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  • Building trust and confidence in our tax system

    Commissioner Chris Jordan, AO

    Keynote address to the Tax Institute 31st National Convention

    Melbourne, 3 March 2016

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    Thank you, Arthur. It’s great to be here with the Tax Institute again.

    I’m almost midway through my seven-year term as Commissioner of Taxation, and want to share with you my reflections on the past three years and my vision for the next three.

    I’ll reiterate how much I am still enjoying the job as Commissioner – which underscores my commitment and energy to complete this tenure with unprecedented levels of confidence and trust in the ATO, in the tax profession, and in the tax system more broadly.

    I hope this is something you would all want to sign up to. Let’s all be part of something big and beneficial for our country and for the future.

    I want the ATO to be known for its contemporary service, expertise and integrity. I don’t think it’s too long a bow to draw, to say that the tax profession would also be pleased to be recognised as such.

    I am actively pursuing this vision and ask you to join me – how can we work together as tax professionals to offer contemporary service, expertise and integrity; and to build trust and confidence in our tax system?

    So, where are we now? And how far have we got to go?

    We have a complex tax system. We all recognise that in the tens of thousands of pages of laws and regulations.

    We also have a large scale production affecting most people in Australia.

    There are millions of different people and entities that we service as clients:

    • 12.8 million individuals
    • 2.9 million small businesses
    • 55,500 tax and BAS agents
    • 557,000 self-managed superannuation funds
    • 780,000 trusts
    • 880,000 employers
    • 1,400 large business groups and superannuation funds.

    And our annual revenue collection and throughput involves hundreds of billions of dollars:

    • 35.5 million returns and activity statements
    • $432 billion in taxes collected and $95.5 billion in refunds
    • $10.4 billion in benefits and credits paid out to Australians through a range of grants, tax offsets and programs, and
    • More than 25 million services delivered – online, via the app, phone, correspondence and shopfront visits – and these are just the ones initiated by taxpayers.

    Clearly, this is an enormous annual production, for us and for you!

    Pleasingly, despite the immense size and complexity of our annual workload, there are relatively few disputes. The vast majority of systems and processes work as seamlessly as intended. Millions of taxpayers receive their assessments on time, often faster than expected, with little intervention required. Let me illustrate.

    With around 35.5 million lodgments last year, we had about 26,000 disputes. This is just 0.0007 of total lodgments. And of the disputes, only about 150 went all the way through to decision by the courts.

    Of those that finally did go through to the courts in 2014-15, 89% of the cases were found in favour, or partly in favour, of the ATO – highlighting that we are choosing the right cases to litigate.

    In the same period, we had 24,500 complaints – again a very small proportion of all lodgments. Out of interest, 8,350 were from agents and nearly 300 were from one agent.

    So while these complaints and dispute numbers are low, they are not to be ignored. And we recognise that there is room for improvement.

    I want to acknowledge that we haven’t always got it right from our end. In our enthusiasm to deliver, we haven’t designed some solutions in partnership with you. I know, for example, the portal and Client Correspondence List have been problematic.

    So, in October last year, we introduced the new dashboard to get visibility on the performance and availability of portal services. And we have an email subscription service that gives updates on outages, system enhancements and planned changes.

    In November and December, we visited 100 agents at 50 separate practices across the country to better understand their experience and to help identify what was working and what wasn’t. We looked at their hardware, software, internet service, and practice processes to understand the nature and causes of problems.

    We received very useful feedback about the Client Correspondence List and as a result, are implementing changes next month so that you can:

    • search, filter and sort in more useful and efficient ways
    • see at least five years’ communication history, not three
    • get consistent results, and
    • have output that is easy to read.

    We also observed and heard that to maximize the efficiency and effectiveness of the Correspondence List and the portal, agents wanted more education and support. To meet this need, we are implementing a ‘Show Me What, Show Me How’ program.

    ATO officers will be visiting metropolitan and regional centres, as part of our regular agent open forums, from now until the end of June this year, to run demonstrations, answer questions and provide personal assistance. We’re also producing a number of help materials including ‘How to’ YouTube clips.

    I want to emphasise again: we are committed to improve our support to you. And I am pleased to note that agents’ satisfaction with service from the ATO went from 59% to 68% in the last quarter and that agent complaints are now trending below the long term average. There’s still a way to go, but things are clearly moving in the right direction!

    I assure you that we will continue to connect and consult with the tax profession on both day-to-day issues and the longer term future.

    There are three major projects that we are consulting about right now:

    1. the New Practitioner Lodgment Service for Tax Time 2016
    2. additional functionality in practice management software by December 2016, and
    3. online services to fix, supplement or replace the existing portal for Tax Time 2017.

    The new SBR-enabled Practitioner Lodgment Service will be the primary and default lodgment channel for practitioners for Tax Time 2016.

    Right now, we are working closely with representatives of agents and individual software developers to ensure the change to the new lodgment service is as seamless as possible.

    We are trying to minimise the risk for everyone and have been providing specifications early, and encouraging thorough testing to identify any potential issues before release.

    As a safety net, we will keep the Electronic Lodgment Service available until 31 March 2017 – to ensure there is a reliable electronic lodgment service at all times.

    The new Lodgment Service lays the foundation for portal functionality to be incorporated into practice management software, which leads me to our next major project – additional functionality through practice management software. I know that many of you are keen to have this – a number of people mentioned this to me at the ATO Tax Practitioner Advisory Group (ATPAG) meeting last week.

    We are working to ensure you no longer need to switch between different systems; where it is easier to authenticate in your software and you are able to perform a range of other functions relating to registrations, account and client management, and the preparation and lodgment of returns.

    Practitioners who already use SBR-enabled software say the systems integration and re-use of information can cut hours from time spent preparing working papers and annual accounts.

    And to our third project: new and better online services for you. I am pleased to say that by this time next year, agents will have significantly improved online services direct from the ATO, featuring current portal functionality and more.

    We are currently in consultation with both the tax profession and the software industry about the best technological solution that will provide a better experience and greater efficiency for all of us.

    Let me recap on our deliverables to you:

    • By the end of April we will have fixed major CCL irritants
    • We will have our new lodgment service implemented for Tax Time 2016
    • You will have additional functionality available for practice management software by December 2016, and
    • Better online services for agents for Tax Time 2017.

    All this is to enhance and build on the other services we already have in place, like our:

    • newsroom
    • online chat, consultation and feedback forum – Let’s Talk
    • complex issues resolution service (which is our escalation service introduced early last year that has already resolved hundreds of issues), and
    • the Tax Profession Roadmap on our website.

    On the Roadmap – it’s meant to be a full picture of things impacting the tax profession in the coming years. We need your help to populate it so that it is useful for tax professionals – it is not meant to just include ATO activities.

    As the tax administration and the tax profession, we must work together to facilitate taxpayers through a complex system. We have to help each other to help taxpayers.

    Of course none of us are perfect – we are dealing with complex social, economic, technological, legal and financial systems. We are human and bound to make mistakes.

    So what I ask of you is that when you notice something wrong or going awry, you let us know. Identify and be specific about problems or issues so that we can understand root causes and source solutions as quickly as possible.

    My role is to make sure we listen and act on what we can – to improve or rectify a situation. I am asking you to work with us constructively to help us solve problems to make things easier for everyone.

    Griping in TaxVine or on social media is not the best way to solve problems together. We need you to engage with us to design solutions to meet your needs and those of your clients.

    In the end, we rely on your constructive input to make things work!

    So, looking forward, to make things work as efficiently as possible, we must continue to embrace new and emerging technologies and communication channels. Any of us ‘opting out’ of keeping up, simply risks being left behind. Technology is not an option anymore, it’s essential for future success.

    On this front, let me tell you about some of the things we’ve tried in the last year – with great take-up and feedback:

    Our ATO App gives people access to both tax and super information and services in the palm of their hand. Our enhancements now include the myDeductions tool.

    More than 700,000 people have downloaded the app and the handy myDeductions feature is great for anyone needing to capture invoices and receipts.

    And voice authentication – more than 1.6 million people have registered their voiceprints with us and we are the first in Australia to deploy this service on an app.

    We also have the Business performance check tool, which helps people compare their business performance with relevant industry performance data, and gives them an indication of their business’s ability to pay its debts.

    Of course, technology is just one way we can improve the client experience. It’s also about good relationships and communication, early engagement, and the right help and support.

    A few examples of our service improvements that have had great feedback:

    • Early engagement across the board – like in our small business GST disputes – a third resolved with just one phone call
    • Greater use of alternative dispute resolution - with in-house facilitators saving thousands in costs to clients and perceptions of fairness improving from 44% to 60% in the last quarter
    • Changing the name of our Compliance Group to Client Engagement Group – better reflecting the breadth of work we undertake and the kind of relationships we’re trying to build with the community
    • Better information on our website – rewritten and streamlined content of more than 150 topics, with more than half a million words removed
    • New Law Companion Guidelines – published when new legislation is tabled, rather than when enacted
    • Safe harbours or what Jeremy Hirschhorn likes to call our ‘Flags on the Beach’. Simple, clear guidance about acceptable practical compliance with the law. You’ll see these soon in a new product called Practical Compliance Guidelines and Tony Poulakis from the ATO will tell you more about safe harbours in his presentation tomorrow.

    We know that great service increases the level of willing participation in our tax and super systems. But service improvements alone will not achieve the levels of trust and confidence I am after.

    People must see that we administer fairly and take action against those who don’t do the right thing.

    At a Senate Estimates hearing recently, I was proud to assure the Committee just how much effort and expertise goes into addressing multinational tax avoidance and to quell any suggestion that the ATO has ‘gone soft’ or that multinationals are ‘getting away with it’.

    While there is much media attention on this matter, I want to put it in perspective – this only involves a small number of taxpayers, although the dollar amounts can be significant.

    My message is clear – if you do business in Australia, you must pay your fair share of tax on the profits you earn here; whether you are a domestic or multinational company, big or small.

    The tax profession has a role to play in this regard. How are you advising your clients? How are you promoting willing participation in our tax and super systems?

    We have a strong base to work from:

    • High levels of voluntary compliance
    • Relatively few disputes and complaints
    • Community interest and support for a good tax system
    • Unprecedented global collaboration and action, and
    • A constructive relationship between the tax profession and the ATO.

    We can make Australia’s tax system the envy of the world through truly contemporary service, expertise and integrity and every one of us here has a role to play.

    Thank you

    I’m happy to take some questions.

    Last modified: 03 Mar 2016QC 48088