The impacts of the economic environment on taxpayers' capacity and willingness to pay, continue to make managing tax and superannuation debt challenging
We are improving debt management by differentiating between taxpayers in our debt collection strategies, which assists in ensuring a level playing field for business and fairness for all taxpayers.
In partnership with a major Australian university, we are using data analysis to develop targeted debt-collection strategies based on taxpayers' needs and behaviours.
Through analysis we can distinguish between debt cases likely to be finalised without our intervention and those cases requiring debt collection action. Following successful pilots in 2012–13, we will begin implementation in 2013–14.
We use behavioural economics principles to positively influence voluntary payment compliance. We piloted this with debt letters in 2012–13 and will be extending our use of these principles across all of our debt collection activities.
We piloted the letters with taxpayers and tax professionals and incorporated the findings of user testing, including:
- making language, structure and layout clearer
- ensuring that the consequences of non-compliance were clear and stated up front
- making it easier for taxpayers to understand the steps they needed to take to address their debt and thereby avoid firmer debt recovery action by us.
For each of the letters piloted there were improvements in payment compliance, evidenced by a reduction in the debt owed by the pilot group and/or an increase in the proportion entering into a payment arrangement.
We also focus on encouraging people to take responsibility for the management of their tax payment obligations by providing online tools and services to assist. Our suite of online tools and services already includes an online payment arrangement calculator, a business viability assessment tool and a payment arrangement system.
The online payment arrangement calculator, released in 2010, enables taxpayers to work out sustainable payment arrangement options that suit their circumstances. Businesses can also use our online business viability assessment tool, which we released in December 2012, to self-assess the financial situation of their business, including their capacity to pay.
From April 2013, we expanded our services to allow individual taxpayers to enter into a payment arrangement online for their income tax debts. Prior to this, taxpayers needed to either speak to a tax officer or use our self-help phone service to make a payment arrangement.