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You can download a printable version of the GST administration annual performance report 2011-12 (NAT 72679, 3.26MB) in Portable Document Format (PDF).
On behalf of the Commissioner of Taxation, I am pleased to present the ATO's GST administration annual performance report 2011-12.
Under the Intergovernmental agreement on federal financial relations, the ATO has a GST administration performance agreement with the Standing Council on Federal Financial Relations.
As a party to the agreement, we are committed towards achieving the world's best practice for GST administration in Australia; a cost-effective and transparent GST administration as well as a cooperative relationship between the agreement parties.
Last financial year was a difficult one for the economy, and at times for the community. Against this challenging background, we sought to ensure that our performance remained focused on the efficiency and effectiveness of our GST administration. We continued to deliver on our commitment to the states and territories while monitoring and responding to challenges.
We developed a presentation called 100 enterprises to demonstrate the characteristics of entities registered for GST. In the presentation 2.4 million activity statement (BAS) lodgers are represented as 100 enterprises. It highlights the range and breadth of interactions the GST-registered community has with the ATO.
Our performance this year has been positive, even though we have had some challenges.
Key points include:
Integrity of Systems
- Improved taxpayer lodgment patterns, including shifts from non-lodgment to lodgment.
- Improved monthly and quarterly BAS lodgments made on time following an extended period (2007-10) of decreasing lodgment rates.
- Increased monthly (up by 0.4%) and quarterly (up by 0.4%) BAS lodged on time, when compared to 2010-11.
- While total GST administrative expenditure was $697 million, a 2% change above the allocation from the Standing Council on Federal Financial Relations estimate, we have improved our response times to taxpayer enquiries, invested in improved risk detection and streamlined processes.
- The change in administrative expenditure was driven primarily by increased work volumes.
- The net GST cash outcome of $46.04 billion includes the net collections by Australian Customs and Border Protection Service.
- An increase this year in the value of GST debt collected from our debt collection initiatives, despite ongoing fragility in the economy.
Compliance and Litigation
- Compliance results exceeded our plan by 16%, with liabilities raised totalling $2.3 billion, of which pre-issue, adjusted GST refunds totalled $529 million, a 31% increase from 2010-11.
- Positive impacts associated with the second year implementation of the Risk Differentiation Framework included a 43% increase in voluntary disclosures from 2010-11.
- To make things easier for businesses to comply with their GST obligations, we sought ways to help and support them. We continued to work closely with intermediaries and businesses to develop tailored information, and a range of support tools and calculators about property and the cash economy.
We continued to find ways to support those involved in property transactions deal with their GST obligations by improving the availability of property-related information on www.ato.gov.au. This includes the release of the GST property tool. By 30 June 2012 there were more than 60,000 visits to our website.
We have maintained our support for viable taxpayers experiencing short-term financial difficulties while achieving an increase this year in the value of GST debt collected from our debt collection initiatives. The improvements are largely attributable to enhancements to our debt collection strategies implemented in 2010-11.
Our risk management approach to compliance is based on our assessment of the relative likelihood of non-compliance and the consequences of any potential non-compliance through the risk differentiation framework (RDF). We have increased our efforts to differentiate our engagement with tax practitioners. This not only enables us to allocate our compliance resources most efficiently in areas of higher risk and consequence, but it also reduces the community's overall compliance costs.
The RDF provided a transparent foundation for improved mutual understanding and engagement from the large business market. A number of large business taxpayers found the RDF process to be positive as they were able to explain their organisation's governance framework outside a review or audit environment. We have begun a pilot using the principles of RDF for small-to-medium enterprises.
We continue to be firm but fair with those who fail to comply, with our strong active compliance results for 2011-12 reflecting our improved approaches. In 2011-12, we collected $1.89 billion in GST, exceeding our planned collection by $240 million (18%).
As part of the 2010 Budget 'Working together to improve voluntary compliance' program, we collected $712.4 million in GST. Overall, since 1 July 2010, we have collected a total of $1.07 billion in GST against an expected total of $1.56 billion for the full four-year program.
Over 2011-12 our pre-issue refund integrity work resulted in $529 million in liabilities and our post-issue refund integrity work resulted in $198 million in liabilities.
We provide a greater level of scrutiny to GST registrations for incorrect or fraudulent applications at the GST registration stage. This financial year we have undertaken reviews of more than 35,000 new GST registrations cancelling 24% that were not entitled to remain registered.
We continued our focus on those who try to defraud the community of tax revenue. We completed 119 GST-related fraud investigations resulting in 57 briefs of evidence referred to the Commonwealth Director of Public Prosecutions (CDPP). Seventeen GST-related fraud cases were dealt with by the courts, all of which resulted in convictions being recorded and prison sentences imposed, ranging in length from five years to three months.
We continued our focus on managing significant refund exploitation cases where taxpayers could gain a substantial windfall in relation to their GST refunds. We continue to carefully consider cases with adverse revenue or system impacts and work with the Treasury to formulate appropriate responses.
This year we have also managed some lead cases to conclusion through the courts. In the lead case relating to section 13 of the GST Transition Act 1999, the Full Federal Court dismissed MTAA Superannuation Fund (RG Casey) Building Property Pty Ltd v. Commissioner of Taxation  FCAFC 89, on 20 June 2012. The Court found in favour of the Commissioner, in that section 13 did not apply to leases that were originally treated as taxable supplies and later claimed to be GST-free.
The courts and Administrative Appeals Tribunal (AAT) delivered 23 decisions related to four practice and procedure matters, and four special leave applications were made to the High Court. The Commissioner received favourable decisions in around 61% of cases and partly favourable decisions in 13% of cases. Taxpayers were successful in 26% of cases.
Finally, I would also like to acknowledge the support, advice and cooperation of the States and Territories representatives, and John Corlis, the States and Territories representative who has assisted us throughout this year.
Deputy Commissioner Indirect Tax