Blockchain case study: Australian Taxation Office

James Murtagh is the product owner of the Australian Taxation Office's (ATO) prototype blockchain solution.

What problem were you trying to solve?

We ran a Hackathon to see if we could create a prototype to help increase transparency around LCT (Luxury Car Tax) compliance and assist other government authorities and car dealerships in helping in tracking vehicle ownership details.

How did use of a blockchain help solve this problem?

Blockchain was used to ensure data entered by car dealers was not later tampered with. Also we used it as a shared data-store so that car dealerships, state road authorities and customs can track ownership of a luxury vehicle throughout its lifespan.

Did you consider existing data exchange and centralised database technologies?

It is likely a centralised database may have achieved the desired technology properties in conjunction with the use of hash trees, though the experiment was intended to help us better understand blockchain technology.

What brought you to blockchain?

Blockchain was originally brought to our attention from external hype generated within the IT vendor community. In 2018, we were offered an opportunity to engage in an experiment facilitated by Microsoft, alongside Australian Securities and Investment Commission (ASIC) and the Digital Transformation Agency (DTA), to participate in a Blockchain Development Hackathon.

What went well?

In one week we built a prototype blockchain solution. The solution worked and proved to be a useful communication tool in helping raise awareness of blockchain technology throughout the agency.

What surprised you?

Immaturity of development tools and technology provided to develop the prototype, and high potential hosting and operational costs (if used in a production environment).

What do you know now that you didn’t know earlier?

We now have a better understanding of what problems should be solved using blockchain technology. For use within a regulatory context, overall maturity of blockchain will need to improve significantly.

What advice would you pass on to other government agencies?

Don’t shy away from experimenting or exploring the use of blockchain within your core business, however always be mindful of the hype which currently surrounds it. We also recommend maintaining a healthy dose of scepticism regarding any claims of future revolutionary impact.

Solving a problem using a blockchain will primarily involve fundamental business change, coupled with addressing the challenge associated with the state of its technology maturity. There are also other external factors to contend with such as privacy, lack of governing principles, standards and other change management issues which will need to be understood and formally addressed across multiple levels of government before you will start to see real benefits.