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  • We measure community perceptions and the level of willing participation

    Like most administrations, we rely on a range of performance indicators to measure the health of the tax system. While direct revenue collections tell an important part of the story, we are also interested in how our interventions affect compliance behaviour over the longer term.

    Collectively, our measures offer rich insights that guide us in determining priority risks and opportunities as well as how best to invest our resources.

    Find out about:

    Community perceptions of confidence

    We regularly conduct surveys and measure ourselves against performance targets to ensure our interactions with clients build trust and confidence in the tax and superannuation systems and foster willing participation. In 2018–19 we introduced a confidence measure aligned to our 2024 aspiration of building trust and confidence. The findings for individual clients for 2018–19 show that:

    • the overall client confidence score was 63/100Footnote1
    • 49% of those who had a dispute with us thought the process was fair, while a further 16% provided a neutral response
    • 61% of those who had an audit, advice or private ruling thought the process was fair, while a further 18% provided a neutral response.

    Our survey results generally show that perceptions of the ATO are much more likely to be favourable than unfavourable. They also indicate that recent contact with us has a positive influence on wider perceptions of us. Nevertheless, we know there is always room to improve. We are constantly working to build community trust and confidence in our administration, across all our service areas.

    Willing participation

    In line with the Organisation for Economic Co-operation and Development (OECD) best practice guidance such as Measures of Tax Compliance Outcomes – A practical guideExternal Link, we use estimates of tax gaps, audit yield and estimates of wider revenue effects to evaluate the impact of our prevention and correction strategies on the level of willing participation for individuals over time.

    See also:

    Total revenue effects

    Total revenue effects are a measure of the revenue we collect as a result of our compliance interventions including audits, other direct interventions and improvements to the design of the tax administration process. Here, we separate these collections into audit yield and wider revenue effects.

    Audit yield is the additional tax liabilities identified and collected through audit activities including interest and penalties.

    Wider revenue effects are an estimate of revenue collected as a result of ongoing behavioural change following an ATO action. It measures the additional tax revenue that results from all our client engagement activities that can be measured and are not already captured by audit yield. This includes revenue from our preventative and corrective activities designed to assist and encourage clients to pay the right amount of tax in future. It also measures changes in compliance from a wider taxpayer population that has not been subject to a direct intervention.

    A key principle we use when measuring wider revenue effects is ensuring there is a clear causal connection between our activity and the change in taxpayer behaviour.

    We expect the amount we attribute to wider revenue effects will grow as our strategies to foster willing participation become increasingly effective.

    Individuals total revenue effects (income tax) ($ million)

    Revenue

    2016–17

    2017–18

    2018–19

    Audit yield (cash)

    718

    446

    438

    Wider revenue

    844

    796

    1,005

    Total revenue

    1,562

    1,242

    1,443

    Tax assured

    Tax assured is the proportion of tax paid that we are confident is correct.

    For individuals not in business, third-party data matching provides us with a high level of confidence that income shown at particular return items is correct. However, we do not have the same ability to assure information relating to deductions and some offsets.

    In 2016–17 we estimate around 75% of tax paid by individuals not in business can be assured as correct.

    As the quantity and quality of data we collect improves, we expect the amount of revenue we deem to be ‘assured’ will increase.

    Revenue measures framework

    Our revenue measures work in combination to provide a holistic view of the health of the income tax system. The relationship between these measures is illustrated in the diagram below.

    Income tax system measures

    This diagram shows the relationship between income tax system measures including the theoretical tax liability against tax voluntarily reported and paid, tax assured, wider revenue effects, adjustments, gross gap and net gap.

    Note: This graph is illustrative only and is not to scale. Adjustments include compliance outcomes and voluntary disclosures relating to primary tax on an accrual (form year) basis. Audit yield is not represented as it includes penalties and interest and is measured on a cash basis.
    Footnote 1
    Client confidence in the ATO is measured across 15 factors, from which an overall index score is calculated. As this measure was previously under development, there is no performance target against which to assess this result this year.

    Return to footnote 1 referrer

    Last modified: 11 Nov 2019QC 56224