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  • Commissioner’s review

    2016–17 has been a very positive year for the ATO’s performance results. We have delivered against commitments to government and the community, made significant improvements to the client and staff experience and progressed our long-term cultural change program. We have also improved our productivity and furthered the public service and government’s digital service delivery and citizen-centric agendas.

    Our overall performance

    The progress of our reinvention program, improved services, success in the courts, progress under the Tax Avoidance Taskforce and consultation with key stakeholders have been key to maintaining and building trust and confidence in the ATO and the tax and superannuation systems. While relationships with the community and the various client segments are healthy, trust and confidence in the ATO were tested this past year with the IT hardware failures and related service interruptions, and the revelations of Operation Elbrus in May 2017.

    We were very conscious of the need to restore confidence in our services, performance and integrity. Consequently, we adjusted our priorities and efforts, instigated a number of reviews, responded to external scrutineers, and drove an intensive program to remedy and develop our IT systems ready for Tax Time 2017 and beyond.

    Our efforts and focus paid off and, as I write this, Tax Time 2017 is outperforming 2016. This is significant given that 2016 was a bumper year, with almost 3.5 million individual taxpayers using myTax (the first time it was offered to all individuals), and with 26% fewer complaints than in Tax Time 2015.

    In both 2016 and 2017, we increased our pre-filling for online returns, with more than 81 million records used to pre-fill the online returns. In Tax Time 2017, lodgments are up on 2016, with a total of 7.7 million from self-preparers and tax agents, and 6.2 million refunds worth more than $17.4 billion issued to date.

    While we have had some intermittent issues with system performance, availability for Tax Time 2017 is at the same level, if not better than in previous years. We have also seen a 30% reduction in complaints compared to the same time last year and all service standards for our calls and correspondence are being met.

    While Operation Elbrus, the joint operation between the ATO and Australian Federal Police, that became public in May 2017, was an excellent piece of investigative work and collaboration, it raised questions about our integrity, processes and controls.

    The Inspector General of Taxation (IGT) was asked by the Senate Economics Reference Committee to review these matters, and we also initiated our own internal reviews. I am open to hearing about improvements we could make. However, I am confident that our monitoring systems, procedures, controls and safeguards worked in the case of Operation Elbrus and that our strong culture of integrity also gives the community every reason to trust the people and processes of the ATO.

    On many other fronts, during 2016–17 the ATO delivered very good results for the community with the highlights including:

    • The Tax Avoidance Taskforce (established on 1 July 2016) raised $4 billion of additional liabilities against a handful of large businesses and multinationals. We also had strong engagement with companies potentially within the scope of the Multinational Anti-Avoidance Law, with a number of them restructuring to recognise profits in Australia for the first time.
    • Our early engagement and alternative dispute resolution have resulted in a 61% reduction in the number of appeals to the Administrative Appeals Tribunal since 2013–14; from 922 in 2013–14 to 357 appeals in 2016–17. We introduced Dispute Assist and Fast Intensive Triage initiatives to streamline, fast-track and support the resolution of objections. This had an immediate positive impact, resolving disputes more quickly. Our alternative dispute resolution approaches are an excellent example of supporting our clients – reducing time, money and angst.
    • Since the introduction of the Independent Review process for the large market in July 2013, we have conducted 41 reviews of significant disputes over large corporate audit positions. Of these, only one matter has proceeded to litigation. Litigation will remain an important avenue in resolution of disputes, to clarify the law and to deal with those who are gaming the system or doing the wrong thing.
    • Our litigation results show success in more than 80% of cases, indicating we are picking the right cases to pursue through the courts. The landmark Chevron case was one of the most important decisions in corporate tax in Australia and will have direct impacts across a range of sectors. The Full Federal Court’s decision on the pricing of related-party debt and subsequent assessments have yielded revenue in excess of $1 billion, and discussions since have shored up tax collections significantly for the future.
    • During 2016–17, we contributed to the Black Economy Taskforce and continued our own action to address the black economy. We contacted more than 11,000 small businesses and are engaging with many more to demonstrate the range of tools the ATO has to assist them with running their businesses.
    • We continued to use behavioural insights in the design, layout and language of our communications to help to make it easier for clients. In particular, this helped with supporting taxpayers to shift from paper to digital, get their work-related expense claims right and for businesses to comply with their reporting and lodgment obligations.
    • Our automated SMS reminders (rather than formal letters) for habitual late payers reaped an extra $800 million in payments in 2016–17 at a cost of just $0.09 per SMS (compared with $1 for a formal letter). This method of communication focuses on prevention, and is much cheaper than chasing these payments after they are due with phone calls and more letters.
    • We moved our website ato.gov.au to be hosted in the cloud, providing a more stable environment for peak period system demands and flexibility to release content to the community 24/7. We have had a 45% reduction in our website content, removing duplication and complexity to allow greater ease of use. Over the past two years, we have removed approximately 5.8 million words from the website.
    • We recently reached the milestone of 3 million enrolments in our voice authentication – giving people a much faster and more secure way of proving their identity when dealing with us.
    • We supported clients and tax practitioners in regional locations who were affected by large business closures, and those impacted by Cyclone Debbie and its aftermath. We increased our communications with visits, regular phone contact and targeted messaging, and provided additional time to meet obligations.
    • The implementation of SuperStream, the standardised electronic payment and information sharing system for employers and super funds, set a new benchmark on how we consult with industry to improve productivity for business and has so far realised significant efficiencies – about $400 million per year for funds, $400 million per year for employers and generating savings for members at an estimated $2.4 billion per year. In November 2016, the SuperStream program was recognised by the Institute of Public Administration Australia with the Gold award for Excellence in Public Administration.

    None of this has been possible without the commitment and effort of our people, who continued to perform admirably over the past year. Our employee engagement, as measured in the 2017 APS Census, is now the highest it has been since this measure was introduced, and our level of unplanned leave is the lowest in 15 years. Our Comcare annual premium too has reduced by around 80% since 2013–14, from more than $54 million to $10 million for 2017–18.

    Our diversity and inclusion successes include increasing our expenditure on Indigenous suppliers from less than $10,000 in 2012–13 to more than $21 million for 2016–17, and our annual property costs have reduced by $50 million.

    Looking forward

    The ATO will continue to reform our administration of the tax and super systems under our reinvention program. We remain committed to improving the client experience and reinforcing a service culture in the ATO for the long haul. Working with clients and stakeholders, we will continue to put our efforts into:

    • earlier engagement, greater transparency and cooperation with clients and partners
    • prevention and early warning, rather than correction
    • more sophisticated use of data for both service and compliance purposes
    • increased digital service offerings and streamlined interactions
    • greater appreciation of, and empathy for, taxpayers; and
    • sensible risk management.

    Meeting our challenges

    The next big challenges we face include influencing community perceptions and attitudes about tax and minimising the various tax gaps. We have made substantial progress with the large market and we will continue to deliver under the Tax Avoidance Taskforce. In the coming year, we will increase our attention on small businesses, the black economy, phoenix operators and the individuals market.

    My aim is to make the ATO’s services comparable to the best of any large organisation interacting with a large and diverse client base anywhere in the world. I also want people to think that while they didn’t necessarily want to deal with us, their interactions were as good as they could ever expect.

    Thank you to all the people in the ATO, our stakeholders, partners and service providers for contributing to the great results in 2016–17. I want to thank those who have supported us, particularly when we were dealing with the highly unusual events of the IT hardware failure and Operation Elbrus.

    Chris Jordan AO
    Commissioner of Taxation
    Registrar of the Australian Business Register

      Last modified: 30 Oct 2017QC 53733