The Tax Office's annual report confirms its executives flew nearly 3 million kilometres more than the previous year while "reinventing the ATO", trying to agree a new wage deal and implementing its "workforce adjustment program."

The report also confirms the Tax Office's workforce shrunk by another 10 per cent in 2014-2015 as it continues with one of the most dramatic downsizing programs in its history.

The figures show the agency's middle-management bore the brunt of the departures with more than two-thirds of the reduction at the APS6, EL1 and EL2 levels, with nearly 1500 ATO public servants at those classifications packing up their desks in 2014-2015.

The office's already small representation in regional Australia was also hit hard with its presence in some parts of regional Tasmania and Victoria eliminated.

Staff numbers in Alice Springs and Darwin were cut in half while Townsville and other areas of country Queensland as well as small towns in NSW saw their Tax Offices drastically reduced or closed altogether.

The report also shows progress in the fight against the ATO's high prevalence of sickies and other "unscheduled absence" reducing the average rate to just under three working weeks per employee, down from 15.2 days in 2014-2015.

But more improvement is needed, the report states, and there are plans in place to "focus on early intervention and resolution of health, performance and attendance issues, leading to better workplace relationships and clearer expectations between managers and staff."

Action to deal with underperformers has also been flagged with the office working on "a new performance experience making the employee and manager mutually accountable for their performance."

The report says another problem dogging the ATO - its vast expanses of empty office space - has not been neglected in 2014-2015 with almost 41,000 square metres offloaded and empty desks reduced by more than 1800.

The annual report states that the smaller workforce is in line with government policy of a more efficient public sector, the report reads.

"As part of the government commitments for a more productive and efficient public service, our workforce was reduced by approximately 2200," the document says.

"This reduction was realised via a range of workforce management options, including natural attrition, redeployment, vacancy management, more efficient job and work design, as well as two large‑scale voluntary redundancy processes."

Tax Office workers clocked up 44,167,198 kilometres of air travel in 2014-2015, the report confirms, with the scale of the changes confronting the organisation cited as the key reason for all the jetting around the country.

"Our total air travel increased by almost 2.8 million kilometres this year compared to 2013–2014, which can be attributed to large-scale operations including our reinventing the ATO program, enterprise bargaining consultation and information sessions, and the Budget response and workforce adjustment program," the report says.

"Video-conferencing facilities are available in our major sites and provide an alternative to air travel, assisting us in minimising our air travel and greenhouse gas emissions.

"We are also trialling telepresence technology to improve our videoconferencing capability."