It is worth reiterating that the tax and superannuation systems are part of Australia's social and economic infrastructure. Fair and efficient administration of high integrity underwrites the effective operation of these systems.
In providing Australia with the best possible tax and superannuation administration the ATO needs to challenge convention to bring about positive and meaningful change. This requires vision and courage. At the aspirational level, we have envisioned a future where:
The underlying themes of this statement apply more broadly. For
non-residents and others operating in Australia, the price for the income earning opportunities in a stable and law abiding country is the fulfilment of their responsibilities under our laws.
Nevertheless, we believe that progress in this direction will benefit Australia. Fortunately, most Australians already demonstrate high levels of willing participation in our tax and superannuation systems. We believe that this is part of good citizenship.
Within this framework our annual corporate plan will outline specific priorities for the year ahead. We will be accountable in respect of these priorities which together should help us make some headway along the pathway set by our strategic statement.
Our strategic statement is externally focused, and puts the taxpayer and the community at the centre of our administration. This approach will require us to be more systematic in our approach to differentiation and to contextualise this with reference to a variety of touch points between taxpayers and government, as well as at different stages of the business or life cycle. What this means is that our segmentation, analytics and profiling need to be more finely grained to the individual, or taxpayer group level. This approach will help us be responsive to the individual circumstances of taxpayers while at the same time being fair and consistent, and firm where necessary.
Within the framework set by our strategic statement our annual corporate plan will outline specific priorities for the year ahead. We will be accountable in respect of these priorities, which together should help us make some headway along the pathway set by our strategic statement.
Our ability to build on commonalities and the influencing power of others will be a powerful driver of internal and external change, as are the opportunities afforded by new technologies.
In conjunction with government and the community, our journey will be guided by five themes. These themes remind us of our purpose and place emphasis on our corporate values. These themes overlap and are in many ways interdependent. They intersect at all levels in our overall vision and our daily practice.
1. Encourage - people support and understand the benefits of participation - they are engaged and willingly participate
The more people can see the link between their taxes and the rights and facilities that they enjoy, the more motivated they may be to see taxes and the care of the system as civic responsibilities. The same applies to the link between superannuation and people's retirement income: non-compliance with employer or trustee obligations or the abuse of superannuation concessions shifts the burden onto others and diminishes the pool of funds available to provide retirement income.
These links are the basis for major policy development. For example, the Intergenerational Report - Australia to 2050 - is likely to shape the government's thinking about the sustainability of Australia's current revenue base, and the changes needed to fund services including health and welfare requirements for our ageing population. More recently, Australia's future tax and transfer system review referred to economic, social and environmental pressures on budgets at all levels of government in meeting current and future challenges.
To a large extent the community's understanding and appreciation of these linkages are cultural issues developed within the wider organic fabric of our society. They are nurtured and propagated by the myriad of influences that together form that culture. The ATO plays only a minor role in this regard, although good administration of high integrity can build goodwill and confidence.
Good habits and cultural norms are best learnt early, and so, to progress our strategic directions, the ATO is championing approaches that engage and influence young Australians or those new to this country. For example, we will continue to improve our website which has a special section devoted to young Australians. We are also seeking to better attract their attention through the use of new social networking technologies.
We are seeking to go further than just communication, by encouraging the inclusion of tax and superannuation education in the national school curriculum and in programs directed at improving financial literacy. We are also working with tertiary organisations at all levels to promote a better understanding of tax and superannuation and what this means for people. This should help influence the way people think and operate. Picture a future where our youth recognise the role of the taxation and superannuation in our society. As adults they will better understand and embrace their rights and responsibilities.
More broadly, we are seeking collaboration with others in the community - such as the membership of our consultative forums - to promote a deeper understanding of the importance of our tax and superannuation systems.
For some new Australians, the concept of taxation and superannuation and of the rule of law, administered by a fair and professional administration of high integrity, is foreign. Through our programs directed at non-English speaking Australians, and in conjunction with ethnic communities, we help them understand their rights and responsibilities as part of our broader community. See for example, our online audio visual product Tax in Australia - what you need to know, which includes essential information about tax and superannuation in 10 languages.
For people on low incomes, we continue to promote our Tax Help Volunteer program. Last year this program assisted over 50,000 taxpayers, of whom over 80% were entitled to a refund. We will also seek to encourage simplicity in administrative and legislative design.
For small businesses, our emphasis on good record keeping helps them run their business in a commercial manner and makes it easier for them to comply with their tax and superannuation obligations.
For large companies, we have encouraged good corporate governance that includes material tax risk in order to assist them with their risk management. This level of self-regulation and approaches such as our annual compliance arrangements allow them to build shareholder value in a 'no surprises' environment. In Australia, large businesses are able to enjoy a stable regulatory environment that respects their rights and which provides them with options for certainty.
Another way in which we encourage ownership of Australia's tax and superannuation systems is through the many consultative forums we host. These forums are inclusive mechanisms by which tax professional, industry and community representative bodies can raise issues, provide feedback, and co-design solutions. We encourage them to see themselves as having a responsibility and interest in doing so. Our corporate value of consultation, collaboration and co-design (our 3Cs) is grounded in the belief that these systems are important community assets and that it is in the community's interest to ensure that they are working well.
Being open and accountable also builds trust and confidence in our administration, and demonstrates that we conduct our work on behalf of the community.
We are also encouraging community ownership of Australia's tax and superannuation systems through our consultative forums. More broadly we are seeking collaboration with others in the community to promote a deeper understanding of the importance of these systems to the wellbeing of Australians.
2. Support - people are helped and assisted to understand their rights and responsibilities and are able to comply easily at minimal cost.
In essence this refreshes our commitment to the Taxpayers' Charter and extends this philosophy to all of our activities. It reflects our corporate value of being fair and professional.
We recognise that high levels of proper participation in our tax and superannuation systems depend on people understanding their rights and responsibilities and on how easily they can comply with their obligations or access benefits under those systems. For example, last year e-tax guided some 2.3 million Australians through their tax return obligations, with pre-filling of returns making it easier for them. We will build on these initiatives.
Our support is more than just providing guidance or making things easier for taxpayers. One of our corporate values is to help those trying to do the right thing to get over the line. During the global financial crisis we actively supported viable businesses with short term cash flow difficulties by deferring payment dates, remitting late payment interest and developing tailored payment arrangements that helped them through difficult times. We also streamlined the way we could grant relief to individual taxpayers experiencing hardship. These initiatives were well received, demonstrating our corporate values in action, and showing that good tax administration can be an asset to the community.
We did not merely respond sympathetically to the needs of taxpayers; we proactively contacted businesses showing signs of stress through our 'early intervention' strategies. By doing so we are able to help them to better manage their financial commitments and to tailor arrangements that help them stay in business. We are improving our ability to read the signs that prompt early intervention.
Apart from an empathetic response being simply the right thing to do if we are really putting the citizen at the centre of our thinking, a further business rationale is that the goodwill shown may be reciprocated by the taxpayer through their ongoing and proper participation in Australia's tax and superannuation systems. These approaches build taxpayer ownership of these systems, and individual commitment to participation as a hallmark of good citizenship.
In seeking to create an environment conducive to high levels of willing and proper participation, we have listened to the community about what is helpful to them. For example, the feedback from business and community groups has consistently stressed practical guidance rather than comprehensive legal advice. The latter often pushes taxpayers to seek the assistance of others. Accordingly, we have focused on providing timely and practical guidance, including self-help products and online tools, to reduce the uncertainty associated with complex law. Examples of this include guides highlighting the matters affecting most taxpayers, rather than seeking to cover every possible scenario. Trying to cover the more arcane aspects of the law which may cover only a few taxpayers makes the material impenetrable for the bulk of taxpayers. Other useful initiatives include decision trees and calculators that not only make things easier but also mask the legal complexities that may lie behind the decisions and calculations, and online applications such as e-tax and pre-filling which both simplify and demystify preparation of returns.
A recent example of guidance materials aligned to life cycle events is the suite of booklets and online materials tailored to the needs of trustees and auditors of self-managed superannuation funds. Note also our Tax basics for small business booklet, available in nine languages. In the future technology will facilitate easy access and use of timely and practical guidance. In partnership with software developers, we will progressively build such guidance into the systems used by people to carry on their business or as part of their day-to-day life activities.
This philosophy also flows through to the revamp of our website. The intention is to make it more user friendly and navigable and for it to provide active step-by-step support in resolving problems rather than being merely a store of information. This requires us to restructure the metadata in a layered way, with the first layer providing practical guidance on common problems, with more detailed coverage of less common scenarios layered behind this material. We are also looking to provide a direct link from our website to our telephony assistance service or to chat-room facilities.
As well as making interactions with the tax and transfer system easier, more certain and more understandable, facilities like e-tax and pre-filling also exploit opportunities to reduce compliance costs. They recognise that developments in technology are transforming the way businesses operate and people live. Our use of social networking media helps us stay attuned to some of these changes.
In harmony with these developments, our current priorities for making it easier to comply are to:
- continue to improve our website
- continue to make it easier for taxpayers to complete and lodge their tax return using e-tax, including pre-filling of returns
- continue to improve our differentiated services using our client management relationship system and new analytical and data mining capabilities
- help connect people to their superannuation (for example, through our online SuperSeeker tool or by superannuation funds through the SuperMatch facility)
- help business interact with government online with reasonable security
- provide taxpayers and their agents with a more integrated view of their tax position
- consolidate our 'a better way' for tax agents, given the importance of tax and BAS agents to the smooth functioning of Australia's tax and superannuation systems
- continue to support the work of approved auditors of self-managed superannuation funds by providing and refining useful tools such as eSAT
- work with other government agencies to rationalise government reporting and registration requirements to minimise red tape and reduce compliance costs.
We should not limit ourselves on the ways we can make things easier for the community. Technology and interconnectivity open new doors and new possibilities. Importantly we need to continually question the status quo and ask the obvious questions - need this be done and if so is there a better way? These questions apply not only to our activities but also to the possibility of different delivery mechanisms and even to the design of the underlying law.
We have also learned some important lessons from our experiences so far and we know we have to continuously take into account new legislative requirements, government initiatives and community expectations when we plan for the future. We also look at how people use our products and services and how satisfied they are with them to see whether we are delivering what they want and what improvements we can make. Our simulation centre exemplifies our user-based approach to design, which is itself premised on our three Cs. Not only does a user-based approach promote ease of use, but it can significantly reduce compliance costs. We seek to champion such an approach across the public sector.
In our role as Registrar of the Australian Business Register (ABR), we are working with other agencies to promote the Australian Business Number (ABN) as the key identifier for business-to-government reporting and dealings. This provides the basis for more efficient dealings between businesses and all levels of government.
Most of the community - individuals, businesses, government bodies and others - now embrace the idea of doing business online. We are working with software developers and with other government agencies to rationalise government reporting and registration requirements so as to minimise red tape and compliance costs for businesses. A significant example of this work is the role the ATO and the ABR is playing in relation to Standard Business Reporting. The recent release of AUSkey will make interactions between businesses and government safer and more streamlined. We anticipate that more opportunities to support the community will arise as technology advances.
The important role played by tax agents in the smooth functioning of the tax and superannuation systems, also requires our recognition and support. By providing assistance to tax agents we support the many taxpayers who lodge returns and BAS statements through them or rely on their advice; and we help to keep costs down for taxpayers. Our website and premium phone service for tax agents assists them in their important work. And our network of relationship managers and professional-to-professional program help to foster a more personalised relationship with them.
The Tax Agent Portal, with around 30 million logins in 2008-09, has revolutionised our relationship with tax agents and we are now extending that support to BAS agents and the legal profession.
We will place a strong emphasis on helping tax practitioners to help and positively influence their clients about the rights and responsibilities.
3. Protect - protecting people and the community by deterring, detecting and dealing with those who have not complied.
The intent of our protection strategies is to support compliant taxpayers by deterring and bringing to book those that improperly seek an unfair advantage.
While we support people who want to do the right thing, we also have to be fair but firm with those who don't. This level of differentiation is all about equity and fairness. Those avoiding or evading their responsibility place an added burden on everyone else. Businesses that do not comply with their obligations in a timely way obtain an unfair competitive advantage. Non-compliance with employer obligations adversely affects employees and their retirement income.
In order to value the tax and superannuation systems as assets, the community needs to have confidence in their fairness and integrity - that everyone is paying the tax properly payable by them; that those entitled to benefits have access to them; and that rights and obligations around superannuation are being fulfilled. When citizens perceive (rightly or wrongly) that others are avoiding or evading their responsibilities, their support for these systems is eroded.
Our compliance model recognises that non-compliance may have various causes, ranging from misunderstanding through to defiance so we will seek to address these causes rather than the symptoms. Accordingly, if people are not complying because they are uncertain about their obligations, then the remedy is to clarify matters for them. Similarly, if the reason for non-compliance is that it is too hard, then the appropriate response is to make it easier. However, for those people that knowingly choose not to comply with their civic responsibilities, a range of strategies is necessary to make them more willing to do so.
Underpinning our protection activities is our preference for strategies that prefer prevention to cure - reflecting a significant shift in our thinking. The more we and others such as tax practitioners can positively influence behaviour before the event, the higher is the level of certainty available to taxpayers, and the lower is the potential cost to them and the community.
In recent years we have promoted the use of our binding and reviewable private ruling system by taxpayers genuinely uncertain about the operation of the law; advance pricing agreements in relation to transfer-pricing matters; and annual compliance arrangements for large companies wanting practical certainty and no surprises. These initiatives are complimented by our public binding rulings program which seeks to clarify our view of the law on contentious issues. We have also put out more red flags highlighting areas of concern through the publication of our annual compliance program and a steady flow of taxpayer alerts.
In relation to the cash economy we have worked with others to publish benchmarks providing a guide to industry norms.
In relation to the abusive use of tax havens, we have been active through Project Wickenby and other initiatives, including close cooperation with overseas tax administrations, in making it clear that such behaviour carries substantial risks and consequences.
Harder edged strategies such as audits and prosecutions are also part and parcel of our holistic suite of activities as illustrated by our work on Project Wickenby. In future we will look to strengthen our collaboration with others to help marshal the full range of remedies that may be available.
In supporting an increasing emphasis on differentiation, we will be enhancing our risk engines to better detect potential risks, and to minimise compliance risks. We will be applying different approaches to taxpayers rated high risk to those rated lower risk. We will also be more transparent in the way we do this.
Into the future, based on more finely grained analysis of risk, we will also be better able to explain to people and business where they stand in terms of having a high or low risk position from our perspective. This involves a more personalised approach to our interaction and relationship with people and business.
Our new strategic statement provides a unifying link between our activities and the behaviour of citizens, taxpayers and their advisors. In short, the earlier issues are aired, detected and resolved, the better it is for everyone.
The broad thrust that underscores all of these initiatives is the realisation by the community that non-compliance adversely affects all of us. Poignantly, the causes of the financial turmoil in Greece in 2010 have been attributed in part to high levels of tax avoidance and evasion. There are many other international examples where defective administration and sub-optimal levels of tax compliance have hampered economic and social growth.
A culture in our community and in the tax profession that recognises willing participation in Australia's tax and superannuation systems as good citizenship provides the strongest protection for the health of these systems.
In the care and management of these systems, the community and other stakeholders such as the tax profession and industry associations can play important roles in influencing ethical behaviour; in identifying areas of uncertainty; and in bringing to our attention sharp practices not aligned with either the letter or the spirit of the law. We have over 50 formal consultative forums providing a vehicle for such dialogue, as well as other processes facilitating this level of engagement.
Similarly, the tax profession can influence the behaviour of their clients. We are using face-to-face discussions with tax professional firms to better support them, to seek their view of what's happening in the market place, and to bring to their attention areas where we have concerns and why we have these concerns. We will be providing further opportunities to engage with them on such issues.
We have similar discussions with senior officers of large businesses. We are giving them the choice of an enhanced relationship with us which will provide them promptly with certainty. We want to influence their behaviour away from the more adversarial, hide-and-seek stance preferred by a small minority of them.
We also provide tax agents with an integrity line so that they can help us to help them.
The intent of all these strategies is primarily to protect and support those taxpayers who participate properly in our tax and superannuation systems by deterring or bringing to book those that improperly seek an unfair advantage.
4. Enhance - we are passionate about improving our capabilities to be more innovative, agile and responsive to challenges and opportunities.
It is often said that if you want to change others you have to change yourself first.
The ATO is fortunate in having the strong alignment of our people with our integrity framework and corporate values, which themselves are underpinned by values that resonate with Australians. Our mission is to ensure that our corporate values make us worthy of the community's trust and confidence.
The organisational culture we want is based not only on high levels of professionalism, skill and empathy but also on enthusiastic commitment and pride in the important work we do for Australia. At the core of this desire is the notion that we want to make a difference.
The purpose of our People strategy 2009-12 is to ensure that we continue to have people with the energy, dedication, desire and skills to generate and improve outcomes in good times, and who have resilience and optimism to make progress in tough times. We recognise that the pace of change is quickening. Our priorities include:
- shaping the culture of our organisation by embedding the even-handed approach espoused in our corporate values, including targeted initiatives for increasing engagement and discretionary effort
- equipping our leaders and managers to enhance productivity through performance management, talent development, continuous improvement and innovation
- implementing enterprise-wide, integrated learning and development approaches to enhance organisational capability and agility, including better integration of business and people systems
- workforce planning aimed at growing, getting and retaining people with the expertise and acumen we need
- ensuring a strong alignment with our strategic statement and a clear line of sight between the efforts of our people and our corporate goals.
The abilities, commitment, and alignment of our people with our strategic statement and corporate values, will be vital to the achievement of our goals.
Modern tax and superannuation administration is also fundamentally dependent on technology. While the complexity of tax and superannuation administration makes new system development a risky business, we cannot lose our nerve or courage in ensuring that our technology base supports our business processes, enhances our analytical capabilities, and provides the springboard for innovation and whole-of-government and other services to the community. The deployment of our new integrated core processing system, which builds on earlier initiatives such as the tax agent and business portals and our customer relationship management and enterprise-wide case management systems, and the continued roll-out of our enterprise-wide systems and processes head us in the right direction. We will continue to explore opportunities that technology and different delivery methods can provide in enhancing our performance.
More broadly, the theme of enhancement applies wider than the ATO. We would like to enhance the government's ability to support citizens through technology that improves services and reduces compliance costs. The ATO and ABR's contribution to whole-of-government ICT initiatives such as AUSkey and Standard Business Reporting is itself a community asset. We continue to work with others including software developers along a path which enhances Australia's efficiency through the greater use of online dealings.
A recurring theme for the ATO is the importance of a capable, ethical and well-regulated tax profession. A new Tax Practitioners Board has now replaced the six state boards to provide a consistent registration and regulatory regime for tax and BAS agents across Australia. With independence from the ATO, the new framework gives greater impetus to community-based regulation. It signals an important shift from viewing the health of the system as the sole responsibility of the ATO towards sharing its care and management with the tax profession and the wider community. We will work closely with the new Tax Practitioners Board and with representative bodies to assists them in ensuring high levels of professionalism within the industry.
5. Champion - we champion the interests of both individual taxpayers and the community, advising government on ways to improve the operation of Australia's tax and superannuation systems.
It is important to recognise that it is not the ATO's role to advise government on tax or superannuation policy. Policy advice to government has always been a matter for Treasury. It is the government and Parliament that shape these legislative regimes, and ultimately these systems reflect the type of society Australians want and the role of government in that society.
Nevertheless the ATO does have a role to play in providing even-handed advice on the administrative, interpretative and compliance cost impacts of new proposals, and on how the tax and superannuation systems are faring on the ground. For example, if we find that the underlying policy intent of the law is not being achieved or there are unintended consequences, whether they benefit or are to the detriment of an individual taxpayer, we would bring such matters to the attention of Treasury and government. In this even-handed way we champion both the interests of individual taxpayers and of the community.
Generally a consultative approach to developing policy and legislation can generate better-targeted and more practical solutions, reducing both unintended consequences and compliance costs. We have championed proposals to 'road test' draft legislative proposals in much the same way as we use simulation and user-based design in developing our products, services and processes. We have supported a tripartite approach to the drafting instruction function involving Treasury, the ATO and the private sector. We are also an active participant and co-host of the Tax Issues Entry System, which provides the opportunity for tax practitioners and members of the community to raise issues relating to the care and maintenance of the tax and superannuation systems.
Internationally, we have championed good tax administration and close working relationships amongst revenue authorities through our work in forums such as the OECD's forum on Tax Administration, the Study Group on Asian Tax Administration and Research and multilateral groupings such as the Joint International Tax Shelter Information Centre. Part of this work has focused on countering the abusive use of tax havens. This work is aligned with diminished global political tolerance for tax secrecy jurisdictions.
We also champion the interests of taxpayers operating in Australia using the mutual assistance articles in treaties in seeking to eliminate double taxation.
Domestically we are participating in whole-of-government service initiatives and joint taskforces on law enforcement. We are also encouraging the community's use of on-line channels, and championing initiatives such as Standard Business Reporting. We are doing this from the perspectives of making the public sector more responsive and of reducing compliance costs to make Australia more efficient.
We have been on these pathways for some time. However, we have never before positioned our activities in championing concepts, initiatives and capabilities that improve the operation of Australia's tax and superannuation systems as a critical and integrated par of our long term vision. Into the future we will be more conscious of this important role.
By putting our five themes of 'encourage', 'support', 'protect', 'enhance' and 'champion' at the forefront of our thinking, we will be responsive to future challenges and opportunities.
These themes overlap and are in many ways interdependent. By championing ways to improve the system on the ground we encourage willing participation and support taxpayers. Similarly by enhancing our capabilities we better support and protect taxpayers. By supporting and protecting honest taxpayers we champion the care and management of fair and equitable tax and superannuation systems.
Following these themes we foresee a future where:
- People are more engaged and willing to participate if they know what is expected of them and they are able to do this easily at minimum cost.
- People are more likely to participate where they can obtain assistance and guidance on how they should participate. Practical assistance and ease of compliance often go hand in hand.
- People are more willing to participate if they believe that others are paying their fair share of tax (that is the tax properly payable under the law). A level playing field legitimises the value of the tax and superannuation systems as community assets.
- People are more likely to participate if they are not competitively disadvantaged by doing the right thing. This is so because they see the systems as working fairly and they feel supported.
- People may be deterred from evading their obligations if there is a real risk of being caught. Deterrence encourages proper participation and supports the vast majority of taxpayers who properly fulfil their obligations.
- People are more likely to participate if they have trust and confidence in the efficiency, effectiveness, fairness and integrity of the administration. Accordingly, the ATO must be passionate about improving our capabilities and in demonstrating an unwavering commitment to our corporate values.
- People are more likely to participate if they believe the tax and superannuation systems are working as they are intended to work. This depends in part on how well the community and its institutions have played their part in the care and management of these systems.
- People are more likely to participate if the society as a whole sees this as simply the right thing to do.
For the public sector, the main driver in our pursuit of excellence is our desire to make a difference. In the ATO we are privileged in having a clear line of sight between our role and the economic and social wellbeing of our nation. The future itself will bring new challenges and new ideas. Our Strategic statement 2010-15 will enable us to see more quickly seize opportunities to add value to the nation within the framework of our responsibilities. Working with the community we will be well placed to seize the day.
In a democratic country such as Australia the health of our tax and superannuation systems is highly dependent on people's willingness to fulfil their civic responsibilities. Our Strategic statement 2010-15 sets a direction for us along a pathway that encourages people to do the right thing.
We hope that it will be the road most followed.
1 Co-chairs' Statement. OECD Joint Meeting of the Committee on Fiscal Affairs and the Development Assistance Committee, 27 January 2010.
Last Modified: Tuesday, 8 June 2010