Show download pdf controls
  • Small business engagement research 2016

    The following information outlines the Small business engagement research for 2016.

    Disclaimer: Please note that the data contained in this report has been prepared for the specific purpose of addressing the items contained in the project contract between TNS Australia and the Australian Taxation Office (ATO). It may not be suitable for other applications. The use of this data for any other purpose should be discussed with the lead author. TNS accepts no responsibility for unauthorised use of this data by a third party.

    Executive summary

    Small businesses in Australia play a significant role in the economic health of the nation, with more than nine in ten businesses classified as small. They are estimated to provide close to half of all national employment.

    As part of the ATO’s reinvention program, and the push towards a more client-centric approach, the ATO has identified the need to better understand and in turn facilitate their relationship with small businesses, their interactions, approachability and aptitude to help them fulfil their tax and superannuation obligations.

    TNS Social Research was commissioned by the ATO to conduct research to inform the development of the Small Business Engagement strategy.

    The primary objective of the research is to provide high-level advice to inform a client-centred strategy for facilitating small business’s engagement and interaction with the ATO. More specifically, the research aims to identify:

    • the drivers and triggers for engaging with the ATO
    • how businesses engage with the ATO
    • the drivers and barriers to using each of the service channels
    • the drivers and barriers to take-up of the ATO’s digital services
    • identify actions to undertake, from a strategy development perspective.

    The research comprised both qualitative and quantitative research with small businesses.

    The qualitative stage consisted of eight (8) focus groups, and five (5) individual in-depth interviews with small businesses across Australia, conducted in October 2015.

    The quantitative research consisted of a total of n=800 telephone interviews with small businesses from across Australia, conducted in December 2015.

    Key findings summary

    1. Small businesses have a low tendency to seek information when starting their business

    Motivations for starting a small business fall into two clear categories – following their heart (doing something they are passionate about) or working for themselves (being their own boss).

    Regardless of their motivation, small businesses that are new to business are more naïve in relation to business and tax obligations. Moreover, they tend to be disinclined to engage in tax planning in light of other priorities related to starting up their business.

    They have a number of concerns in relation to their business when starting out, in particular record keeping, end of year statements, managing cash flows, and understanding their tax and workplace obligations.

    This presents a distinct opportunity for the ATO to create early positive engagement with small business.

    Despite the fact that over three in four small businesses (79%) think about business tax requirements before or as soon as they start operating, over one quarter (28%) claim they didn’t seek advice or information from anyone. A further 41% seek advice and information only from informal sources (previous experience, friends, family, google, online forums, other businesses, business partner or mentor).

    The primary source of information and advice when starting in business is an accountant (25%), while slightly over one in ten (13%) seek information from business or industry associations, highlighting the opportunity of working with these third parties to encourage early positive engagement.

    Figure 1 is described in a data table at link below.

    See full data table for Figure E1

    2. Tax professionals play an important role in supporting small business and are clearly the preferred source of information and advice

    Almost all small businesses approach an accountant as the ‘first port of call’ for a tax-related issue. As demonstrated in Figure E2, below, of the three quarters (74%) of small businesses that have ever sought information or advice about their business tax requirements, 80% claim that their accountant is their first source of information and advice.

    Figure 2 is described in a data table at link below.

    See full data table for Figure E2

    The ATO is not top of mind for business tax advice, with nearly half the small business population indicating they would not approach the ATO for advice ‘any time at all’ (47%). Further, three in ten small businesses claim to have had no interaction at all with the ATO in the past twelve months. Accordingly, the level of engagement with tax professionals is greater than the level of engagement with the ATO on almost any tax-related issue. The primary reasons for engaging with the ATO tend to be transactional in nature, in particular BAS (26%), tax payments (14%), and GST management (9%).

    Figure 3 is described in a data table at link below

    See full data table for Figure E3

    A preference for seeking advice from tax professionals is driven by very positive perceptions of their approachability, capability, accessibility, knowledge, trustworthiness, and reliability – as well as their familiarity with the ATO.

    Qualitative findings suggested that the appeal of tax professionals is shaped by both preconceived notions and experience. For instance, tax professionals are perceived to offer more personal and specific information and advice because they are attuned to the specifics of an individual’s business and the broader context of their business (eg history, future plans, personal/family issues), allowing them to offer a more holistic perspective and tailored advice. In addition to this, there is a strong belief that tax professionals have the ability to ‘tell them what they didn’t know they didn’t know’.

    This is particularly pertinent for new businesses who are often overwhelmed and seeking a ‘one stop shop’ for information and advice, and accountants are seen as being able to provide this service.

    Another key differentiator is the role of the tax professional as an ‘interpreter’. Where the ATO is perceived to be fairly rigid and functional in the way they deliver information, tax professionals, on the other hand, are perceived to interpret tax information and provide advice specifically for the benefit of the business.

    In addition to these drivers, the use of a tax professional is considered to be a time-saving strategy for the small business, as well as convenient. This positively impacts the administrative burden felt by small businesses, reducing their load.

    On an emotional level, tax professionals were thought to be representing the best interests of small businesses and to be motivated to save them money. They were seen to provide reassurance and peace of mind – both in terms of compliance and optimising benefits for the business.

    In strong contrast, the relationship between small businesses and the ATO is seen as predominantly a transactional one, where there is limited personal interest or investment on behalf of the ATO. The biggest emotional barrier to small businesses actively engaging with the ATO is the ATO’s role as a regulator, leading to a belief that they are not necessarily representing the best financial interests of small business.

    3. Key drivers of engagement with the ATO

    The four key drivers of engagement with the ATO are:

    1. the ATO gives me the right information to meet my needs
    2. the ATO listens to the needs of small business
    3. dealing with the ATO is simple
    4. the ATO are on my side.

    More than one in three small businesses are satisfied with the ATO’s ability to provide advice, support and information, with a further over one third ‘neutral’ in their views.

    Interestingly, the level of engagement satisfaction with the ATO increases according to the recency of contact – such as perceptions were far more positive among those who had been in contact with the ATO in the past twelve months. This is an important finding and suggests that the ATO’s current service provides a more positive experience for small business than it has in the past.

    It also suggests, however, that many businesses may have formed an entrenched impression of the ATO, based on interactions from some time ago. This was confirmed in the qualitative research, which suggested that perceptions of the ATO were shaped as much by the ‘popular view’, preconceptions and assumptions or previous experiences, as they were by recent interaction.

    Figure 4 is described in a data table at link below.

    See full data table for Figure E4

    The research identified four key drivers of engagement with the ATO, which impact significantly on businesses’ satisfaction with the ATO, and should be the focus of any engagement strategy the ATO develops for small business. Maximising agreement with each of these attributes will in turn maximise overall engagement satisfaction with the ATO. These drivers are:

    1. the ATO gives me the right information to meet my needs
    2. the ATO listens to the needs of small business
    3. dealing with the ATO is simple
    4. the ATO are on my side.

    Agreement with each of these drivers varies considerably, with highest agreement evident for the ATO providing the right information to meet my needs (52% agree), and the lowest agreement with the ATO listening to the needs of small business (23% agree).

    While the agreement rates are low and demonstrate a lack of engagement with the ATO, nearly one quarter of small businesses are neutral in their rating for each of the key drivers, indicating considerable potential to improve engagement by shifting neutral to positive – a much easier undertaking than trying to shift entrenched negative attitudes.

    As for overall engagement with the ATO, recency of contact with the ATO is related to each of the key drivers. In particular, agreement is higher for each key driver when small businesses have had contact with the ATO in the past 12 months.

    Figure 5 is described in a data table at link below

    See full data table for Figure E5

    The ATO gives me the right information

    Small businesses often have a very clear need for tailored advice and assistance in relation to their tax and superannuation requirements. This occurs in relation to transactional assistance (eg assistance with completing BAS, how to fill out a form) and more complex tax or superannuation advice.

    Depending on the urgency or complexity of the request, businesses will either initially look to the ATO website or immediately defer to their tax professional. ATO resources were often regarded as a good first source for straightforward requirements or transactional requests, but not the preferred source for tailored tax or superannuation advice where the clear preference is for small businesses to speak with a tax professional. Even where small businesses do approach the ATO, with the expectation of tailored tax and superannuation advice, they are often unsatisfied and end up consulting a tax professional.

    Dissatisfaction with tailored (more complex) advice from the ATO can occur for two key reasons:

    1. Unrealistic expectations of small business in relation to the ATO’s ability to provide tailored advice.
    2. The complexity of the query may require the call centre staff to refer the query to their supervisor and/or to a specialised team. Often in this situation small businesses are required to repeat (sometimes multiple times) their situation and context, which causes frustration and is often considered a waste of time for the small business.
    The ATO listens to the needs of small business

    Despite a significant program of consulting with small business across Australia, only one quarter of small businesses agree that the ATO listens to the needs of their community. This reflects a perception that the ATO service is fairly perfunctory and generic, offering little opportunity for discussion or consultation.

    Dealing with the ATO is simple

    Just over one quarter of small businesses believe dealing with the ATO is simple, with extensive criticism around the accessibility of ATO services and information. A number of channels contributed to this perception, including the website, telephone service and printed communications.

    It is vital to understand the need for specific channels – when they are sought and for what reason – when considering the type of content each touch point should offer and the level of service available at each. For example, a preference for human contact is not necessarily a reflection of their degree of ‘digital savviness’, but a general preference for speaking to someone who can understand their issues in the context of their own lives and situations.

    Small businesses also become extremely frustrated if staff refer them back to the website for the required information when they have started their quest for assistance there. This has a detrimental impact on the perception of engagement with the ATO, again reinforcing the preference for engaging with a tax professional.

    The ATO are on my side

    Less than half of small businesses believe that the ATO are on their side. The research revealed very mixed attitudes towards the ATO. While many recognise the ATO has a role to assist small business, there is also a very strong association between the ATO and enforcement and penalties, resulting in questioning around whose ‘side’ the ATO really were on.

    By contrast, tax professionals were clearly seen to represent the best financial interests of small business, providing an individual service that is focused on minimising tax and maximising income to the business.

    Some of the challenges mentioned above, and throughout this report, are already known to the ATO. This research points to the importance of acknowledging the challenges and building on the opportunities to improve the ATO’s engagement with, and services to, small businesses.

    It will be important to monitor the relative impact of the four key engagement drivers, as the small business engagement strategy is implemented, with a goal to achieve the service industry standard of 70% (or more) agreement that small businesses are satisfied with their engagement with the ATO (see Section 8 for more details).


    Based on this research, there are a number of recommendations for consideration in the development of a small business engagement strategy, as outlined below.

    1. Small businesses have a low tendency to seek information when starting their business

    • It is important to recognise that government is not the first choice for information when setting up a business, suggesting the need to leverage opportunities with third parties (eg accountants, industry associations) and the broader community, and pointing to the need for greater investment in community engagement and outreach activities.
    • Further research is required to explore why small businesses think about tax requirements when starting their business without acting on this, the ways different motivations for starting a business impact this, and further exploration of the specific concerns of small business when starting their business and how the ATO can help address these concerns.

    2. Tax professionals play an important role in supporting small business and are clearly the preferred source of information and advice

    • Engagement strategies with small business need to consider and incorporate the important role that tax professionals play, in particular when planning the design of ATO products and services and in the development of ATO communications with small business.

    3. The four key drivers of engagement with the ATO are giving the right information to meet needs, listening to needs, simple dealings and being on the side of small business

    • While acknowledging the challenges highlighted in the findings of this small business engagement research, it recommended that the ATO develop integrated strategies to improve performance against each of the four key drivers of engagement to lift small business satisfaction to a rating of 70% or more.
    • To improve engagement and services to small businesses, the ATO could consider the following
      • Right information/easy dealings
        • Manage small business expectations of the kind of tailored advice that the ATO can realistically provide to them.
        • Provide hands-on instruction and advice, education and training through seminars, conferences and site visits – with a focus on practical demonstrations.
        • Website – simplify the design and navigability of the website; dedicate sections for identified business needs, eg by industry or lifestage, ensure FAQs and search functions are easy to use.
        • Written communications (including website content) - in plain English and avoid the use of jargon.
        • Call centres – reduce the waiting time and use a ticketing system, where possible; manage expectations when escalating calls and train frontline staff to effectively and compassionately deal with their frustrations (including not referring them to the website when they’ve already exhausted this channel).
        • Online services – review closure of payment processes online to encourage a sense of reassurance that they do not need to speak to an operator, thereby reducing wait times on the telephone; raise awareness of, and provide assistance to use, self-service channels; provide the ability to interact online via loading of stimulus (screenshots, photos from smartphones etc).
        • Consider assigning a single point of contact (or ‘case manager’) to individual businesses, who can respond to queries and concerns specific to that business.
      • Listening to needs/on their side
        • Demonstrate and communicate that the ATO takes small business priorities and concerns seriously.
        • It is essential that the ATO present an image to the business community that conveys values of support, reassurance and trustworthiness; backed up by a service that is attentive, patient, responsive, friendly and approachable.
      Last modified: 02 Nov 2018QC 57274