Performance results

The ATO has been going through a period of significant change to improve the client and staff experience, change our culture, improve our organisational performance and to increase trust and confidence in the tax and superannuation systems. We are working to make it easier for people to do the right thing – providing certainty, engaging early and 'upstream', tailoring attention and engagement, and working with the tax profession, software providers, government and other organisations.

The ATO performance results for 2015–16 indicate a year of solid and consistent performance, with some measures showing improvement and indicating that we are making positive progress with our client-centric approach. We note the favourable results in relation to making it easier for people to access our services, the reliability and clarity of the information we provide, the reliability of our website and improvements to the community perception of fairness in disputes. These are consistent with our priorities and efforts of our reinvention program. There is still room for improvement and further work to do across the board, and to understand better the context and drivers behind client satisfaction results.

Looking back, our priorities for the year, as set out in the corporate plan, included specific strategies to drive a shift in culture, develop our leadership and enhance staff engagement. Our level of employee engagement is the second highest ATO result in the five years with the increases across job satisfaction and team engagement being the drivers behind the improvement at this stage. With culture and engagement of the workforce factor influencing performance as a whole, in particular the client experience and willing participation, these are positive foundations for the future and we will continue to move forward on these priorities.

It is important to note that performance results need to be considered in the context of environmental influences, trends across reporting periods and together as a suite of indicators rather than in isolation. We will continue to monitor and assess performance as we build on the outcomes we have achieved to date.

The following table reports on the impact measures in the ATO corporate plan 2015–19, published in July 2015 and on the key performance indicators for the ATO from the Portfolio Budget Statements 2015–16 (PBS) published in May 2015. Results shown for years prior to 2015–16 were reported in previous Commissioner of Taxation annual reports.

TABLE 2.11 Program 1.1 Australian Taxation Office, 2013–14 to 2015–16

Integrity

   

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Community satisfaction with ATO performance

Corporate plan / PBS

76%

74%

Analysis

Community satisfaction with the ATO’s performance decreased very slightly but remains positive.

Overall, the ATO performed strongly against 9 of the 11 areas tested in our surveys of community satisfaction, with the following identified as areas for improvement – ‘kept informed about status/delays/issues’ and ‘ATO would be responsive to feedback’. (These results are consistent with last year’s results.)

People who had dealt with the ATO recently had a more positive view and greater level of satisfaction than those who had not had an interaction with the ATO for some time. The aged perceptions of performance are likely driven by media coverage and debate – for example, around large multinational tax avoidance, rather than recent first-hand experience. An area of focus for us continues to be the active influence of perceptions through our interaction with the community and stakeholders to ensure we are building confidence in the system and our administration.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Perceptions of fairness in disputes

Corporate plan / PBS

50%

55%

Analysis

Surveys conducted show that perceptions of fairness have increased in 2015–16. This year, 55% of taxpayers who finalised a dispute with us perceive the overall disputes process as ‘fair’.

In response to key findings from these surveys, significant investment has been made to enhance taxpayer perceptions of fairness across dispute, audit, advice and debt interactions. The investment to date covers five key focus areas, including:

  • tailoring our engagement by delivering a more personalised service based on taxpayers’ individual circumstances
  • using natural systems to leverage the existing strengths of staff around professionalism, courtesy and respect to further enhance our relationship with taxpayers
  • utilising learning and development to improve staff understanding and awareness of ‘why fairness matters’ and how to apply principles of fairness
  • creating client certainty by engaging with taxpayers early and increasing support to those dealing with us for the first time
  • embedding a culture of fairness to develop and promote fairness behavioural principles to be applied by staff in their interactions with taxpayers.

With the significant investment in this work to date, and an understanding of what drives perceptions of fairness across interactions and market segments, the ATO is using these focus areas to develop a single organisation-wide response to creating a fairer client experience.

We continue to undertake research and seek feedback to understand taxpayers’ perceptions of fairness in disputes, audit, advice and debt.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Professionalism – people surveyed agreed that the ATO listens and responds to feedback

Corporate plan

53%

52%

54%

Analysis

Surveys conducted show the perceived view of the ATO’s responsiveness to feedback remains fairly steady over the past three years with a slight improvement this year. Views across client groups indicate:

  • tax professionals’ perceptions of the ATO were weaker than other customer groups in regards to responsiveness to feedback
  • smaller businesses (with an annual turnover of less than $100,000) rated the ATO more favourably than larger businesses (those with an annual turnover of more than $100,000) in relation to the ATO being responsive to feedback
  • recent contact with the ATO had a positive influence on wider perceptions of the ATO.

We have progressed a range of strategies in response to feedback through our consultation networks and contact with clients and stakeholders.

Our work with tax professionals, through visits and understanding how they use technology and tools in their business practice, has been a focus. We also worked through consultation in relation to the phasing out of the electronic lodgment service as it is replaced by the new practitioner lodgment service. Our response to the feedback in this regard was to adjust the roll-out timeframes and to work to understand impacts of this change and other initiatives on business models.

We have listened to and supported small business with regard to accessibility after hours, the fix-it squads that have addressed irritants cross-government, our Small Business Newsroom providing up to date information, new tools to support their willing participation and the show me how strategy and showcase events.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Culture – level of employee engagement

Corporate plan

6.4

6.5(1)

Analysis

The 2016 APS employee census run by the Australian Public Service Commission (APSC) shows that overall engagement has remained steady since 2015.

The ATO is categorised by the APSC as a large operational agency. Our results were above the average for agencies in this category and represent an improvement on the previous year.

We have invested significantly in the implementation of our culture and leadership strategies, recognising that the right mindset, effective leadership and appropriate tools and capabilities enable our staff to reach their potential. We have further backed this up with streamlined policies and processes and the availability of contemporary technology.

(1) This is a measure out of 10.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Assurance of draft legislation before introduction to Parliament

PBS

91.2%

Analysis

There were 34 tax measures introduced into Parliament in 2015–16. Of these, 31 were jointly assured by the ATO and Treasury. This is providing assurance that the ATO can interpret and administer the law consistent with the policy intent.

Three of the measures were not quality assured through the joint process due to time constraints, as agreed with Treasury; however the ATO continues to work with Treasury on these matters.

Willing participation

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Ease – people surveyed agree that the ATO makes it easy to access:

Corporate plan

     
  • services

72%

70%

78%

  • information

73%

Analysis

Survey results indicate ease of access to ATO services has improved to 78%.

We have introduced a number of changes to enable secure access to ATO systems –voiceprint verification, myGov improvements and linking myGov to the ABR.

Satisfaction with our website has increased particularly in relation to site reliability, the clarity of information provided and users reported encountering fewer issues.

Inbound phone interactions were viewed most positively for providing information the customer can understand. However, they were viewed less favourably than other channels in terms of access. This remains an identified area for improvement.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Proportion of inbound transactions completed digitally:

Corporate plan

     
  • Income tax returns (excluding amendments)

96%

  • Activity statements

80%

  • Tax File Number (TFN) registration

92%

Analysis

We are enhancing and promoting our online services with the aim of delivering a contemporary and tailored service to clients and stakeholders in the tax and superannuation systems.

During 2015–16, digital interactions have grown as new services have been released or upgraded for individuals and sole traders in ATO online. This includes the ability to lodge returns via myTax, lodge and revise activity statements, and receive digital mail via the myGov inbox.

In addition, digital take-up has been supported by improvements to myGov and the ability for individuals in business to link an ABN to their myGov account so they can access secure online services from any device.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Compliance cost – average cost of managing tax affairs

Corporate plan / PBS

2.0%
reduction on prior year result

3.5%
reduction on prior year result

3.6%
reduction on prior year result

Analysis

This result shows an improvement on previous year results. The adjusted average cost of managing tax affairs has been declining since the 2010–11 income year.

To better understand the underlying results, we have also considered the adjusted median cost of managing tax affairs. This suggests a minimal apparent reduction in the cost of managing tax affairs in 2015–16.

The cost of managing tax affairs includes the costs for preparing and lodging returns and activity statements, fees paid to tax advisers, tax reference material and so on. While the impact of external market forces would influence the results, our strategies in making it easier to comply through the provision of the better guidance and advice, contemporary and digital services, new tools such as the myDeductions app, also play a part in ensuring this trend in the right way.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Time-cost index for businesses and superannuation funds to prepare and complete key tax forms

PBS

Analysis

Across our main income tax return forms and business activity statement indexes the time-cost index remains stable – the exception to this is the superannuation funds where the index has been variable. This likely reflects the ongoing changes in the superannuation system.

This indicator tracks multiple indexes at the macro level and reports on the trend analysis. For this reason there is no quantitative data provided for this measure.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Registration – proportion of companies and individuals registered in the system:

Corporate plan / PBS

     
  • Companies
 

84.6%

68.0%(2)

  • Individuals

127%

126.0%

127.0%

Analysis

As the numbers of companies and individuals are counted differently by the ASIC, the ABS and the ATO, neither of these proportions can be 100%. Not all companies that are registered with the ASIC have taxation reporting requirements. Conversely, the ABS population is limited by age (15–64 years) and does not include all people with tax obligations. This proportion is expected to always be over 100%.

The use of reliable third-party data enables us to assess the level of registrations against the population that we would expect to be registered in the system and form a view as to the level of participation. This data supports the view that those who should be registered are registered, with trends as expected.

Companies: The proportion of company TFN registrations compared to the ASIC registered population has remained steady. The difference in results between 2014–15 and 2015–16 reflects a change in methodology rather than performance. For comparison, we have calculated the performance for 2015–16 using both methods. This comparison exercise indicates that the number of companies registered with ATO as a percentage of companies registered with the ASIC has remained static with no significant change through 2015–16.

Individuals: The proportion of individual TFN registrations compared to the ABS estimated resident population remains steady.

(2) As a change of methodology occurred in 2015–16, results for companies are not comparable across prior years.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Lodgment – proportion of activity statements and income tax returns lodged on time:

Corporate plan / PBS

     
  • Activity statements

78.6%

78.5%

78.1%

  • Income tax returns

81.7%

82.2%

82.3%

Analysis

Activity statements:

  • Overall, on-time lodgment of activity statements has been maintained at around 78%.
  • On-time lodgment and overall lodgment of monthly activity statements has continued with steady growth
  • On-time lodgment of quarterly activity statements declined in the third quarter of 2015–16.

Income tax returns:

  • On-time lodgment of income tax returns has been maintained at around 82% through strategies, including:
  • reviewing communications with taxpayers using behavioural insight techniques
  • following up overdue returns sooner.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Payment – proportion of liabilities paid on time by value

Corporate plan / PBS

     

Total

 

88.6%

89.2%

89.5%

  • Pay as you go – PAYG withholding
 

95.3%

95.0%

94.9%

  • Individuals – returns and instalments
 

68.5%

69.1%

69.4%

  • Companies – returns and instalments
 

84.9%

86.0%

87.2%

  • Goods and services tax
 

87.8%

87.8%

89.5%

  • Excise
 

96.0%

96.8%

93.1%

  • Superannuation funds – returns and instalments
 

93.6%

Analysis

Overall the pay on time performance (by amount) has improved slightly compared to the same time periods for previous financial years.

Pay on time performance (by number of transactions) has improved compared to the same time periods for previous financial years (74.3% compared to 73.7% in previous year). The performance across years is quite consistent across all revenue types.

We continued to expand the range of contemporary tools and services we provide to make it as easy as possible for clients to pay on time. Examples include:

  • enabling pre-payments of activity statement liabilities to assist clients in managing their cash flow
  • issuing preventative SMS payment reminders for those clients likely to pay late or not at all (in 2015–16 we sent 540,000 reminder SMS which resulted in payments of $949 million).

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Superannuation – adjusted employer superannuation contributions as a proportion of adjusted salary and wages

Corporate plan / PBS

9.54%

9.79%

10.03%

Analysis

In 2015–16, total employer superannuation guarantee contributions as a proportion of total salary and wage was 10.03% against the statutory superannuation guarantee rate of 9.5% for the 2014–15 income year. This indicates some employers are paying more than the minimum 9.5%. We also know that some are not paying enough. We monitor performance of the system through this measure in addition to other indicators such as reported complaint numbers.

We attribute a large part of the increase in the observed rate to the legislated increase in contribution rate in 2014–15.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Goods and services tax (GST) gap as a proportion of GST revenue

Corporate plan / PBS

5.8%(3)

6.1%(4)

6.5%(5)

Analysis

The GST gap is the difference between the amount of GST payable under the law and the amount actually collected.

The ABS Total Final Household Consumption Expenditure data is used to derive the GST gap estimate.

The net GST gap for 2014–15 (as reported in 2015–16) is $3.8 billion or 6.5%.

Care should be taken when considering the use of tax gap estimates as performance indicators. These estimates are best viewed as a trend over time, and the absolute dollar gap should only be seen as a guide.

Australia’s GST gap compares favourably with similar international tax administrations. While the gap has increased slightly over the last two years, it is lower than earlier years. It is too early to determine if this is a trend.

The GST gap can arise from a number of taxpayer behaviours. These include but are not limited to non-reporting of GST, under-reporting of GST and over-claiming of refunds. For example, incorrect classification of transactions in accounting systems, creation of false tax invoices, innocent claiming of incorrect input tax credits and non-reporting of sales liable for GST.

In 2014–15, to minimise the tax gap and maximise voluntary compliance we had a balanced and targeted compliance program based on transparency, risk and behaviour.

We had an increased focus on reasonable and fair compliance outcomes. Where we identified potential non-compliance, we gave taxpayers reasonable time to rectify errors or omissions. Where a taxpayer did not comply, we took action and, when necessary, used all avenues available to us under the law. Where people were transparent about their tax affairs and participated willingly, we offered a lighter touch experience that should result in less effort for them in meeting their obligations. For those who were not willing to do the right thing, we targeted and tailored our compliance activities using a risk-management approach, considering the relative likelihood and consequences of non-compliance.

To minimise the gap, the ATO will continue to monitor compliance through the use of third-party data holdings, analytics and risk mitigation activities. Our focus is on activities designed to prevent compliance issues prior to them arising. This has resulted in a significant investment shift to assurance and early engagement activities with a view to fostering voluntary compliance, reducing mistakes and an increased focus on those not doing the right thing.

(3) Changes from previously published estimates are due to revisions to the ABS data, updated ATO data and a modified approach to determining liabilities reported but not paid. Revisions to the estimates occur over time for a variety of reasons, including improvements in methodology, revisions to external data and additional or updated data becoming available.

(4) As above.

(5) Due to data lag, the data for the reporting period 2015–16 relates to gap estimates in the tax year 2014–15. This same rationale applies for prior years.

Revenue

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Tax assured – new measure under development

Corporate plan

Under development

Analysis

The methodology for this measure is under development. We will report a result when the methodology is finalised and the results are reliable.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Audit yield – cash collected from direct compliance activities

Corporate plan

$9.4 billion

$9.6 billion

$9.6 billion

Analysis

Although the result for 2015–16 of $9.6 billion has not changed from last year’s result, it was significantly above anticipated results which reflected the shift in focus to early interaction strategies.

The relatively stable outcome, combined with a reduction in compliance activities, suggests that, where corrective action is required, the ATO has been more effective than in previous years.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Total revenue effects – new measure under development

Corporate plan

Under development

Analysis

The methodology for this measure is under development. We will report a result when the methodology is finalised and the results are reliable.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Debt – ratio of collectable debt to net tax collections

Corporate plan / PBS

5.8%

5.7%

5.3%

Analysis

This result represents an improvement on previous years.

This ratio cannot be used in isolation and is best viewed in a suite of key performance indicators. The ratio is driven in part by external factors and as a result it can be difficult to isolate singular drivers.

Notwithstanding, we continued to expand the range of contemporary tools and services we provide to make it as easy as possible for taxpayers to manage their debts. Examples include:

  • expanding the visibility of ATO accounts online, with individuals and sole traders now able to view activity statement accounts and pay activity statement debts online (previously this was only possible for income tax)
  • enabling individuals and sole traders to set up plans for debts up to $100,000 via ATO online for both income tax and activity statement debts
  • re-designing debt letters to make it easier for taxpayers to understand why they are getting the letter, what they have to do, how they can do it, when they have to do it by, and the consequences if they do not take action.

This contributed to us agreeing to around 950,000 payment plans in 2015–16, an increase of 17.2% over the previous year.

For the minority of clients who failed to work with us to address their tax debt we took more timely stronger action, including insolvency proceedings, to prevent them getting an unfair financial advantage over those that pay and to ensure a level playing field for all.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Expected revenue – proportion of revenue collected compared with forecast

Corporate plan

4.4% below original Budget forecast

2.7% below original Budget forecast

4.1% below original Budget forecast

Analysis

While this result represents a decrease on last year’s result, most of the variation can be explained by changes in external factors in the economy, including:

  • reduced company tax receipts, mainly attributable to declines in commodity prices, which flowed on to weak growth in profits and capital gains
  • lower excise collections from the finalisation of offshoring of all tobacco production
  • historically weak wage growth dampening gross receipts from income tax withholding.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Proportion of self-managed superannuation funds (SMSFs) contraventions compared to the total number of self-managed superannuation funds

PBS

1.6%

Analysis

As at 30 June 2016, there were 8,219 funds that had an auditor contravention report for the 2013–14 income year. This represents 1.6% of total funds (524,065) in that year.

There were a total of 14,678 contraventions reported for the 8,219 funds that had an auditor contravention report. The proportion of those contraventions reported as rectified was 54%.

Those contraventions that are unrectified are subject to further investigation with possible outcomes ranging from self-rectification through to compliance action.

The most commonly reported contraventions continued to be loans or financial assistance to members (22%), while in-house assets and separation of assets contraventions constituted 20.6% and 14% respectively. Breaches of the sole purpose test constituted 9.3% of reported contraventions, with contraventions related to borrowings comprising 9% of the total reported contraventions.

Analysis to support this measurement can only be undertaken after fund audits for a financial year of income are completed and contraventions have been reported to the ATO. Audits completed in 2014–15 related to the 2013–14 income year; the total number of contraventions reported in that year were analysed to provide the 2015–16 result reported here.

Productivity

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Budget – operating within budget

Corporate plan

0.02% surplus

1.6% surplus

0.8% deficit

Analysis

This result represents a decrease on last year’s result.

The overall result for 2015–16 was an operating deficit of $25.4 million or 0.8% of budget (excluding depreciation, amortisation, finance lease and revaluation adjustment made for our financial statements).

This result was due to an increase in leave provisions of $29.2 million brought about by the reduction to the bond rate. Advice on the impact of this provision was provided to the Department of Finance. As the expense is technical in nature, formal approval from the Finance Minister for an operating loss was not required.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Cost to collect $100

Corporate plan / PBS

$0.69 (gross)

$0.90 (net)

$0.77 (gross)

$0.84 (net)

$0.77 (gross)

$0.84 (net)

Analysis

In 2012–13 to 2014–15, the net cost to collect trended down by 3% yearly. In 2015–16, the net cost to collect remained the same as 2014–15, due to slower growth in net tax collections.

Much of the drag on net collections came from company tax receipts, which fell below last year’s levels by $4.3 billion. This was mainly attributable to declines in commodity prices, which flowed on to weak growth in company profits and capital gains. In addition, we saw lower excise collections due to the finalisation of offshoring of all tobacco production. This resulted in a corresponding increase in excise collected by the Australian Border Force.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Expenditure:

Corporate plan

     
  • Tax administration expenditure as % of gross domestic product

0.18%

  • Non-tax expenditure as % of total ATO expenditure

5.7%

Analysis

This is a new performance criterion for 2015–16. Tax administration expenditure by its nature will have a declining trend as gross domestic product (GDP) has a growth component. In 2015–16, the downward trend has slowed due to weakness in nominal GDP growth.

At the same time, staff numbers have been falling in recent years, reducing the cost of tax administration. This has the effect of further pushing the ratio below trend.

Non-tax expenditure: This measure has not been previously reported.

Non-tax expenditure is comprised of:

  • Superannuation regulatory expenses (Lost Members Register and Unclaimed Super Money)
  • Tax Practitioners Board
  • Australian Business Register
  • Australian Charities and Not-for-profits Commission.

Performance criterion

Criterion source

Result

2013–14

2014–15

2015–16

Cost per transaction – under development and will not be reported on in 2015–16

Corporate plan / PBS

Under development

Analysis

The development of the methodology for this indicator is not finalised for reporting this financial year.