When the Albanese government unveiled its controversial tax reform, the general public who had never voted on the changes were not the only ones blindsided.
Historically, major overhauls to Australia’s tax framework have involved extensive, multistage consultation between the Treasury, peak business groups, and leading professional tax bodies.
At the Tax Summit in Sydney, a large gathering of tax professionals and experts across three days, many speakers were baffled that they were not asked before the government went ahead with the legislation — which they said was so poorly drafted it will have dire consequences down the track.
One of them was Tracey Dunn, a lawyer, tax practitioner and former director at EY, a tax expert with over 25 years’ experience who warned the changes were “awfully” legislated and were so complex that it could see a huge increase in Aussies being hauled before the courts over tax disputes.
The Associate Director at tax law firm Birchstone Legal Group and self-confessed “super nerd” said the issues with the complexity of the changes could have been avoided if the government spoke to tax experts before pushing ahead with the reforms.
Treasury rejected Ms Dunn’s claims, insisting it had engaged in “extensive consultation” with tax and other professions before introducing the changes.
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Why the government ‘didn’t consult big business’
Ms Dunn said she believed the Albanese government did not ask some of the nation’s leading tax experts for their opinion because of the many scandals that have enveloped the so-called big four consultancy firms in recent years.
The big four – PwC, EY, Deloitte and KPMG – have worked closely with governments on both sides for many years on tax reform to model the impact of it on the nation, but she told news.com.au the government had sidelined them this time around.
“My concern is that what seems to be a move away from consultation and unwillingness to consult with the profession seems to have come from the unfortunate events of a few years ago with a certain partner at PwC who was involved in consultation. And did the wrong thing,” she said.
She was alluding to a decade-long scandal involving former PwC partner Peter Collins leaking confidential Australian Treasury plans for anti-tax-avoidance legislation to colleagues and corporate clients, enabling multinational companies to devise tax avoidance strategies before the laws were even enacted.
“So, I think as a result of that there seems to be less of a willingness or desire on behalf of the government to consult with the professionals that they need to consult with,” Ms Dunn said. “For concerns around that confidentiality, which is unfortunate because we have a situation where an individual with the wrong thing that seems to have had broader implications for the profession and Australian taxpayers more broadly.”
She told news.com.au there appeared to be a perception among the government that the big four were now “evil” because of a few “bad apples” in the companies that employ roughly 30,000 Australians.
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Changes ‘awful’, needlessly complex
Ms Dunn said the tax changes will have devastating unintended consequences because of the lack of proper consultation with experienced practitioners – which she said is vital to ensuring legislation remains “efficient, fair, and simple” so everyday taxpayers can comply.
She warned that the budget changes were so complex that they even left her confused.
“For those in the room who have had dealings with me before, you know that I’m a super nerd,” she said. “I’m always in there reading legislation, reading bills, researching, trying to understand how it really impacts on people. And I enjoy reading legislation and case law.
“I don’t enjoy reading the CGT changes. They are really hard, and they’re complex. To work out a basic gain, you have 41 pages of primary legislation. If you want to use a proportionate method, you’ve got a nine-step method that is really quite complicated.”
This complexity, she argued, creates a domino effect across the entire tax landscape. Everyday Australians who cannot afford specialised advice risk making errors, tax agents struggle to interpret the law in practice, and the Australian Taxation Office (ATO) faces an administrative nightmare.
The confusion is further compounded by the government releasing legislation in piecemeal “tranches”, leaving practitioners to decipher conflicting explanatory memorandums and forcing the ATO to issue extra guidance just to clarify the rules.
Ms Dunn pointed to an even more alarming precedent: the government rushing legislation through Parliament before the public consultation window had even closed.
An exposure draft intended for feedback until August 21 was introduced to the House of Representatives and passed into law on August 19.
“In my entire life and my 25-plus year career in public practice, I have never seen a situation where legislation that was currently open for consultation has actually been introduced and passed into law before that consultation has closed,” she said. “And that is very concerning, and everybody should be concerned about that.”
She warned the lack of consultation from the government risks severing a historically strong relationship with tax professionals.
If skilled experts decide it is no longer worth committing resources to assist with policy design, she warned, the integrity of the Australian tax system will be put at risk.
She said it could also lead to a wider distrust in government and the democratic process.
“Australian taxpayers need to have trust in government and in the tax office, and if the government goes, well, we’re open to consultation, and we want to ensure that we’re listening to the Australian people, but we’re just going to push this through anyway, what message does that send?” she asked.
She said the current situation was “really sad”, because tax changes are notoriously difficult for the government to push through and that the tax profession broadly supports tax reform.
“If we reflect back a few years, there was a great relationship with the tax office, and you had really intelligent people that were in the profession, that were working with the Board of Tax, and working hard on consultation submissions,” she said.
“If people now reflect on how things are in the current state, and say, well, I don’t know if I want to commit the resources to contributing to consultation, that has a really bad outcome for everybody. Because we’re the ones that are on the ground, that understand in practice how this is going to work out.”
Warning of surging court cases over tax
In a warning about the “horrendous” unintended consequences of the budget changes, Ms Dunn warned that Australia is “absolutely going to see more litigation,” with ordinary taxpayers who are simply trying to do the right thing facing the prospect of being hauled before the courts.
She argued that much of the problem stems from complex, deeply ambiguous drafting, citing the exposure draft on integrity measures for deceased estates as a prime example.
“It talks about a purpose other than a purpose, including a purpose that includes a broad purpose. I mean, what does that mean?” Ms Dunn said. “When you have ambiguity, then it’s open to interpretation and then that results in potential disputes. So I think, if these issues aren’t resolved, absolutely we’re going to see more litigation, more disputes.”
The fallout, she added, will not be confined to tax disputes alone. If the proposed trust changes proceed in their current form, Australia could also face a wave of litigation under trust law, particularly if trustees and advisers attempt to restructure without fully grasping trustee obligations or beneficiary rights.
“There could be all of these unintended consequences and disputes down the track, which we’ve already seen in the past, where people make amendments to trustees and beneficiaries and appointors and terms of trust, or they seek to vest a trust without appropriate consideration,” she warned. “We could see claims in courts to unwind some of these things.”
Treasury says it engaged in ‘extensive consultation’
In response to Ms Dunn’s warning, a Treasury spokeswoman said it had done its due diligence in drafting the tax reforms.
“Treasury has engaged in extensive consultation including targeted consultation with tax and other professions in progressing consultation papers and exposure drafts relating to tax reforms announced in the 2026-27 Budget,” she said.
“Treasury has released four packages of consultation material: a consultation paper and exposure draft legislation for the minimum tax on trusts, exposure draft of Tranche 2 of the CGT and negative gearing reforms, and a consultation on CGT for innovative start-ups.
“Treasury has conducted targeted consultation with a range of stakeholders, including representatives of industry associations, peak accountancy bodies as well as various accounting and law firms.”