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  • Individuals

    Individuals represent the largest community segment interacting with the tax and superannuation systems. There are approximately 10.9 million individuals in the tax system, not including those who are in business, for example as a sole trader (see Small businesses).

    Most individual taxpayers interact with the ATO only once a year by lodging a tax return (and receive or make a payment as a result). Of the individuals (not in business) that lodged a return this year, around 67% lodged through a tax agent, 30% lodged their own return online using myTax and 3% lodged their own paper return.

    Indicators of participation

    Correctly registering in the system

    Individuals register in the tax system by getting a tax file number (TFN), which they quote to employers and other payers as part of the pay as you go (PAYG) withholding system. Of the 20 million active TFNs registered to individuals at 30 June 2017, 97% were held by people who were considered to be Australian residents for tax purposes. There were almost 775,900 new registrations in 2016–17, including around 567,500 for residents and 208,400 for non-residents for tax purposes.

    Lodging tax information on time

    In 2016–17, 10.9 million individuals were expected to need to lodge a return for the 2015–16 financial year and 84% were lodged on time, a slight improvement on the previous year. This increased to 86% for returns lodged within 60 days of being due; and by 30 June 2017, 89% of returns were lodged. Over the past five years, there has been a 5% increase in the number of tax returns lodged by individual taxpayers.

    In 2016–17, we contacted 200,000 individuals employed under PAYG arrangements who generally have small amounts of tax payable or are due a refund but had outstanding lodgment obligations. There was a lower than expected response rate to bring their lodgment obligations up to date indicating that, even with the likelihood of a tax refund, some clients are not motivated to lodge their tax returns. We will work to explore and better understand these behaviours and refine our strategies to more effectively engage with these clients in 2017–18.

    Reporting complete and accurate information

    The accuracy of income reporting has improved with greater and earlier availability of third-party data for pre-filling in online returns which helps reduce reporting errors. Online lodgment accounted for 97% of the returns lodged by individuals in 2016–17. We have an extensive data-matching program, in which data we receive from more than 640 million records from third parties is compared to information reported in tax returns. Where we see discrepancies, we bring them to the attention of the individual or their tax agent, and work with them to amend the return.

    However, for tax deductions, there is limited third-party data available and, where we have concerns with taxpayers’ claims, we take more direct action. Mistakes mainly involve over-claiming of rental and work-related expenses. Work–related expenses account for around 76% of deductions for individuals not in business. While amounts over-claimed by individuals are relatively small, they are significant when totalled across the population.

    Paying tax obligations

    In 2016–17, 69% of individuals’ tax liabilities were paid on time, down 1 percentage point from last year and 88% were paid within 90 days of the due date. This is consistent with last year.

    At 30 June 2017, individuals owed $2.3 billion in collectable tax debt, up around 2% from last year. Individuals account for 11% of total collectable debt.

    Of all our clients, individuals have the lowest rate for on-time payment of tax debts. We are conducting research to understand why individuals get into debt and how we can support them.

    How we are making it easier

    Providing choice

    We aim to provide easy-to-use digital and support services that enable people to minimise mistakes and meet their obligations with minimal cost and with minimal impact on their time. These services support people in managing their tax affairs, whether they choose to engage a tax agent or prefer to deal directly with the ATO.

    For people who choose to deal directly with the ATO, our online services accessed through the myGov portal, enable them to access their tax and super accounts, keep tax records, and lodge their tax returns and activity statements.

    In 2016–17, almost 3.5 million returns were lodged via myTax by those who chose to self-prepare – an increase of 8% over the previous year. More online lodgment has seen a reduction in paper lodgments of 20% (to 443,600), and around a 5% reduction in paper amendments.

    Individuals can use ATO tools and services, such as the myDeductions tool on the ATO app, to assist them in managing their tax affairs. In 2016–17, almost 56,300 taxpayers uploaded details of their deductions from myDeductions to myTax or to their tax agent.

    By moving high-volume, low-complexity interactions to digital services, we are improving the client experience, as well as reducing our costs. Our client experience satisfaction survey reveals that individuals are significantly more satisfied with the ATO online experience (69%) than the phone experience (64%).

    The shift to digital services has seen a decrease in inbound calls, including self-help interactive voice recognition (IVR) calls, by 10% from 2015–16 to 2016–17. We have also reduced the number of non-digital enquiries by sending SMS progress-of-return messages to people who have lodged their own return through myTax and are due for a refund.

    Personalised support

    Individuals expect the ATO to deliver digital services that streamline interactions, and to provide information that is easy to find and understand.

    In October 2016, we piloted web-chat and screen-share services for myTax users, allowing them to interact with an ATO staff member for support while completing their tax return, and share their screen for help with navigation and features. Having proved popular with clients and staff, web chat and screen share are available for Tax Time 2017.

    Alex, the ATO website's virtual assistant, has engaged in 1.5 million conversations since being launched at the end of February 2016, resolving more than 81% of client enquiries at first contact and contributing to reducing demands on our call centres. As at 30 June 2017, Alex can now respond to over 500 types of client questions and this service continues to expand.

    Support for those who need more

    While we encourage people to deal with us online, we recognise that some will find it difficult. We will continue to offer convenient and accessible call centre and face-to-face services. Access to call centre services, as well as some digital interactions, is enhanced through the use of voice identification. To date, 2.8 million clients have enrolled their voiceprint to verify their identities, saving time for both the taxpayer and the ATO.

    Other support services we provide include:

    • the Tax Help program, which provided assistance to 30,400 low income taxpayers in around 610 locations through the dedicated work of almost 820 volunteers. Included in the program are 53 centres that specifically serve people from culturally and linguistically diverse backgrounds, and 21 that specifically serve Indigenous Australians
    • ATO Shopfronts, supplemented with 31 pop-up tax time booths in major shopping centres, concentrated in geographic areas where needs are greatest, which helped some 5,640 taxpayers with general enquiries and the transition to digital services
    • services to taxpayers in regional and remote areas in partnership with the Department of Human Services (DHS) through DHS mobile service centres
    • participating in 150 seminars and other events, to provide information on ATO services and context about the operation of the tax and superannuation systems.

    Educating those new to tax and super

    Knowing how to participate in the tax and superannuation systems is an important life skill, and research indicates we can influence lifelong attitudes of compliance by helping to educate tomorrow’s taxpayers. During the year, we updated the ATO’s Tax, Super and You online teaching resource, mapping it to the national school curriculum for Years 7 to 10. Tax, Super and You now also includes downloadable components to support classroom teaching. In 2016–17, we supported this initiative through almost 270 school visits, delivering face-to-face talks and webinars to secondary students across Australia. The talks engaged over 19,500 students in discussion about tax and super to assist them to prepare for beginning employment and further education. Tax, Super and You has around 600 registered schools.

    Helping people new to Australia to understand the value the tax and superannuation systems and have a positive attitude about compliance is an ongoing focus. Knowing that engaging through trusted community leaders is one of the most effective means of communicating with this audience, we are expanding our network of community partners.

    Norfolk Island residents were brought into the Australian tax and superannuation systems on 1 July 2016. We have undertaken extensive work to equip Norfolk Islanders to comply with their obligations. This has included sending a welcome letter to each resident, publishing tailored information, and providing face-to-face assistance. We will provide further help for Norfolk Islanders as they lodge their first tax returns from 1 July 2017.

    Helping non-lodgers get back on track

    Most individuals who self-prepare their tax returns are required to lodge by 31 October. For those using a tax agent, the time frame is extended and varies depending on particular situations.

    Late or incorrect lodgments can delay the collection of revenue or the provision of tax refunds. They can also affect other whole-of-government obligations that rely on income tax assessment, such as Higher Education Loan Payment (HELP) compulsory repayments and child support payments.

    The ATO has a strategic program with the Department of Human Services to pursue outstanding tax returns of Child Support Program clients. These lodgments provide a determination of income for child support payment purposes and, where the taxpayer may be entitled to a refund, this can be garnisheed to meet any outstanding child support debts.

    Of the outstanding tax returns identified through this program, almost 126,500 were finalised in 2016–17, including 65,400 which were used by the Department of Human Services to determine income for Child Support Program clients. We also intercepted over 15,300 tax refunds, totalling $21.3 million, to be applied to child support debts. Over the next twelve months, we will increase our focus on those taxpayers with the financial capacity to meet their obligations.

    We use data-matching evidence to identify taxpayers with a requirement to lodge due to the receipt of income. For those who don’t lodge on time, we make early contact via letter or SMS to remind them of key dates and encourage them to lodge without further delay.

    Where we see taxpayers with multiple lodgments outstanding, we make contact in person, tailoring our conversations to guide them back on track. For people who continue not to lodge we take firmer action, which may include default assessments, failure to lodge penalties and, in some cases, referral for prosecution.

    Supporting departing and temporary residents

    From January 2017, a new 15% income tax rate for working holidaymakers (those on subclass 417 and 462 visas) was introduced. From 1 July 2017, a tax rate of 65% applied for departing Australia superannuation payments for working holidaymakers. To support the implementation of these measures, we worked with industry associations and tax professionals to communicate the new rules to employers and working holidaymakers. We also made changes to the TFN application form and the employer registration process to accommodate the new measures.

    We are making it easier for departing and temporary residents to understand their entitlements and claim their super by:

    • providing guidance
    • working with the Treasury and Department of Immigration and Border Protection to address system irritants, implement systems changes and provide online information
    • improving pre- and post-departure training, as part of a whole-of-government approach with Department of Foreign Affairs and Trade, Department of Education, and Department of Immigration and Border Protection.

    Supporting super fund members

    We help super fund members to manage their super by providing targeted guidance on changes to the superannuation rules and easy-to-use tools, including tools that help reunite people with their lost super accounts.

    In implementing changes to contributions caps, the transfer balance cap and to working holidaymaker rules that come into effect over 2017, we released a range of guidance material and ensured staff in our contact centres were equipped to provide personalised help to clients. Further, we directly contacted those likely to be affected.

    During 2016–17, we also:

    • improved the functionality of our super guarantee online self-help tools, which enable people to identify and report any concerns about the payment of their super contributions
    • increased community understanding of how superannuation works by improving online learning resources, delivering a tailored program for Indigenous Australians, and including information on super in our presentations to schools.

    We are working on ways to increase the visibility of an individual’s total superannuation position. This includes working with Australian Prudential Regulation Authority (APRA) regulated super funds to establish a more contemporary approach for reporting member data which will allow individuals to better monitor their caps, consolidate their super holdings, monitor super guarantee contributions and make informed decisions to optimise their super over the long-term.

    Lost and unclaimed super

    At 30 June 2017, there were 6.3 million lost or unclaimed super accounts, with a total value of $18 billion (an increase from the 5.7 million lost and unclaimed accounts and $14.8 billion in value from 2015–16). Of these, 628,700 lost accounts (with a value of $14.1 billion) were held by super funds and 5.7 million unclaimed accounts (with a value of $3.8 billion) were held by the ATO.

    Lost super accounts that meet certain criteria can be transferred to the ATO, ensuring they are protected from ‘erosion’ by fees and charges.

    During the year, we ran outbound campaigns and communication strategies to targeted clients to reunite them with their super money. In 2016–17, we reunited 548,300 individuals with their lost, unclaimed and active super accounts worth $2.9 billion.

    Delivering contemporary and tailored services

    Ensuring integrity and fairness

    Our program of reinvention is improving the client experience and supporting willing participation in the tax and superannuation systems. Research shows that most Australians have an understanding of why they pay tax and make an effort to meet their obligations. Personal circumstances and perceptions of fairness can also affect attitudes and behaviour in complying with tax and super obligations.

    We are focused on improving client interactions by taking into consideration individual circumstances, communicating regularly and taking the time to explain outcomes.

    This year, we developed an organisational fairness framework and implemented a range of strategies to ensure our staff make the most of every community interaction. We have seen some positive outcomes, including an increase in the overall fairness survey results and the number of compliments our staff received from the community. The most recent findings show that more than half (68%) of individuals surveyed think the ATO is fair and professional in administering the tax and superannuation systems.

    Similarly, 56% of taxpayers who were involved in a dispute with the ATO agreed that the dispute process was fair. This is a slight increase from the previous year’s results (55%). In addition, a higher proportion of audited taxpayers thought the audit process was fair, 71% in 2016–17 compared with 66% in 2015–16.

    Using data to prevent non-compliance

    Our priority is to help people to get their tax returns right from the start, rather than conduct reviews and audits to make corrections after the event.

    Collaboration with third-party data providers, including employers, banks, private health insurance providers and other government agencies, has helped us to pre-fill as much data as we can into tax returns, which minimises errors. Over the 2016–17 year, we pre-filled over 81 million records to assist taxpayers who self-prepare their return or their tax agents to manage tax obligations.

    Tools such as myDeductions on the ATO app help people record accurate information about their deductions during the income year, which they can upload to their myTax return or provide to their tax agent.

    Real-time analytics messaging was trialled in myTax 2016 to encourage self-preparers to review their deductions. We sent a total of over 110,000 messages to myTax users whose claims for work-related expenses or the cost of managing tax affairs were higher than their peers (those earning similar income, in similar occupations). Based on this successful trial, the scope will be expanded during Tax Time 2017.

    Dealing with non-compliance

    While our emphasis is on helping people willingly comply with their tax obligations, we take action to protect the integrity of the Australian taxation system and ensure everyone pays the right amount of tax. We have been transforming the way we assess our risks and the strategies we use to address them.

    All tax returns are scrutinised. The information is matched with third-party data and against various risk indicators to identify errors and irregularities for specific groups, such as occupations and industries, the workforces of specific employers, and some types of investors. We also support tax agents by providing them with a ‘risk picture’ customised to their client base.

    Errors we commonly see involve over-claiming of rental and work-related expenses. Work–related expenses accounted for around 76% of deductions for individuals. While amounts over-claimed by individuals are relatively small, they are significant when totalled across the population.

    In 2016–17, we continued to refine our strategies and tactics for managing deduction claims, particularly work-related deductions. We undertook over 762,000 compliance activities, including tailored letters, pre-issue reviews, audits, working with large employers, and personal visits to tax agents to improve correct reporting further and address non-compliance. These activities resulted in tax liabilities of $893.8 million. We are developing strategies to increase the number of activities we undertake in 2017–18.

    Supporting payment on time

    While 69% of individuals’ tax liabilities were paid on time, as at 30 June 2017, individuals owed $2.3 billion in collectable tax debt. Of all our client groups, individuals have the lowest rate for on-time payment of tax debts.

    We are conducting research to understand why individuals get into debt and how we can support them. Anecdotal evidence suggests four key drivers of tax debt for individuals:

    • prioritising tax debts below more critical living expenses
    • fluctuations in income and unexpected tax liabilities
    • the time lag between accruing a liability and when payment is due
    • limited awareness of tax debts and/or payment options.

    Our strategies aim to help individuals manage and pay their debts – for example, by sending SMS reminders, letters or calling them. Those that have difficulty paying their tax debt can enter into a payment arrangement. Where debt is an issue, we encourage people to contact us early. Our aim is to find a solution that minimises the anxiety for taxpayers and is workable for all involved. To provide a whole-of-client service and reduce multiple interactions with the ATO, we have started to include a discussion about these payments when finalising a review or audit with individuals. Where debts remain unpaid, we take firmer action to prevent those taxpayers gaining an unfair financial advantage over the majority that pay on time.

    Dispute resolution

    In the individuals market, we aim to resolve disputes as early as possible. We offer in-house facilitation and adopt a collaborative approach to dispute resolution by ensuring the right people are engaged at the earliest opportunity with the skills to resolve the dispute. For vulnerable taxpayers with significant personal circumstances, we provide an independent person to assist them through the process, and explore what options are available for the payment of any outstanding amounts. We measure ourselves against fairness targets to ensure that our interactions are simple and understood, and foster willing participation in the tax and superannuation systems.

    See Resolving disputes for more information.

      Last modified: 30 Oct 2017QC 53553