Tax payment performance

Since 2014–15, there has been a gradual but sustained improvement in tax payment performance. This reflects our active program to reduce the level and incidence of outstanding tax debt through early intervention, such as SMS reminders sent to habitual late payers, and extending the options available to taxpayers to set up and commit to payment plans online.

At the end of 2015–16, 89.5% of liabilities had been paid on time, compared with 89.2% in the previous year, and the percentage paid within 90 days of becoming due increased from 95.6% to 96.2%.

The total level of collectable debt at 30 June 2016 was $19.2 billion, which is similar to last year.

The 12-month rolling average of the ratio of collectable debt to net tax collections started trending down in 2014–15 and that trend has continued throughout 2015–16. At 30 June 2016, the ratio was 5.3%, below the target of 5.5%.

The small business segment remains a key area of focus with just 72.3% of small business tax liabilities being paid on time up to the end of 2015–16. Small businesses accounted for 65.2% ($12.5 billion) of total collectable debt holdings at 30 June 2016. This is an increase of 1.9% over the previous year.

Along with greater productivity and reduced processing costs, automated online payment plans are effective from the behavioural perspective. We find that people with outstanding debts are often more willing to initiate contact with the ATO and enter into an arrangement to pay them off if they can do this online or via an automated phone service.

In 2015–16, we found online payment plans were 22.4% more effective in collecting debt than payment plans entered through more traditional channels.

From December 2015, we increased the maximum amount of outstanding income tax debt for which an online payment plan can be entered into, from $50,000 to $100,000, for individuals and sole traders. This is enabling more people to self-manage their tax debts.

For taxpayers who need or prefer to talk to us, we are focused on our staff being able to respond to client issues on the spot. Trusting our staff to have more ‘natural conversations’ with our clients, rather than sticking to rigid scripts, is delivering quicker outcomes and a better experience for our clients.

Recognising that individuals and businesses can experience financial difficulties due to challenging business conditions or unexpected events, we take an empathetic approach to help people get back on track. Recent examples include supporting drought-affected taxpayers, the Australian dairy industry, and those affected by Arrium Limited going into external administration.

To help taxpayers address their debts, we agreed to around 950,000 payment plans in 2015–16, an increase of 17.2% over the previous year.

However, where people with outstanding tax debts fail to engage with us, we are taking more timely action, including insolvency proceedings, to prevent those who don't pay from getting an unfair financial advantage over those who do.

Tailoring our tax collection approaches to local circumstances

When Arrium went into external administration in early 2016, the ATO recognised the potentially devastating impact this could have on the small community of Whyalla, where Arrium’s steelworks is located.

We made our staff aware of the challenges facing the Whyalla community and quickly set about responding accordingly.

Working with local stakeholders, including the mayor of Whyalla, the president of the Whyalla Chamber of Commerce and Industry, the Small Business Commissioner South Australia and local tax agents, we have put in place a range of initiatives:

  • offering supportive repayment arrangements and remission of interest, where appropriate, for those who cannot meet their tax payment obligations
  • stopping debt collection activities in the affected area.

To promote awareness of the assistance available, we:

  • informed the professional associations for tax and BAS agents
  • contacted key local agents directly
  • visited the Whyalla community to talk to locals and get a better understanding of how they were being affected and what more we could do to help them in the longer term.

Initial feedback from key stakeholders in Whyalla shows that this empathetic and proactive approach has been well received.