Performance report

Part 2 of this report is divided into two sections:

  • the statement of performance, and
  • analysis of the IGT's financial performance

during the 2015–16 financial year.

Performance statement

The statement of performance measures and assesses the IGT's performance in fulfilling its purpose and key objectives.

The purpose of the IGT is to improve tax administration with key objectives being:

  1. establish and maintain an effective and efficient complaints handling function;
  2. identify and prioritise areas of tax administration for improvement; and
  3. conduct reviews and make recommendations for improvement to Government, the ATO and the TPB.

These key objectives are monitored by performance measures, the results of which are included in the following sections:

Objective 1 — Establish and maintain an effective and efficient complaints handling function

As discussed in Part 1, on 1 May 2015, the Government transferred the tax complaints handling function to the IGT. Work was then carried out to establish this function within the IGT by recruiting and training tax specialist staff as well as developing an information technological and service delivery platform together with appropriate systems and procedures.

The effective and efficient resolution of complaints demands a flexible process and approach. Some complaints require investigations by the IGT whilst others may be resolved, for example, by simply providing the appropriate information. The key features of this process are set out in Part 1.

The complaints handling process is continually refined as improvement opportunities are identified through internal processes as well as through feedback from the community, ATO and TPB. Examples of such improvements in the 2015–16 financial year include the completion of a major phase in the staged development of our information and communications technology systems which will provide greater efficiencies and an enhanced complainant experience.

The IGT's performance in establishing and maintaining an effective and efficient complaints handling function for the 2015–16 financial year was assessed against three measures. These assessments are set out in the following sections. It is acknowledged that there are additional or alternative ways to carry out such measurements. These will be considered as part of our planning process for the future.

Performance measure — Complaints received compared to complaints actioned

In total, 2232 complaints were handled by the IGT during the 2015–16 financial year, over 95 per cent of which were resolved during the same period—see Table 1 below.

Of the complaints received during the 2015–16 financial year, 2111 related to the ATO (95%), 54 related to the TPB (2%) and 67 related to other matters (3%), for example, those outside of the IGT's jurisdiction to consider.

Table 1: Numbers of complaints received and resolved, by agency

Agency

Complaints received

Complaints resolved

Received in
2014–15

Received in
2015–16

Total handled during 2015–16

Total resolved in 2015–16

ATO

79

2032

2111

2014

TPB

4

50

54

54

Other

1

66

67

65

Total

84

2148

2232

2133

Every complaint received by the IGT is managed by a specific IGT officer for action. The officer contacts the complainant to better understand their concerns and preferred outcomes at the outset of the complaints handling process.

The specific action taken in each complaint case depends upon its history, the nature of issues raised and the outcomes sought.

Generally, there are two types of outcomes sought. Firstly, complainants may seek information or independent advice and assurance in relation to ATO or TPB actions. In many of these cases, IGT officers are able to provide appropriate information, advice and assurance without needing to involve the ATO or TPB. In the 2015–16 financial year, IGT staff resolved approximately 40 per cent of such complaints.

Secondly, complainants may seek a review of ATO or TPB actions or decisions which they consider to be inappropriate or unfair. These complaints require ATO or TPB involvement and are initiated by way of an investigation.

Investigations allow the IGT to obtain information from the ATO or TPB which would otherwise be unavailable due to the tax law secrecy provisions. The IGT may also serve formal notices requiring employees of the ATO or TPB to provide information relevant to the IGT's investigations.28 In the 2015–16 financial year, no such notices were issued.

In total, 1388 investigations were undertaken by the IGT during the 2015-16 financial year. Over 93 per cent of these were finalised during the same period— see Table 2 below.

99 per cent of the investigations commenced during the 2015–16 financial year related to the ATO with the remaining being TPB-related.

Table 2: Total numbers of investigations commenced and completed, by agency

Agency

Investigations commenced

Investigations completed

Commenced in 2014–15

Commenced in 2015–16

Total undertaken in 2015–16

Completed in
2015–16

ATO

69

1307

1376

1285

TPB

4

8

12

12

Total

73

1315

1388

1297

Performance measure — Proportion of complaints that are actioned promptly

Complaints may be lodged through the IGT's website as well as by telephone, post, email and facsimile. The website or telephone is the preferred means of lodgement as taxpayers and their representatives are prompted for all of the information needed to action the complaint quickly.

The IGT aims to acknowledge all complaints, generally within 2 business days of receipt, as such acknowledgement provides assurance that concerns have been received and will be considered.

Throughout the handling of a complaint case, the IGT case officers maintain communication with the complainant, including immediately after relevant inquiries and investigations have been completed. Such contact ensures that, before a finalisation letter is issued to the complainant, the main issues of concern have been addressed and appropriate resolution options have been explored.

The IGT aims to promptly resolve cases and issue a finalisation letter within 15 business days. However, more complex cases may require more time to resolve.

In 92 per cent of complaint cases received during the 2015–16 financial year, the IGT issued a finalisation letter within 15 business days of receiving the complaint.

After a finalisation letter is issued, complainants are provided a further 10 business days as an opportunity to raise any further issues for consideration before the complaint case is formally closed. For the 2015–16 financial year, the IGT formally closed 78 per cent of cases within 15 business days of receiving the complaint.

Performance measure — Feedback provided on the complaints handling process from complainants, the ATO and the TPB

The IGT continues to receive positive feedback and support from community stakeholders on its complaints handling role in the tax system. Whilst not every complainant has obtained their desired outcome, feedback has reflected the effectiveness of the IGT in facilitating the resolution of complaints. Examples of such feedback were provided in Part 1. Further examples of positive feedback are provided below:

Example 1

A taxpayer was involved in a marriage breakdown and took action which he believed had resulted in someone taking their own life. Following these events, he found it difficult to keep his affairs in good order, including meeting his obligations under the tax laws. After a number of years, he took steps to 'get his life back on track' and approached a tax practitioner to help him fix up his finances, including the repayment of his outstanding tax debts and meeting his tax obligations going forward.

The tax agent worked out that the tax debt also included interest and penalties which had been automatically applied over the years and now totalled more than the primary tax debts. The taxpayer could pay his primary tax debts, however, he did not have the financial capacity to also pay the penalties and accrued interest in full. The tax agent approached the ATO with a payment proposal that highlighted the merit in remitting some of the penalties and interest so that the taxpayer could 'get back on track' with his tax affairs and his life. The ATO, however, declined to remit any amounts and required payment in full due to the taxpayer's poor compliance history. The tax practitioner approached the IGT for assistance as he had reached an impasse.

The IGT registered the complaint with the ATO and highlighted the life events which contributed to the non-payment of the tax debts and resulting accrual of interest and penalties as well as the taxpayer's recent efforts to address his debts. During these discussions, the ATO agreed to reconsider the payment proposal and contacted the tax agent. A mutually satisfactory solution was reached and the tax agent has since emailed the IGT, stating that it 'would not have been possible without your assistance. Once again thank you very much for your assistance.'

Example 2

A taxpayer became aware that a person they knew had not declared all of their income in their tax returns. They provided information to the ATO about this undeclared income. The taxpayer did not see any ATO action taken on their information and they approached the ATO again asking for confirmation that the action that had been taken. The ATO explained that as the information related to another taxpayer's tax affairs, the secrecy provisions would prevent it from disclosing what action was taken. The taxpayer lodged a complaint with the IGT as they believed that the ATO should at least confirm if anything was being done.

The IGT investigated the matter and asked the ATO to provide records which would confirm that it had considered the information appropriately and in accordance with its procedures. As a result, the ATO identified that the taxpayer's information had not been forwarded to the correct area within the ATO for consideration. Accordingly, the information was redirected to the correct area promptly and the IGT examined the records to confirm that the information was now being appropriately considered. The IGT informed the taxpayer of its investigation and that the ATO was now appropriately addressing the matter. Although the taxpayer understood that the IGT could not divulge what action was being taken, they were happy that an independent party had reviewed the situation.

Example 3

The ATO started sending electronic correspondence to taxpayers via their online MyGov accounts and a number of tax practitioners began receiving calls from their clients asking about such correspondence. However, these practitioners were not aware that correspondence had issued as the MyGov platform did not allow tax practitioner access to their clients' MyGov accounts. The practitioners were embarrassed and considered that it had damaged their reputation because their clients had employed them to deal with the ATO on their behalf. They were also concerned that their clients may assume that their representative had reviewed the correspondence and therefore their clients may not feel the need to respond or even raise the issue with their representative.

To address these concerns, the ATO created a facility for the tax practitioner to receive a list of correspondence issued – the 'client correspondence list' or CCL. Some tax practitioners, however, found the CCL difficult to access and download. They also noticed that the dates that the CCL listed for some correspondence did not match the actual date that the correspondence was sent by the ATO. They raised their concerns with the ATO. However, the ATO initially considered that the practitioners may not know how to use the CCL properly. Some of these practitioners raised the issue with the IGT.

The IGT commenced an investigation and, as a first step, organised and facilitated a meeting between the relevant ATO officers and tax practitioners at one of the practitioner's premises. The tax practitioner provided a number of examples of what had transpired and the resulting impacts on their business. The ATO officers discussed these examples with the practitioner to better appreciate the impacts on their business as well as exploring what could have caused the events and what could be done to resolve or minimise the adverse effects.

Following the meeting, the IGT and ATO continued discussions to explore what could be done and the ATO proposed changes which would address some of the issues, including the concerns with the accuracy of the dates on the CCL. The IGT contacted the tax practitioner to seek their views on the changes and they agreed that the changes would be of benefit, notwithstanding their desire for further changes to be made. Thereafter, the IGT obtained the ATO's commitment to the proposed changes and obtained regular ATO updates on their progress in implementing those changes. The changes were completed as part of the upgrade to the CCL in late 2015–16. Tax practitioners have since provided positive feedback on the improvements.

Complainants have expressed high levels of satisfaction on the ease with which complaints can be made with the IGT. They have been particularly impressed with the courtesy and professionalism of IGT staff and their willingness to take the time to listen to complainants.

Furthermore, a high proportion of a sample of complainants have indicated that they are likely to use the IGT's complaints handling service again in the future should the need arise.

During ongoing communications with the ATO and TPB, the two agencies have also provided positive feedback as well as suggested refinements to the IGT's complaints handling process.

Objective 2 — Identify and prioritise areas for improvement

In prior years, the IGT has relied on public consultation as a primary means of identifying tax administration issues of concern and prioritising topics for review in developing his work programme. As noted in Part 1, it is expected that themes emerging from the IGT's complaints handling function will increasingly inform the IGT's work programme in the future.

Performance measure — Issues identified from complaints

The most common issues arising in complaint cases during the 2015–16 financial year are outlined in Table 3 below:

Table 3: Top 5 issues raised in complaints

Type of issues

Approximate percentage of all issues raised

ATO debt collection actions, including ATO garnishee notices, bankruptcy actions, payment arrangement negotiations, debt release applications and other related collection actions of the ATO or third parties contracted by the ATO.

23%

Lodgment and processing issues, including delayed tax credits and assessments as well as and problems with lodging tax returns or activity statements.

19%

ATO audit and review actions, including the scope of information gathering and investigation powers used during ATO audits, taxpayer disagreements with ATO adjustments and amendments and objection processes.

11%

Superannuation issues, including superannuation guarantee payments made by employers, excess contributions tax, lost superannuation and other superannuation related issues.

6%

Dissatisfaction with how the ATO had handled a complaint.

5%


Some issues mentioned in the table above have been examined in recent IGT reviews. For example, the IGT's recent Debt collection review examined many of the debt issues in the table above and made recommendations for improvement. The changes flowing from the ATO's implementation of agreed recommendations may take time to produce results.

Performance measure — Consultation with stakeholders on broader reviews

The IGT consults with the community, which include taxpayers, tax practitioners and their representative bodies, particularly during the development of his work programme and the conduct of subsequent reviews.

As mentioned in Part 1, the IGT also consults with the Government and its agencies such as the ATO, TPB, ANAO, Ombudsman and Treasury. Interactions with parliamentarians take place mainly through committees such as the House of Representatives Standing Committee on Tax and Revenue. At an international level, the IGT exchanges views and information with his counterparts, revenue agencies and other relevant international organisations such as the OECD.

The IGT also encourages public engagement on broader issues of interest through the media (including social media) and the IGT website as well as presenting at and participating in conferences, seminars and local tax practitioner discussion groups.

Key events at which the IGT and his staff have made presentations during this financial year are set out in Table 4 below. Participation at such events provides the public with yet another avenue for raising matters of concern and increases the IGT's awareness of key emerging issues.

Table 4: IGT speaking engagements in 2015–16

Speaking engagements

Date

Organisation

Type of function

Location

23 July 2015

Australia Indonesia Partnership for Economic Governance (AIPEG)

Discussion Group

Sydney

29 July 2015

CPA Australia

Discussion Group

Springwood

11 August 2015

Curtin University

Seminar

Perth

12 August 2015

PwC

Discussion Group

Perth

12 August 2015

Australian Institute of Administrative Law

Seminar

Perth

13 August 2015

The Tax Institute

Conference

Perth

17 August 2015

Chartered Accountants Australia and New Zealand

Discussion Group

Sydney

19 August 2015

CPA Australia

Discussion Group

Central Coast

21 August 2015

AIPEG

Seminar

Sydney

19 August 2015

CPA Australia

Discussion Group

Central Coast

21 August 2015

AIPEG

Seminar

Sydney

26 August 2015

Uniting Bookkeepers

Discussion Group

Newcastle

4 September 2015

Valuers of Equities and Other Securities Panel

Seminar

Sydney

17 October 2015

Law Council of Australia

Conference

Melbourne

4 November 2015

The University of the Third Age

Seminar

Canberra

18 November 2015

International Quality & Productivity Centre

Summit

Sydney

19 November 2015

The National Taxpayer Advocate of the U.S. Internal Revenue Service

Conference

Washington DC USA

7 December 2015

AIPEG

Seminar

Sydney

10 December 2015

Taxpayers Australia

Discussion Group

Melbourne

16 March 2016

H&R Block

Conference

Adelaide

31 March 2016

UNSW

Conference

Sydney

18 April 2016

Uniting Bookkeepers

Discussion Group

Newcastle

10 May 2016

Tax Practitioners Board

Conference

Sydney

27 May 2016

Institute of Public Accountants

Conference

Tasmania

3 June 2016

Minerals Council of Australia

Forum

Melbourne

8 June 2016

International Monetary Fund

Discussion Group

Washington DC USA

20–21 June 2016

Corporate Tax Association

Conference

Sydney

Objective 3 — Conduct of reviews and recommendations for improvement

The conduct and management of reviews is determined by the bespoke nature of each review as well as the priorities afforded by various parties. Ministerial direction and requests from the Commissioner of Taxation (Commissioner) or parliamentary committees are also factors that need to be considered in selecting topics for review.

During the 2015–16 financial year, the IGT publicly released reports of two reviews and commenced the remaining two reviews on his then current work programme. These last two reviews are in the final stages of completion and expected to be released in 2016‒17 financial year.

Table 5, below, lists the reviews conducted during the 2015–16 financial year and their status at 30 June 2016.29 These reviews are described in Part 1 of this report. Further details on these reviews are available on the IGT website.

Table 5: IGT reviews and their status at 30 June 2016

IGT review

Status at 30 June 2016

Debt collection

Report publicly released

The Australian Taxation Office's services and support for tax practitioners

Report publicly released

Review into the ATO's employer obligation compliance activities

In progress

Review into the Taxpayers' Charter and taxpayer protections

In progress

The IGT's performance in conducting reviews and making recommendations for improvement is measured with regard to the two following performance measures which are discussed together below.

Performance measures — Recommendations for improvement and their implementation

The reports of IGT reviews contain recommendations for improvement together with the relevant agencies' responses.

The ATO and TPB have statutory independence in their respective jurisdictions. The IGT does not hold any powers to direct the Commissioner or the TPB in this regard. Historically, however, the vast majority of the IGT's recommendations have been accepted in full or in part. This trend continues with respect to reviews publicly released in the 2015–16 financial year — refer to Table 6 below. No reviews were conducted into the TPB's activities in this financial year.

Table 6: Recommendations in publicly released IGT reports during 2015–16

IGT review

Number of recommendations accepted fully, in part or in principle by the ATO

Number of recommendations for Government's consideration

Number of recommendations disagreed by the ATO

Debt collection

16

1

2

ATO's services and support for tax practitioners

8

0

0

Total

24

1

2

The above recommendations and IGT observations leading to those recommendations are outlined in Part 1. More details are available in the relevant reports which are available on the IGT website.

The IGT's recommendations for improvement may be implemented in several ways. Firstly, recommendations made for Government consideration generally require legislative change. Examples of Government's action which addresses such recommendation are provided in Part 1 of this report.

Secondly, recommendations which are made to the ATO or TPB for administrative change may be agreed and implemented by the relevant agency during an IGT review or following the release of the relevant report. The ATO's implementation of agreed recommendations is assured by its audit and risk committee. The IGT may conduct follow up reviews where there is a compelling reason to do so.

Thirdly, recommendations with which the ATO or TPB have disagreed, in full or in part, may later be substantively implemented by the relevant agency over time. Examples of the ATO's implementation of such recommendations are provided in Part 1.

Analysis of performance against purpose

As the forgoing demonstrates, the IGT has continued to seek improvements to tax administration by fulfilling his twin roles of providing an effective complaints handling function and conducting broader reviews. In doing so, a number of ancillary achievements have also been realised.

One of the major achievements, as mentioned in Part 1, was the development of a much larger work force, with the appropriate talent and qualities, to fulfil the IGT's expanded role. During the course of the 2015–16 financial year, the total number of IGT staff increased from 8 to 24.

The foundation for achieving the IGT's objectives efficiently and effectively is the recruitment, development and retention of professionals with strong taxation knowledge and experience. They should also share the IGT's values of a collegiate work culture, be dedicated to the principles of improvement and have a personal commitment to service. Accordingly, considerable time and resources was devoted to the selection and development of both existing and new staff in this financial year.

Other ancillary achievements during the 2015–16 financial year include completion of major phases of the IGT's business systems improvement project. The focus was primarily on improving the information technology and service delivery platform software which is used to handle complaints and record interactions with the public, ATO and TPB.

The development of the expanded workforce and the improved business systems have resulted in a strong organisational performance particularly in the tax complaints handling function of the IGT.

Statutory statement

I, Ali Noroozi, as the accountable authority of the IGT, present the above
2015–16 annual performance statement of the IGT, as required under paragraph 39(1)(a) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). In my opinion, this annual performance statement is based on properly maintained records, accurately reflects the performance of the entity and complies with subsection 39(2) of the PGPA Act.

Financial performance

The IGT received an unmodified audit report on the 2015–16 financial statements from the Australian National Audit Office (ANAO). These statements can be found in Part 4 of this report.

The IGT ended 2015–16 with an attributable surplus of $888,021 (after adjusting for depreciation and changes in asset revaluation), compared to a surplus of $283,651 in 2014–15.

The entity has sufficient cash and reserves to fund its liabilities as and when they fall due.

28 Section 9 of the Ombudsman Act 1976 which operates by virtue of section 15 of the Inspector-General of Taxation Act 2003.

29 Since 1 May 2015, the IGT's reviews have been conducted under paragraphs 7(1)(c) and (d) of the Inspector-General of Taxation Act 2003 which provide for the power to investigate systems established by the ATO, TPB or the taxation laws.