Feature: Easy for people to participate

We want to make it as easy as possible for people to participate in the GST system and more difficult not to comply. We are transforming our digital services to make it easier for clients to comply with their obligations, reducing red tape and known irritants.

SMS tool

We implemented an online tool that allows ATO case officers to send short messages (SMS) digitally to clients or an approved third party. This means clients can now quickly send and receive notifications from the ATO on their mobile devices. However, messages will never ask clients to provide personal information, such as tax file number (TFN) or personal bank account numbers or BSB.

The SMS tool also replaces many traditional correspondence methods such as paper-based letters (including confirmations of receipt of requests or applications, requests for further information, confirmations of identification, and document request reminders), which has significantly reduced the administration burden for both clients and the ATO, resulting in substantial financial savings. The SMS tool has resulted in less disruption to our clients’ business activities.

Debt performance check tool

The tool is accessible via the ATO’s App for tablets and smart phones. It enables a small business operator to check how their business is performing and compare that performance to similar businesses in their industry. The results are not a definitive assessment of the viability or solvency of a business.

The self-help tool provides small businesses with a quick snapshot of their business’ financial health including its profitability, cash flow, working capital and ability to service their debts.

Online validation at lodgment

During 2014–15, we worked to deliver a number of new services for sole traders to be delivered for Tax Time 2015 through ATO online services. These new services include functionality to manage activity statement obligations.

To help individuals and sole traders get their BAS right at the time of lodgment, a number of built-in ‘rules’ have been provided to advise clients of potential errors and allow them to correct these then and there. There is also an expanded range of help options for clients to refer to. This gives clients increased confidence in the accuracy of their BAS and they have greater visibility of their tax affairs. There is less need for them to contact us, and more time for them to focus on running their business.

Small business fix-it squads

Our Small Business Fix-it SquadsExternal Link aim to improve interactions between small businesses and government that cross over multiple agencies – the focus is to identify and reduce red tape.

Squads bring together small business owners, their representatives, and intermediaries who work in a team with federal, state and local regulators to examine an issue from a small business perspective and make recommendations. Topics covered this year included: Taking on an employee, BAS irritants, and small businesses changing from a sole trader to a small proprietary company.

Our approach

Fostering willing participation

To promote willing participation in the tax system we recognise that we have to provide assistance, practical advice and take advantage of contemporary technology to deliver tailored services to the taxpayer community.

Contemporary and tailored service

We know that people are more willing to comply if it is easier for them to do so, and if they have confidence that others are complying. In 2014–15, by taking advantage of new technology, we were able to provide our clients with improved electronic self-assurance and help tools and education material that make it easier for them to meet their tax obligations.

Our communication activities are designed to provide relevant information in ways that align with community standards and expectations. We continue to explore new ways of engaging with the community through digital channels – mobile phones, tablets, social media, YouTube videos (including providing subtitles translated into languages other than English), infographics, online webinars, and discussion boards.

We answered around 1.3 million GST-related phone calls during 2014–15. While answering 25% more calls than last year, we were able to reduce call wait times for general calls with 87% of general taxpayer calls answered within five minutes, up from 79% in the previous year. We also answered 92% of tax agent calls within two minutes.

For those operating a small business, we aim to meet their needs at any point in the small business lifecycle. In addition to the self-help tools and education products available, we also expanded the information on our Small business newsroom website to include:

  • information on the common mistakes businesses make on their BAS
  • tips for getting their BAS right the first time
  • videos to help businesses understand their GST obligations

The small business assist program continues to play an important role with over 2,500 small businesses assisted during the year. These provided small business owners with an opportunity to discuss their specific needs and circumstances with us in person.

As part of our commitment to improving services and reducing the burden of red tape, small business owners can now get extra help from the ATO through our after-hours call back service or the live web chat facility. This ensures they are supported with access to the advice they need at a time that suits them. The new web chat service allows small business owners to have real-time, online conversations with us on a range of topics. With the introduction of this service as an alternative to a visit, and with the increase in self-help digital services available, we have seen a decrease in the number of face-to-face visits requested.

Registrations and processing

We help people to register correctly in the GST system and to exit the GST system when required. At the end of 2014–15, there were 2.63 million active GST registrants, a slight decrease (0.5%) on 2013–14.

During the year, we registered over 308,000 new GST accounts and cancelled 309,274 GST registrations.

To protect the identity of registrants, we undertake checks at the time of registration to address errors and detect crime. We conducted 26,885 checks at GST registration that resulted in 1,349 registrations being cancelled. Our detection systems are updated to monitor suspicious behaviour and changes to client information to assist in stopping the release of fraudulent refunds.

Figure 8: GST in the community

This diagram breaks down GST in the community and shows how it flows through.  From 2.63 million active GST registrants, there are over 10.1 million business activity statements (BAS) lodged; $14.3 trillion in total value of business sales and purchases - this is calculated by using BAS labels and adding G1 (total sales) plus G10 (capital purchases) and G11 (non-capital purchases); $538 billion in GST transactions – calculated by adding BAS labels 1A (GST payable) plus 1B (GST paid) and 7A (deferred imports); $101 billion in positive GST liabilities from businesses; and finally $51 billion in GST refunds to business.

The deferred GST (DGST) scheme allows registered importers to defer payment of GST on all taxable importations into Australia until the 21st day of the following calendar month. Approval is only granted if the importer has a history of good compliance, lodges a monthly BAS using the internet, and pays BAS net amounts electronically.

This year we:

  • approved 1,358 new deferred GST registrations, up 10.1% from 2013–14
  • refused 945 deferred GST registration applications that did not qualify for the scheme.

The number of importers registered to defer GST increased to over 11,700. A total of $24.7 billion in GST was deferred at 30 June 2015, an increase of 2.1% on 2013–14. Of the 11,700 registered importers, we estimate that around 1% have a GST debt.

During the year, we issued over 11.3 million original BAS and processed more than 10.1 million original BAS lodgments, 1.5% more than last year. We also:

  • issued 1.6 million activity statement refunds with a total value of $48.4 billion, with 99.4% in 14 days, a 0.4% improvement on last year
  • paid $3.2 million in interest on delayed refunds, 23.9% more that 2013–14
  • banked 13.1 million BAS-related payments with a value of $249.8 billion.

We continue to encourage taxpayers to deal with us electronically, and offer simplified and differentiated reporting options for those with simple tax affairs. We are now seeing the positive impact of these options with the number of BAS being processed electronically continuing to increase this year, at 7.2% higher than last year. At 30 June 2015, the electronic lodgment rate for all original BAS received was 67.6%.

Managing debt

As part our transformation approach to managing debt, we are increasingly using analytics to gain a greater understanding of the choices taxpayers make in managing their debt. These insights are used to deliver the right treatment, at the right time, to the right taxpayer.

In 2014-15, our emphasis on understanding how people make decisions around their payment obligations and debt prevention enabled us to reduce the inflow of new activity statement (including GST) debt, which was down 4.1% on 2013–14. Our GST debt collection performance continued to improve, with collections resulting from our debt collection actions up 8.4% this year.

We estimate that, at 30 June 2015, GST collectable debt was $3.47 billion, a decrease of 2.9% on the previous year. Collectable debt is debt that is not subject to objection or appeal or to some form of insolvency administration. Total debt is estimated to be $5.00 billion.

GST collectable debt growth was below the growth in GST revenue, with the ratio of GST collectable debt to net GST collections at 30 June 2015 being 6.4%, down from 7.0% at 30 June 2014. (Refer GST debt non-pursuit feature) We continued to exceed both the year-to-date and program-to-date GST debt collection targets for the GST Voluntary Compliance Program.

Small business continued to be a major focus of our strategies for managing debt in 2014–15, enabling us to reduce small business GST collectable debt by 4.8% during the year.

Though still in the early stages of our transformation, we are seeing improved outcomes for taxpayers and the community. We are:

  • Increasingly using analytics and behavioural insights to inform the way we engage with businesses and manage specific risk groups. This includes sending SMS reminders to clients who were expected to pay late or not at all. Such action this year led to payments of $834 million (across a range of taxes including GST) on, or near, the due date.
  • Changing our payment plan negotiation strategy based on research findings and our own analysis of successful plans, including introducing an analytics based payment plan assistance tool that staff use to identify businesses who have a high risk of non-payment and require a stronger negotiation conversation.
  • Applying stronger and timelier use of statutory and legislative powers to address the unfair financial advantage of businesses that do not pay their obligations, or trade while insolvent, over those that do pay.
  • Making it easy as possible for businesses to pay their obligations by expanding and enhancing our digital service offerings and opportunities for businesses to self-manage their debt; this included introducing a payment plan estimator as part of the ATO app.
  • Redesigning our key debt letters, including the use of colour and clearer messages on the consequences of non-payment, to ensure it is easy for businesses to understand why they received the letter, what they have to do, when they have to do it, how to go about it.

Figure 9: GST collectable debt by top five industries

This provides the top five industries with GST collectable debt for the financial years 2013–14 and 2014–15.  In 2013–14 the top five industries were Construction 26%, Professional, scientific and technical services 11%, Accommodation and food services 7%, Transport, postal and warehousing 6% and Manufacturing 6%. In 2014–15 the top five industries were Construction 27%, Professional, scientific and technical services 11%, Accommodation and food services 7%, Transport, postal and warehousing 6% and Retail 6%.

In response to the risk the construction industry presents, we have created a ‘payment and debt profile’ to better understand and target our response to this industry. Our analysis shows that the construction industry falls below the average for all industries for on time payment of tax. We have added a focus on the construction industry to our debt intermediaries program for 2015–16. The program is being expanded to build outcome-focused relationships with major industry and business associations.

Figure 10: GST collectable debt by market segment

This figure shows GST collectable debt by market segment for 2013–14 and 2014–15.  In 2013–14: micro 72%, small to medium enterprises 21%, large businesses12% and other 0%.  In 2014–15: micro 71%, small to medium enterprises 23%, large businesses 0% and other 6%.

    Last modified: 14 Dec 2015QC 47462