ATO Admits To Falling Short On Service Standards

by Mary Swire, Tax-News.com, Hong Kong

28 October 2010

Australia’s Commissioner of Taxation, Michael D’Ascenzo, in presenting the 2009-10 annual report of the Australian Taxation Office (ATO), has had to make reference to its failure to deliver some of the standards of service expected of it during the year.

Overall, D’Ascenzo said the ATO performed well in a year that was characterized by ongoing economic uncertainty, and revenue collections were maintained in line with government expectations. One of its significant achievements was the deployment of its new integrated core processing system for income tax. That was, he explained, “a high-risk endeavour involving some 27m taxpayer records, 32m accounts and 282m forms”.

However, he also admitted that there was a below standard performance in 2009–10 against some of the ATO’s service standards. Performance was adversely affected by the increased workloads from modernization of its systems, as well as from the tax bonus payments in 2008–09.

The number of complaints received by the ATO from the community rose sharply as a result. While its surveys continue to show that the ATO is highly rated by most taxpayers, businesses and tax agents, the increase in complaints was mostly related to “what were unavoidable delays” in issuing income tax refunds.

The release of the new integrated core processing system for income tax “inevitably impacted some taxpayers and tax agents”, and D’Ascenzo apologized for the fact that some people for a time had to wait longer than usual for their refund or notice of assessment.

With the bedding in of its new systems and improved work practices, he promised that the ATO will seek to improve its performance in 2010–11.

He also asked that the dip in service standards during the year be considered in the context of the size and complexity of Australia’s taxation and superannuation systems. He confirmed that, while implementing transformational change, the ATO has continued to deliver on many fronts.

Over the year, he disclosed, it “managed over 39m lodgments, processed over 33m activity statements and income tax returns, issued over 13m refunds, maintained 23m active tax file numbers and over 6m Australian business numbers, handled over 10m phone calls and carried out a wide range of compliance activities to support taxpayers.”

He said that, globally, Australia has been recognized by the Organization for Economic Cooperation and Development as a leader in the development and implementation of ‘e-services’ that facilitate and improve the cost-effectiveness of dealings between taxpayers and revenue authorities. The range of third-party information pre-filled into personal tax returns has steadily increased over time, and the ATO is now exploring how it can further expand on that capability.

In addition, D’Ascenzo emphasized how the ATO has continued to support international cooperation and information-sharing agreements, with Australia now having 25 tax information exchange agreements in place.

The ATO’s activities to support taxpayers, he confirmed, continue to be balanced by strategies designed to ensure that there is a level playing field for all. He took one example where, in the superannuation area, the ATO was able to mitigate the risks posed by illegal early-release schemes and identity fraud, and introduced risk profiling of all new trustees of self-managed superannuation funds.

The government has also provided it with funding to step up its activities in relation to large businesses, high-wealth individuals and goods and service tax compliance. This step-up in activities, he said, “may have resulted in increased tension with some large businesses”.

Finally, D’Ascenzo pointed out that an area of growing importance is the ATO’s ability to work with other government agencies to implement government policy, to create efficiencies both for taxpayers and the economy, and to reduce compliance costs.

On the legislative front, last year saw the finalization of years of collaborative work associated with measures such as the taxation of financial arrangements, and information obtained from government agencies enabled the ATO to complement the third-party data used to pre-fill returns. Standard Business Reporting and its accompanying login AUSkey is another good example, he said, of collaboration with both public sector agencies and the private sector, particularly software developers, to reduce compliance costs.

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