More than 260 ATO public servants have been given the news that they are to keep their jobs.
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Another 250 will be offered redundancy packages as the Tax Office continues its downsizing drive.
The news comes as bosses at the Tax Office try to arrange a ballot of their 18,000 public servants, on a controversial pay offer, within weeks.
About 550 ATO middle managers, nearly 12 per cent of the Tax Office's EL1 and EL2 cohort, applied for the latest round of redundancies when they were announced in August.
But about 260 of the public servants have been told that they will keep their jobs as the latest round sees a reduction in middle management of nearly 25 per cent on 2013 levels.
The oversubscription to the redundancy offer is not the first rush to the exits the office has seen in recent times with 2187 workers applying for just 500 payouts in February 2014.
An ATO spokesman insisted that frontline tax collection services would not be affected by the new round of lay-offs.
"The ATO has undertaken work to rebalance and refresh the workforce to ensure we have efficient and effective management structures and the right capability for the future," he said.
"This includes ensuring that frontline services and areas undertaking critical work have the right resources and investment.
"The reductions are being managed so that any effect on revenue collections and service standards are minimised."
Most of the the managers who have scored a redundancy will leave in four tranches between October and November while some, where there is a "critical business need", will remain in their jobs until mid-2016.
Meantime, ATO staff have been told their bosses want to take their 1.5 per cent pay offer to a vote within weeks.
A bulletin sent to workers this week said there had been 17 bargaining agreements and 36 days of the official bargaining period, despite the previous agreement having expired more than 14 months ago.
The bulletin said that "progress was made" in talks with unions who want the ATO to reveal more of its future plans before they will allow a vote to proceed.
"We will need to convene a further meeting early next week with the intention of finalising bargaining discussions," the bulletin stated.
"We will then seek the appropriate approvals to proceed to a vote on the proposed EA as soon as practicable.
"Subject to those approvals, we would be aiming to conduct a vote in early to mid-October, taking school holiday periods into account."