• Regulator Performance Framework

    The Regulator Performance Framework was developed as part of the government’s commitment to reducing the cost of unnecessary or inefficient regulation imposed on individuals, business and community organisations.

    We have assessed our performance for the period 1 July 2015 to 30 June 2016 against the six key performance indicators contained in the Framework.

    Our Regulator Performance Framework self-assessment report informs the responsible minister, stakeholders and community of our regulator performance for the past financial year.

    Read our Regulator Performance Framework self-assessment report 2015–16 summary or you can download the whole report in Portable Document Format (PDF) below.

    ATO Regulator Performance Framework self-assessment report 2015–16

    Download a full copy of the ATO Regulator Performance Framework self-assessment report (Portable Document Format, 582kb)This link will download a file.

    Introduction

    As part of the Government’s regulatory reform agenda, the government released its Regulator Performance Framework under the 2014 Spring Repeal Day. The Framework is an important element of the government’s commitment to reduce the cost of unnecessary or inefficient regulation imposed on individuals, business and community. As a regulator the Australian Taxation Office (ATO) is required to self-assess its performance against the Regulator Performance Framework.

    The Regulator Performance Framework comprises six outcomes-based key performance indicators (KPIs). These articulate the government’s overarching expectations of regulator performance, namely that:

    • regulators do not unnecessarily impede the efficient operation of regulated entities
    • communication with regulated entities is clear, targeted and effective
    • actions undertaken by regulators are proportionate to the risk being managed
    • compliance and monitoring approaches are streamlined and coordinated
    • regulators are open and transparent in their dealings with regulated entities
    • regulators actively contribute to the continuous improvement of regulatory frameworks.

    This report addresses the framework’s metrics, measures and reporting requirements for the ATO that were agreed with the Board of Taxation in 2015. It is an assessment of our performance as a regulator for the 2015–16 financial year.

    This self-assessment must be comprehensive, timely and publicly available. The Board of Taxation, acting as a sounding board, believes the ATO is likely to be correct in its ratings and so is broadly supportive of them.

    In this report, we provide an assessment of our performance against each of the KPIs in the ATO Regulator Performance Framework. Assessment is through a combination of activity-based evidence and metrics/measures, qualitative reporting and client experience survey data. We demonstrate our performance against each of the activities and measures for each of the six KPIs. Areas of improvement are also highlighted. Agreed metrics are included as quantitative evidence to support performance.

    The following rating scale is used in assessing our performance:

    Rating

    Definition

    Excellent

    Met all expectations with no further improvements required.

    Very good

    Made significant improvements, with programs of work almost complete. Significantly exceeded service commitments.

    Good

    Improvements consistent with expectations, with some further work required, as reflected in feedback. Exceeded service commitments.

    Satisfactory

    Met base expectations as expected and achieved service commitments.

    Requires development

    Did not meet base expectations or service commitments.

    In reporting on our performance, it is important to acknowledge our purpose as an organisation. The purpose of the ATO is to contribute to the economic and social wellbeing of Australians by fostering willing participation in our tax and superannuation systems.

    We are:

    • making it easier for people to participate
    • delivering contemporary and tailored service
    • ensuring purposeful and respectful relationships
    • a professional and productive organisation.

    The strategies that guide us in achieving our purpose are:

    • build a culture that embodies our values and transforms the client experience
    • simplify interactions, maximise automation and reduce costs
    • connect with the community and other agencies in meaningful ways
    • influence policy and law design for more certain outcomes
    • use data in a smarter way to improve decisions, services and compliance
    • reshape the workforce and how we work, to optimise capability and performance.

    Assessment of performance – summary

    As a regulator of the tax and superannuation systems in Australia, we have self-assessed our overall performance against the Regulator Performance Framework to be good. The ATO is committed to reducing the burden of regulation and have made strong progress working with our clients to make it easier for them to comply with their obligations. As much of the community interact with the tax and superannuation system through their tax agent or adviser, the views of progress made by the ATO as a regulator is also influenced through the interactions and views of their tax agent or adviser.

    2015–16 has seen solid and consistent performance for the ATO through the implementation of a range of strategies to foster willing participation. We have cut red tape by listening to the community and focusing on the client experience. By changing our processes we have reduced the cost of red tape for individuals and businesses by a further $297.7 million. This brings the ATO contribution to the regulatory reform agenda to $615.5 million over the 2014 and 2015 calendar years.

    We have met all of our service commitments, which are the commitments to service we have in place to assure ourselves and the community that the services we providing are of a consistent and high standard. We publish information about how we are performing against our commitments to service, and by doing so; we honour our commitment to transparent management, accountability for results and client-centred service delivery.

    Significant progress has been made in delivering a better experience for the community by:

    • making products, tools and services easier to use and understand, saving time
    • providing more support to help people get things right
    • engaging early and more often so people understand their obligations from the start.

    New and improved services included:

    • a streamlined online tax return in myTax 2015, with 1.8 million individuals using this improved digital service, with some clients now taking just minutes to lodge a return
    • providing additional pre-filled information to around 1.5 million taxpayers making the client experience easier, as well as improving the ATO’s data matching capability
    • new features on the ATOapp, such as myDeductions and the Business performance check tool to provide better advice and guidance through contemporary digital services
    • our Small Business Fix-it Squads working to address irritants and provide improvements for small business owners
    • increased access to our online payment plans for a greater range of clients
    • greater availability of alternative dispute resolution to help achieve breakthroughs in disputes
    • tax governance guides for businesses to better manage their tax and reputational risks
    • ‘Show me what, show me how’ sessions for small businesses in regional centres to support them in complying with their tax and superannuation obligations.

    We also delivered improvements for tax professionals. Tax professionals are critical to the effective and efficient administration of the tax and superannuation systems in Australia and support of the profession is vital to our success. During the year, we:

    • invested in greater communications, connections, and making improvements for the tax profession including consulting extensively. We engaged with numerous tax practitioners to help us better understand their experiences, how they use ATO services and what we could do to fix irritants (for example, with the Tax Agent Portal).
    • conducted ‘Show me what, show me how’ sessions to help tax practitioners save time, optimise performance of the portal and their own technology, introduced a complex issue resolution service, and eliminated irritants with the client correspondence list.
    • committed to working with software developers to deliver the new practitioner lodgment service (PLS) as the primary and default lodgment channel for tax practitioners. The new lodgment channel uses Standard Business Reporting language and format and we have provided technical specifications to software developers for Tax Time 2015, Tax Time 2016 and SuperStream.

    As a regulator, the ATO is focused on driving willing participation in the tax and superannuation systems by providing the right services, support and cutting red tape to make it easier for the community to comply with its obligations.

    Overall, our results and evidence demonstrate the ATO performance for five of the six KPIs to be good with KPI 3 assessed as very good. We have undertaken consultation to understand issues and implemented improvements. We acknowledge there are areas requiring improvement and will focus on these through 2016–17, in particular:

    • enhancing our understanding of businesses operating environments – we will continue our research to understand these environments.
    • continuing to tailor communication and services to clients, tax professionals and others interacting with the tax and superannuation systems to ensure they are aware of available services and have the information and support they need to make it easier to participate.
    • making greater use of data and pre-fill to improve the ATO’s data matching capability, for both service and compliance purposes to further support the shift towards help and prevention activities.
    • further rationalisation and rewriting of information on our website to provide enhanced general tax guidance and navigation to help people get things right.
    • making certain that guidance and information is up-to-date, concise, accessible, clear, timely and provides certainty at the earliest possible stage.
    • continuing to make improvements to provide a more personalised disputes process service and improve the perception of fairness in disputes.
    • taking a more consultative approach to issues that directly affect individuals and business and exploring this on a more detailed level to identify where improvements can be made.

    KPI 1: Regulators do not unnecessarily impede the efficient operation of regulated entities – summary

    We assess our performance for this KPI to be good.

    This is based on the improvements to products and services, consultation we have undertaken and initiatives we have implemented. However we also acknowledge there are areas we need to improve for our clients, for example Tax Professionals perceptions of the ATO and ensuring we learn from complaints received to minimise and where possible eliminate disruption on taxpayers in the future.

    The ATO has continued to work with clients to develop improvements to products and services, with minimal impact on the efficient operation of other regulated entities. Through regular consultation with stakeholders, we have been able to maintain awareness of issues or irritants affecting clients in our operating environment. This consultation has enabled actions to be taken to minimise potential unintended negative impacts of ATO activities on taxpayers. We have implemented improvements that support our clients and, in turn, progressively reduce the cost to taxpayers in complying with their obligations. Our approach to early engagement with our clients has assisted us to understand the initiatives and strategies that can minimise impact. We have in place a program to pick up the phone and talk to clients early to ensure clarity and that there are no unnecessary delays.

    Enhancements made to ATO online services are an example of the changes made to support the client experience and reduce the time cost of compliance for taxpayers. Specifically, individuals have benefited from improved digital services to myTax supporting the lodgment of income tax returns (for example, more pre-filled information) and some clients are now taking just minutes to lodge a return.

    Results from our client experience surveys indicate that we are making progress in our understanding of the different industry operating environments, with only 21% disagreeing. We consider a high neutral response means we are making progress, and a range of research is underway to further improve our understanding of business operating environments.

    Survey results also showed that perceptions of our responsiveness to feedback have remained fairly steady over the past three years, with a slight improvement this year.

    We implemented initiatives to communicate about new tools and services we have on offer and ensure our clients know they are available. We will continue to communicate the actions we have taken in response to feedback, as well as continuing our focus on understanding the practices of tax professionals and how they use services such as the portal.

    The safe harbour initiatives are a good example of our ongoing commitment to ease the burden on taxpayers. The client experience survey results are supportive of our performance assessment. There has been an increase in the monthly results for the proportion of clients who agree that dealing with the ATO is getting easier. Further, the majority of businesses agreed the time taken by ATO staff when dealing with them is reasonable, as well as the time taken to find what they were looking for or to do what they needed to do was acceptable.

    We acknowledge there are some areas we need to continue to improve on for our clients. Our survey results showed that perceptions of tax professionals were weaker than the other client groups on ATO responsiveness to feedback. Also, there was an increase in complaint volumes in 2015–16 due to issues associated with the Client Register system release in January 2015 which caused some delays to ABN and TFN registrations and updates for some clients. We worked with affected clients to resolve the issues and all problems were resolved by December 2015. The learnings from these incidents were taken on board to minimise and where possible to eliminate disruption on taxpayers in the future. Moving forward, we will stay committed to delivering improvements and our ‘Every year counts’ products demonstrate that commitment – it highlights the changes and improvements we are committed to delivering over the next 12 months, for example, a simpler BAS experience.

    KPI 2: Communication with regulated entities is clear, targeted and effective – summary

    We assess our performance for this KPI to be good.

    This assessment is based on the improvements we have made to the delivery of general tax guidance, for example, tailoring of information to certain client groups, and acknowledging the progress made for other elements of this KPI.

    However we also acknowledge there are areas we need to improve and will focus on these in 2016–17:

    • continuing to tailor communication and services to our clients, tax professionals and others interacting with the tax and superannuation systems.
    • further rationalisation and rewriting of information on our website to provide enhanced general tax guidance and navigation to help people get things right.
    • continuing to make improvements to provide a more personalised disputes process service and improve the perception of fairness in disputes.

    We have strived to ensure our communication of guidance and information is up-to-date, clear, accessible and concise.

    The way we provide advice and guidance has been enhanced through continued redesign of our website to make it easier to use. The emphasis is on tailoring information to the needs of clients according to their level of knowledge and the complexity of their questions. We acknowledge that further improvement is required to tailor information to fit the needs of taxpayers and their advisers. We have been reviewing and applying a new content model to the general tax guidance on our website at ato.gov.au and a website virtual assistant ('Alex') has been introduced this year to answer a growing range of general tax enquiries. We will also continue research to improve navigation for the ATO website to ensure consistency of information.

    We recognise the importance of timely responses to our clients, the improved client experience that comes through explaining reasons for our decisions and the long-term impact on willing participation. We acknowledge that the provision of advice and guidance needs to continue to be accessible and timely, and will strive to achieve this through further consultation. A greater understanding of the drivers of perception around ‘certainty’ is required in order to address this aspect.

    In response to key findings from client experience surveys, significant investment has been made to enhance the client experience and, in particular, their perceptions of fairness. This year, 55% of taxpayers who finalised a dispute with us perceived the overall disputes process as fair, 31% disagreed and 14% were neutral or did not know. We have undertaken work to improve performance in this area including communications, ongoing engagement with clients throughout the dispute, introducing fairness champions and providing specialised training to staff to improve the client experience.

    We are focussed on growing the organisational capability and more systematically applying behavioural insights to positively affect the experience of our clients. We are looking at new ways for taxpayers to get information, as well as customising engagement and tailoring our communication. We will continue to broaden the use of behavioural insights following the positive results in payment compliance from using behavioural insights to develop new debt letters focussing on the language, structure and layout used.

    Specifically we will deliver further improvements in 2016–17, such as new online features for myTax and myDeductions, including the ability to record events and transactions for depreciation and capital gains tax throughout the year for pre-filling of tax returns and new ways to get assistance online when using myTax.

    KPI 3: Actions undertaken by regulators are proportionate to the regulatory risk being managed – summary

    We assess our performance for this KPI to be very good.

    This assessment is based on the risk-based proportionate approach we have applied in 2015–16, for example we have attempted to make it easy for people to participate and hard for them not to get things right. We used data in a smarter way to improve decisions, services and compliance and to make things easier for our clients, for example in tailoring our interactions with them. Whilst we have a rating of very good we will be seeking to improve across all areas in the future.

    The ATO has focussed on ensuring its risks, strategies, activities and enforcement actions are proportionate to changing priorities in its operating environment. We already have a high level of compliance to obligations and our main focus is to continue this high level by making it easier for taxpayers to comply.

    We have internally and externally (ato.gov.au) made available the risk-based proportionate approach to compliance obligations, engagement and regulatory enforcement obligations we apply to the ATO as an organisation and our clients.

    Building confidence released on ato.gov.au, outlines our strategies for achieving fairness in the tax and superannuation systems, including what taxpayers can expect from us when we provide a service or interact with them, our approach to compliance and how we detect and deal with those who don’t do the right thing.

    The Tax risk management and governance review guide assists large and complex corporations, tax consolidated groups and foreign multinational corporations conducting business in Australia to identify and manage tax risk.

    We are using increasingly sophisticated data analysis techniques to inform our compliance initiatives. We are clear about our approach to behaviours such as evasion and tax crime and publish information on our website such as The fight against tax crime, which explains our range of compliance strategies to deal with tax crime and our focus on key areas that present a higher risk including international, trust and phoenix tax evasion and fraudulent behaviour, refund fraud, identity crime and organised crime.

    We are improving our knowledge about business, industry and commercial realities, so that we can better understand their circumstances. If we identify a risk, we may contact the client to resolve or better understand the matter before progressing further. We have quality assurance processes in place for our staff and ensure that relevant staff are trained in risk management policies, processes and procedures.

    We acknowledge that key areas for improvement are timely completion of work and documenting and recording of decisions.

    We will stay committed to delivering improvements and our ‘Every year counts’ products demonstrate that commitment – it highlights the changes and improvements we are committed to delivering over the next 12 months – for example, tailored compliance engagement – to make it easier for public businesses to self-assess and resolve tax risks prior to lodgment.

    KPI 4: Compliance and monitoring approaches are streamlined and coordinated – summary

    We assess our performance for this KPI to be good.

    This assessment is based on the improvements made to compliance and monitoring approaches – for example, our tailored engagement model for privately owned business groups and wealthy people, which emphasises transparency and mutual respect. This means that when a taxpayer is open with us, we can understand their circumstances, offer the right services and work with them where needed to get things right.

    However we acknowledge there are areas requiring further improvement and will focus on these through 2016–17:

    • continuing to tailor services to clients, tax professionals and others interacting with the tax and superannuation systems.
    • making greater use of data and pre-fill, for both service and compliance purposes to minimise requests for information to clients and further support the shift towards help and prevention activities.

    As a regulator we have focussed on minimising the impact of our compliance and monitoring approaches on clients.

    We have continued to tailor our services to specific audiences, and demonstrated improvements in minimising the cost to the community in complying with obligations by assisting them to get things right.

    For example, we attempt to make it easier for people and hard for them to not get things right. We are using data in smarter ways to improve decisions, services and compliance. Ultimately compliance strategies vary depending on a taxpayers circumstances and the information they provide.

    A deliberate shift towards help and prevention activities to assist taxpayers to get it right prior to lodgements has meant fewer audits and reviews. Our safe harbour initiatives are one example.

    We are also expanding and automating our access to data from third parties and other jurisdictions. Combining this with improved analytics allows us to better understand complex business structures and individual client circumstances to further tailor our interactions. This enables us to use data we already have, minimising requests for information from clients. Our survey results showed that only 9% of clients, who recently interacted with the ATO, thought the ATO contacted them unnecessarily.

    KPI 5: Regulators are open and transparent in their dealings with regulated entities – summary

    We assess our performance for this KPI to be good.

    This assessment is based on the transparent approach of the ATO in its dealings with clients. We are open and responsive to requests from taxpayers and our service commitments and performance measurement results are published in a timely manner honouring our commitment to transparent management.

    However we acknowledge that we need to continue making improvements to providing a more personalised disputes process and understand what drives perceptions of fairness in audit, advice and debt disputes to enhance our transparency, for example providing certainty at the earliest possible stage. We also need to improve our timeliness when advising clients of delays.

    We strive to ensure disputes are dealt with in an open and transparent way and have made progress in managing objections and disputes, for example in 2015–16, we dedicated additional resources to resolving the longest running disputes. While this has led to an increase in the average age of completed cases, it has reduced the average age of cases on hand. The higher average age of completed cases reflects a small pool of long-running cases that were resolved during the year.

    Further, results from our client surveys show that 57% of individuals and 59% of businesses agree that they are able to gain information from or contact the ATO in a way that they want. Our new, virtual website assistant (Alex) helps make this possible.

    KPI 6: Regulators actively contribute to the continuous improvement of regulatory frameworks – summary

    We assess our performance for this KPI to be good.

    This assessment is based on the cooperative and collaborative relationships we have with stakeholders which promote trust and improve the efficiency and effectiveness of ATO administration.

    One example is our use of special purpose working groups to consult on specific matters that have the potential to significantly affect the community’s willing participation. Stakeholders are engaged in the development of options to reduce compliance costs and sharing of feedback – such as the improvements currently being co-designed with BAS and tax agents.

    We acknowledge there are areas requiring improvement and will focus on these through 2016–17:

    • Client experience surveys indicate we need to take a more consultative approach to issues that directly affect individuals and business. This will require exploring on a more detailed level to identify where improvements can be made.

    Enquiries about the ATO Regulator Performance Framework self-assessment report 2015–16 can be directed to Annualreport@ato.gov.au.

    Last modified: 20 Dec 2016QC 46888