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The volume of our account maintenance work increased by 2.5% this year, yet we managed to maintain our service delivery to taxpayers while reducing administration costs. Where appropriate, we changed our procedures to meet community expectations that refunds are paid correctly, on time and to the right taxpayer. We balanced this with our need to be confident that the right checks and integrity controls are in place.
This year we managed 21.9 million accounts and issued 12.3 million refunds. This was 26% more accounts and 3% more refunds than last year. A significant component of the increase in accounts was a result of including superannuation accounts in our reporting for the first time. Refunds included 9.5 million income tax refunds and 1.9 million activity statement refunds.
During the year we streamlined our processes to ensure that, where all information had been provided, we issued refunds promptly. We introduced an automated process where activity statement accounts with small credit balances are checked weekly and automatically refunded provided there is limited risk of incorrect payment. Implementing this process removed the need for taxpayers to contact us to request a refund of a small credit, while substantially reducing the need for manual intervention on our part. This resulted in us transferring credits between accounts for the same taxpayer or paying 181,427 refunds worth $78.0 million, which would otherwise have remained as a credit on the account.
We continued to review income tax refunds to assure the integrity of the refund process and mitigate the risk of errors and incorrect refunds. This strategy proved to be effective, with account corrections of $2.9 billion. These reviews do not adjust any claims by taxpayers, but simply correct errors such as those caused by forms being filled out incorrectly. They are in addition to the reviews reported under 'Active compliance' , which adjust claims made by taxpayers.
The value of refunds held as a percentage of the net value of refunds issued was 1.9%. The majority of these refunds were held because taxpayers had not provided financial institution details for their activity statement accounts. We are pursuing strategies to encourage taxpayers to comply with this legislative requirement.
During the year we implemented a recommendation from the Inspector-General of Taxation to publish weekly processing statistics for activity statement refunds on our website, showing the percentage of refunds processed within the performance standard. Every week we also published expected processing times for routine activity statement refunds to give taxpayers an indication of how long it would take to receive their refund. This should help taxpayers manage their cash flow with more certainty. The average processing time for electronically lodged activity statements this year was 4.9 days, and 7.4 days for paper lodged activity statements.
When an activity statement is lodged and a refund is expected, the performance standard is to issue 92% of those refunds within 14 days of all information being provided by the taxpayer. This year we processed 1.9 million activity statement refunds and issued 92.2% within 14 days. This represents an increase of 0.1% in activity statement refunds being processed compared to last year, and a slight increase in performance from 92.1% issuing within 14 days.
We also concentrated on the end-to-end processing of refund activity statements in order to provide a better service to taxpayers. This created a clearer picture of the interdependencies that processing one item of work has on helping taxpayers comply with their obligations. For example, where a taxpayer advises us that their financial institution details have changed, we aim to update their records before their next activity statement is due, thus minimising any delays in receiving refunds.
We delay non-routine activity statement refunds to verify them or if we require additional information from a taxpayer. This year the average value of activity statement refunds held at any time for more than 14 days after lodgment was $4,989. This was 13% less than last year, but our checking activities inevitably give rise to some delays.
Where a taxpayer or their representative requests a refund of overpaid tax, the performance standard is to issue 92% of refunds within 28 days. This year we actioned 242,487 requests and issued 92.7% within 28 days. We also automated the actioning of low-risk cases, which reduced the time taken to issue refunds and improved the efficiency of our case actioning.
The Tax Agent and Business portals continue to provide taxpayers and their representatives with easier access to their tax accounts. During the year use of the Tax Agent Portal increased by 19% and use of the Business Portal increased by 67%. While the portals have increased the transparency of our records, they have also increased the number of taxpayer requests related to managing their accounts. The increased interactions make us more confident that accounts are accurate.
Access to deferred company instalments ceased on 30 June 2006. The majority of taxpayers who chose to use this option have met their obligations and their accounts have been reconciled, with only 7,793 cases to resolve in early 2006-07. The remaining unresolved accounts are for taxpayers who have incomplete lodgment obligations, or have substituted accounting period reporting approvals that carry over the normal financial year.
This year we paid $238 million in interest on overpayments and early payments under the Taxation (Interest on Overpayments and Early Payments) Act 1983.
Case study - A productive partnership
Changes to our call centre scripting, improved letters, new fact sheets, and updates to the Tax Agent and Business portals to reduce confusion for taxpayers and reverse workflows for tax agents were just some of the positive outcomes of our with the Accounting Working Group this year.
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The Accounting Working Group represents one of the many ways we work with agents to improve the administration of the tax system.
The group gives agents the opportunity to openly discuss matters and alert us to the problems they face in meeting their clients' needs. Together we can then discuss solutions aimed at improving the experience for agents and taxpayers, without affecting the integrity of the tax system.
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The integrity of Tax Office accounts, refund processing controls, interactions between accounts, and the administration of PAYG withholding were just some of the varied topics discussed this year.
The group also provides the opportunity to update agents on how we are progressing with our change program, thus allowing them to experience this major journey of change with us.
We look forward to building on the collaboration and trust developed through such groups in 2006-07.
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Sections within 3.5 Output 1.1.2 - Management of revenue collection and transfers
Last Modified: Wednesday, 18 October 2006