Making it easier to comply

Case study: Tax officer, Michael Strong and Darryl Daisley, PricewaterhouseCoopers

Improving our products and services through the 3Cs - consultation, collaboration and co-design

The Tax Office is going through an extended period of planned change, as we aim for ongoing improvements to capitalise on our new platform of integrated systems and processes.

The procedures and processes that deliver the change must be carefully designed to achieve the best possible outcome for the government, the community, taxpayers and other intermediaries, and the Tax Office.

Our user-based design approach to change is based on what we call the 3Cs - consultation, collaboration and co-design.

Under the Tax Office 2006-10 strategic statement, consultation, collaboration and co-design are part of our business model. This includes managing 'our relationships with taxpayers and key intermediaries such as employers, the tax profession and software developers through consulting, collaborating and co-designing solutions that encourage high levels of voluntary compliance and reduce red tape and compliance costs'.

The Commissioner of Taxation, Michael D'Ascenzo, has encouraged staff to view consultation as seeking the views of relevant stakeholders to identify and understand their perspective and issues. It is also about explaining to them the context of the matter, and any policy or practical perspectives that underlie the issue. It is a two-way dialogue, the Commissioner explained.

Collaboration is working with others on joint solutions. Co-design is a process of involving the user in the design of solutions so that the output best meets their needs, is user-friendly, and achieves the desired outcomes.

For Michael Strong, National Director, Excise Change and Product Management in the Brisbane office of the ATO, the 3Cs are key organisational values that guide him and his team as they seek out opportunities to reduce the community's compliance costs.

'User-based design allows us to view the world from the taxpayer's perspective.' Michael said. 'Using this approach we will get better outcomes because the materials we produce for the community will be written in their words not ours, using their thinking and not ours, and fitting with their natural systems, not ours.

'If we apply these principles, compliance becomes the norm because it is easy.'

Michael's responsibilities include supporting the ATO's Fuel Schemes Advisory Forum (FSAF). The forum has been established to facilitate consultation on fuel scheme (such as fuel tax credits) between the Tax Office, industry associations and government departments.

He is confident that the 3Cs can be used to lift the bar on excellence in the Tax Office administration of tax and superannuation.

'An example of this is the work we are doing in fuel tax credits to improve record-keeping methodologies. We have a working party with industry representatives to design new record-keeping methods for clients to calculate their fuel tax credit,' he said. The changes to an existing method, and development of a new method, will go a long way to reducing the costs of compliance for businesses in all market segments.

'We were also told by clients that they had difficulty in determining their entitlements to claim a fuel tax credit. To make it easier, we developed and implemented an eligibility tool that can be used by anyone to determine their entitlement to claim a fuel tax credit. Members of the FSAF provided us with examples of work carried out in their industries, and types of equipment used, that we could use in the tool to make it more relevant'.

'It is possible to achieve a good experience for stakeholders who interact with us by making it easy for them to comply - by having tools and products that are understandable and useful. We need to design for the 90% of people for whom tax affairs are simple.

'I think the 3Cs has improved our ability to do this and inspires confidence among those who want to know about what we do,' Michael said.

Darryl Daisley, from PricewaterhouseCoopers (PwC), is well placed to have seen the benefits of the 3Cs approach.

Darryl's the leader of the firm's Perth-based customs and excise team. The team provides advice to some of Australia's leading listed companies on issues such as project-related duty concessions, tariff classification disputes, fuel concessions to mining and oil/gas companies, and customs requirements for large importers/exporters.

Since 1999, Darryl has represented the Association of Mining and Exploration Companies (AMEC) on the FSAF. He has some 23 years of experience in international trade matters, including more than a decade with the Australian Customs Service.

He said the FSAF is a good example of the application of the3Cs approach. 'The federal fuel schemes have undergone significant change since 2000, moving from the diesel fuel rebate scheme to the energy grants credit scheme and now the fuel tax credit system,' he said.

'Throughout this period, the ATO has continually sought feedback via the forum members on the implementation of the schemes and the quality of materials available to the taxpayer, to ensure compliance with the legislation and regulation.

'This forum has delivered many positive outcomes for taxpayers. The ability to provide constructive feedback to the ATO on many fuel-related public rulings has allowed the ATO to insert industry examples, written in our words and aligning with normal business practices.'

Darryl said that during his interaction with the ATO's Excise business line he'd seen both the quantum and quality of supportive material significantly improved. Similarly, there's been an expansion of the opportunities to work with the ATO on specific projects - for example, in late 2007 into 2008, PwC ran a national series of fuel seminars aligned with AMEC and state-based chambers of commerce, and supported by the ATO. It was an effort well received by the broader business community, Darryl said.

In another recent demonstration of the 3Cs, AMEC provided feedback at the June 2008 FSAF that the current record-keeping methodologies for fuel tax credits were not well aligned with the new entitlements afforded taxpayers since 1 July 2008. This was particularly so with the 50% off-road credit for the use of light vehicles.

Darryl said the ATO suggested the formation of a working party to consider and address the issue. 'Over the last two months, in consultation with the ATO and a number of FSAF members, a new record-keeping submission has been produced for consideration by the Excise Executive. It's aimed at streamlining the ability to capture entitlements in a manner that is not onerous, one that is fair and reasonable, reduces red tape and compliance costs.

'This is a clear example of where the ATO was able to quickly gather the relevant stakeholders in a single room for two days to consider and address the issues with industry representatives.'