GST voluntary compliance program research
In the 2010-11 Federal Budget, we received funding (over four years), to implement an integrated goods and services tax (GST) compliance program. The intent of the GST voluntary compliance program is to deter fraud and evasion, and help people understand the heightened risks which accompany deliberate non-compliance. This, it is contended, will positively influence voluntary compliance, leading to willing engagement with the tax system.
In 2011, we commissioned TNS Social Research to conduct a major program of research. They utilised their behavioural change model to research the beliefs and external factors that impact on GST compliance behaviour. The objective was to understand the attitudes and behaviours that drive compliance (or non-compliance) with GST obligations.
TNS undertook the research in three phases including:
- a review of tax compliance literature
- qualitative research consisting of one-to-one interviews, focus groups and online discussions
- quantitative research consisting of telephone surveys.
The research examined GST behaviour among micro businesses and small to medium enterprises. It also included a study with tax and business activity statement (BAS) agents.
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End of attention
Attitudes towards the GST system as a whole are generally good. Almost all respondents agree that remitting the GST they collect to the ATO is the right thing to do, suggesting a high level of moral engagement.
The research suggests that the majority of businesses are confident about meeting their GST obligations and believe they do so successfully. Businesses indicating weaker growth, business owners with lower levels of business acumen, and newer businesses found meeting their GST obligations more challenging than others, and showed lower levels of confidence.
There are correlations between effective business systems and voluntary compliance. Those with good business systems in place:
- had greater BAS self-sufficiency
- were less resentful about the GST system
- found compliance easier.
Reported engagement in minimisation practices, including under-reporting, claiming incorrect credits, dealing in cash, deregistering, and using multiple business structures was extremely low.
The research explored specific business activities and behaviours in relation to a number of elements related to GST compliance, including registration, reporting, lodgment and debt. Most notably the research indicated:
- A relatively high proportion of businesses believe it is easy to register for GST.
- A considerable number of businesses find lodging their BAS on time challenging and expect to make a mistake given the challenge of on-time lodgment.
- There is a strong recognition that the GST collected does not belong to the business and is not the business' money. However, some businesses do use the funds to manage their cash-flow.
- There is an overall willingness to pay GST owed, although some businesses indicated that it is acceptable to pay late.
Findings from the research are being used to guide and inform communication activities supporting the GST compliance program in the key focus areas of lodgement, debt, serious evasion and refund integrity. The research will also be used to establish benchmarks that will be monitored and reported against as part of the compliance effectiveness measures for the program.
Detailed findings about the research conducted are provided in the three research reports listed below: