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  • Schedule D: Budget measure – GST voluntary compliance program

    Schedule D of the GST Administration Performance Agreement (1 July 2017 - 30 June 2020) is about performance outcomes relating to the Budget measure, GST voluntary compliance program, ‘Working together to improve voluntary compliance’.

    In the 2015 Budget, with the support of the states and territories, we received additional funding extending the program for a further three years to 2018–19.

    The program allows us to better identify fraudulent GST refunds, under-reporting of GST liabilities, failure to lodge GST returns, and outstanding GST debts. The intent is to deter fraud and evasion and help people understand the heightened risks that accompany deliberate non-compliance. The result is improved voluntary compliance, willing engagement with the tax system and a level playing field for Australian businesses.

    During the first seven years of the program, we have focused on four key areas (quadrants) achieving positive outcomes for revenue and influencing compliance behaviour.

    The program has been extremely effective in meeting its revenue commitments, with those commitments exceeded in each year of the program. At 30 June 2017 (the end of year seven of the program), an estimated $4.69 billion in compliance liabilities have been raised compared to a commitment of $2.95 billion. Including debt collections, an estimated $6.16 billion in additional GST has been collected from the start of the program to the end of 2016–17, compared to the total seven-year commitment of $2.82 billion.

    GST debt collections through the program continued to significantly exceed commitments in 2016–17, with $347.1 million collected. The level of GST debt collected was consistent with previous years of the program, with the exception of 2013–14 when an early collections campaign noticeably increased GST collections that year.

    GST liabilities raised through lodgment enforcement work in 2016–17 were the highest in the program to date at $679.0 million. This is in addition to the liabilities raised as a direct outcome of the lodgment enforcement strategies.

    GST voluntary compliance program research – phase 7

    As part of our efforts to gain insights from the community, under the GST voluntary compliance program, we commissioned Kantar Public (formerly TNS Social Research) to conduct a seven-year program of research to understand the attributes and behaviours that drive compliance (or non-compliance) with GST obligations.

    The research for the sixth phase of the program was completed in July 2016.

    The preliminary findings for phase 7 were derived from the initial qualitative phase, thus are not comparable to the previous year’s update. The preliminary findings are:

    • GST is becoming increasingly embedded and normalised as part of business
    • engagement of intermediaries is a strong determinant in perceived ease and ability to comply with GST requirements
    • technology and automation continue to play a significant role in supporting compliance
    • non-compliance is largely viewed as unintentional but is seen to be inevitable
    • the cash economy is the main forum for deliberate non-compliance, with values and beliefs around this continuing to drive acceptance, or at least casual tolerance.

    Upon completing the quantitative survey, we will undertake further analysis to understand drivers of compliance and non-compliance attitudes and behaviours.

    Table 6.1: Budget measure compliance results (Years 1 to 6)

     

    Years 1 to 6
    (2010–11 to 2015–16)

    Item

    Quadrants

    Planned

    Actual

    1

    The detection and reduction of inflated or fabricated GST refund claims

    $795.4m

    $1,042.7m

    2

    Investigation of systematic or deliberate under-reporting of GST

    $625.9m

    $642.5m

    3

    More direct contact between the ATO and non-lodgers

    $991.6m

    $1,905.8m

     

    Sub-total

    $2,412.9m

    $3,591.0m

    4

    More direct contact between the ATO and taxpayers with a GST debt

    $416.6m

    $2,878.8m

    Table 6.2: Budget measure compliance results (Years 7 to 9)

     

    Year 7
    (2016–17)

    Year 8
    (2017–18)

    Year 9
    (2018–19)

    Item

    Quadrants

    Planned

    Actual

    Planned

    Planned

    1

    The detection and reduction of inflated or fabricated GST refund claims

    $275.5m

    $163.5m

    $257.7m

    $248.6m

    2

    Investigation of systematic or deliberate under-reporting of GST

    $261.2m

    3

    More direct contact between the ATO and non-lodgers

    $270.0m

    $679.0m

    $406.2m

    $489.9m

     

    Sub-total

    $545.5m

    $1,103.7m

    $663.9m

    $738.5m

    4

    More direct contact between the ATO and taxpayers with a GST debt

    $213.0m

    $347.1m

    $192.0m

    $171.0m

    Notes:

    • As part of the 2015 Budget extension, quadrants 1 and 2 (planned) are combined in years 7 to 9.
    • Totals may differ from the sum of components due to rounding.
    • Quadrants 1–3 planned and actual figures are represented in liabilities raised as a result of audit activity. Quadrant 4 planned figures are represented in cash collections as a result of debt collection activity.

    Analysis

    In 2016–17, we raised $1,103.7 million in GST liabilities and recovered $347.1 million in GST debt collections. The program has been extremely effective in meeting its revenue commitments, with those commitments exceeded in each year of the program to date.

    Figure 1: Estimated GST cash collections

    This graph shows the planned and actual GST cash collections for the financial years 2010–11 to 2016–17. The actual GST collection results exceeded the plan in each year. In 2016–17 the plan was to collect $493.4 million and we actually collected $1050.0 million.

    Outcomes continue to exceed plan due to a number of factors. Our initial estimates were conservative but our return on investment has continued to exceed these expectations, particularly, better than expected GST liabilities raised through lodgment enforcement work and higher debt collections.

    We have continued to improve our allocation of resources and taken a flexible approach that allowed us to respond to attacks on the GST system that present themselves in the future as well as dealing with the systemic risks.

    Over the life of the program cash collection rates have also continued to improve (especially in lodgment work) and exceed the base period in 2010.

      Last modified: 30 Jan 2018QC 54336