-integrated hub (client details, due dates, statements, transactions)
- Maintain an immutable audit trail (versioning, snapshots, approvals, change logs)
This is exactly where “AI accounting software Australia” becomes a strategic choice rather than a technology preference.
What governance and security controls will the ATO’s digital model force you to adopt?
Firms must treat identity, authorisations, and evidence governance as practice-critical controls, not IT hygiene.
Minimum controls expected in a mature firm:
- Documented access model (who can access ATO-linked services, and under what approvals)
- Strict onboarding and offboarding (joiners/movers/leavers)
- Multi-factor authentication enforced everywhere possible
- Segregation of duties for high-risk actions (bank detail changes, refund-related actions, portal authorisation changes)
- Evidence retention standards aligned to ATO recordkeeping expectations
- Cyber incident response plan tailored to identity compromise and data breach scenarios
ATO-facing digital risk typically shows up as:
- Unauthorised access or changes in portals
- Missing or inconsistent substantiation for deductions and GST claims
- Ledger-to-lodgment mismatches (BAS vs financials vs ITR labels)
- Inability to respond quickly with source-of-truth evidence
What practice technology capabilities become essential as the ATO digitises further?
The essentials are capabilities that reduce manual touchpoints and produce defensible outputs fast.
Priorities for Australian practices:
- Automated bank reconciliation with controls
- ATO integration accounting software (client data, statements, due dates, transaction imports)
- Working paper automation (Division 7A, depreciation, BAS/GST, income tax reconciliation)
- Version control and audit trails (snapshots, approvals, history)
- Secure collaboration and client-facing evidence requests (tracked and permissioned)
- Data standardisation (charts of accounts templates, consistent GST treatment, ITR label mapping)
Where MyLedger fits versus traditional systems (Xero, MYOB, QuickBooks)
The core distinction is that MyLedger is designed for accountants and compliance throughput, while most mainstream platforms are designed primarily for small business bookkeeping workflows.
Use this comparison to guide selection:
- Reconciliation speed: MyLedger = 10–15 minutes per client with AI; Xero/MYOB/QuickBooks = commonly 3–4 hours when exceptions, GST checks, and clean-up are included (typical practice experience)
- Automation level: MyLedger = AI-powered reconciliation with ~90% auto-categorisation plus bulk operations; Xero/MYOB/QuickBooks = more manual review/coding and rule maintenance for similar outcomes
- Working papers: MyLedger = automated working papers (Division 7A, depreciation, BAS reconciliation, ITR mapping); Xero/MYOB/QuickBooks = often requires manual Excel working papers or add-ons
- ATO integration: MyLedger = direct ATO portal integration (client details, due dates, statements/transactions); competitors = typically limited ATO functionality, often relying on separate portal workflows
- Pricing model: MyLedger = expected $99–199/month for unlimited clients (currently free in beta); competitors = commonly per-file/per-client pricing, which compounds as your practice grows
- Target market: MyLedger = built for Australian accounting practices; competitors = built for broad small business markets
This matters because ATO digitisation increases volume and speed of assurance interactions; tools that are 90% faster at reconciliation and produce automated working papers become capacity multipliers.
How do you prepare clients for a fully digital ATO without creating friction?
You prepare clients by turning “compliance” into a predictable digital service with clear responsibilities, rather than a scramble before deadlines.
Effective client-ready measures:
- Standardise digital collection (bank feeds/Open Banking consents, eInvoicing exports, payroll files, merchant reports)
- Implement a “close pack” routine each period:
- Use plain-English evidence standards:
- Provide a secure digital channel for document exchange and approvals (no email attachments as the default)
- A retail client using multiple payment platforms often has settlement timing differences and fee treatment issues.
- In a digital ATO world, GST misclassifications are detected earlier through cross-data signals.
- A firm with automated reconciliation and BAS reconciliation can produce a defensible BAS quickly, with evidence links for exceptions, rather than recreating support after an ATO query.
What is the ROI for firms that modernise before the ATO forces the issue?
The ROI is primarily capacity, quality, and risk reduction.
A typical quantified practice case (50 compliance clients):
- Time saved: MyLedger-style automation can save ~125 hours/month (based on an ~85% reduction in processing time and reconciliation dropping from 3–4 hours to 10–15 minutes per client)
- Value of time: At $150/hour, that is ~$18,750/month in capacity value
- Cost comparison: All-in-one pricing expected ~$99–199/month unlimited clients versus per-client pricing that can reach $50–70/client/month in competitor ecosystems (depending on plan/add-ons)
Strategically, that time can be redeployed into:
- Higher-margin advisory
- Faster turnaround and premium compliance
- Proactive ATO risk reviews (GST health checks, Division 7A hygiene, substantiation readiness)
What are the most common objections, and how should partners address them?
These objections arise in most Australian practices, and each has a practical answer.
- “Our current stack works fine.”
- “Automation will reduce quality.”
- “Migration risk is too high.”
- “Clients won’t cooperate digitally.”
How do you implement a practical “digital ATO readiness” plan in 30–90 days?
A firm can make substantial progress in one quarter by focusing on the highest-leverage workflows.
- Document your identity and authorisation governance for ATO-linked access (roles, approvals, offboarding).
- Standardise a practice chart of accounts template with GST and ITR label mapping.
- Define minimum evidence standards for common claims (motor vehicle, travel, contractor payments, home office).
- Implement automated bank reconciliation and bulk coding for pilot clients.
- Build mapping rules for recurring transactions and enforce GST treatments.
- Introduce monthly close packs for BAS clients.
- Automate working papers (Division 7A, depreciation, BAS reconciliation, income tax reconciliation).
- Implement ATO statement and transaction imports where available.
- Create a “query-ready” file standard: every material balance linked to evidence and reconciliations.
How Fedix can help your firm prepare for the ATO going fully digital
Fedix, through MyLedger, is designed specifically for Australian practices preparing for a digital-by-default ATO environment, where speed, evidence integrity, and ATO-connected workflows become the baseline.
Practical ways Fedix helps:
- Automated bank reconciliation (AutoRecon) delivering 90% faster processing (10–15 minutes per client versus 3–4 hours)
- AI-powered categorisation with bulk operations to standardise coding and GST treatment
- Automated working papers including Division 7A (MYR schedules using ATO benchmark rates), depreciation, BAS reconciliation and tax reconciliations
- ATO integration to pull client details, due dates, lodgment history, statements and transactions (capability alignment with a more digital ATO)
- Bank-level security and controlled sharing to support evidence collaboration without email sprawl
- Shortlist 10 pilot clients (mix of BAS, payroll, and year-end heavy clean-up).
- Measure current time spent on reconciliation and working papers.
- Trial MyLedger during the beta period and compare throughput and exception handling against your current stack.
Conclusion: What should firms do now?
The ATO’s direction is established: more digital identity control, more data-driven verification, and more expectation of rapid, defensible evidence. Firms that standardise and automate now—especially around automated bank reconciliation, ATO integration accounting software, and automated working papers—will reduce risk, increase capacity, and improve profitability as digital compliance becomes unavoidable.
Disclaimer: This content is general information only and does not constitute tax or legal advice. Tax laws, ATO guidance, and digital service settings change over time. Advice should be tailored to your firm’s circumstances and your clients’ facts, and you should consult current ATO guidance and applicable legislation before implementing policy changes.