The performance report for this financial year is divided into two key sections:
- the performance statement; and
- the analysis of the IGT's financial performance.
Our commitment to performance measurement and analysis is central and on-going. We carefully consider and monitor all aspects both within our annual corporate planning process and our day-to-day service delivery.
This statement measures and assesses the IGT's performance in fulfilling our purpose and our deliverables.
The purpose of the IGT is to improve tax administration by providing the following deliverables:
- maintain an effective complaints handling function;
- identify and prioritise areas of tax administration for improvement; and
- conduct reviews and make recommendations for improvement to Government, the ATO and the TPB.
The three deliverables are assessed by reference to the performance measures, the results of which are shown in the sections that follow.
Deliverable 1 — Effective handling of tax administration complaints
The IGT's performance in maintaining an effective complaints handling function for this financial year was assessed against five performance measures, being:
- the number of complaints received compared to complaints actioned;
- feedback provided by stakeholders about the IGT's complaints handling function;
- feedback from the ATO and the TPB about the IGT's complaints handling function;
- feedback from staff about the IGT's complaints handling function; and
- the percentage of correspondence that meets IGT quality standards.
Each performance measure is addressed in more detail in the specific sections that follow.
Performance measure — Number of complaints received compared to complaints actioned
A total of 2251 complaints were received in the 2016–17 financial year. Approximately 90 per cent of these were resolved during the same period—see Table 2 below.
Of the complaints received during this financial year, 2083 related to the ATO (93%), 53 related to the TPB (2%) and 115 related to other matters (5%), for example, referrals to other jurisdictions for consideration.
Table 2: Numbers of complaints received and resolved, by agency
Every complaint received by the IGT is managed by a dedicated officer. Before proceeding with a complaint, the officer makes initial contact with the complainant to better understand their concerns and preferred outcomes as well as to determine the appropriate action to be taken.
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 this financial year, approximately 42 per cent of all complaints were resolved by IGT staff in this manner.
Secondly, complainants may seek a review of ATO or TPB actions or decisions relating to the tax administration system 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 to complainant taxpayers or citizens 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.41 This financial year, no such notices were issued.
In total, 1411 investigations were undertaken by the IGT during this financial year. Approximately 98 per cent of the investigations commenced this financial year related to the ATO with the remainder relating to the TPB.
Over 90 per cent of all investigations were completed during the same period—see Table 3 below.
Table 3: Total numbers of investigations commenced and completed, by agency
Performance measure — Feedback provided by stakeholders about the IGT's complaints handling function
The IGT is committed to providing and maintaining a high standard of service in our interactions with the community and values feedback received from complainants. In this regard, our work has included engaging ORIMA Research Pty Ltd (ORIMA) to conduct an independent survey to evaluate the performance of the IGT complaint handling service.
Approximately 51 per cent42 of the complainants who were contacted by ORIMA during 2016–17 provided feedback. This represents an increase from the 40 per cent of complainants who responded in the previous financial year.
The IGT continued to receive high levels of satisfaction. Table 4 below shows that in 2016–17, 78 per cent of survey respondents reported overall satisfaction with the complaints handling service, 59 per cent reported overall satisfaction with the outcome of their complaint and 93 per cent reported satisfaction with the professionalism of IGT staff.
Table 4: Complaints handling feedback survey results
The results of the survey reflect the effectiveness of our role in facilitating the resolution of complaints. Whilst not every complainant achieved their preferred outcome, they have still expressed high levels of satisfaction with the complaints handling service and the professionalism of IGT staff. In particular, it should be noted that of the complainants that were dissatisfied with the outcome of their complaint, 48 per cent expressed that they would still use the complaints handling service of the IGT in the future.
The survey also provided opportunities for the IGT to further improve performance to meet the service expectations of the community. As mentioned earlier, one area that requires improvement is the visibility of the IGT, work on which is already underway. Some complainants would also like to see further efficiencies and we are currently exploring how this may be achieved.
The IGT also receives feedback directly from complainants. During the 2016–17 financial year, 257 complainants provided such feedback43 of which over 90 per cent were positive in nature. The majority of the positive feedback received was directed at the specific IGT officer managing the complaint, expressed overall satisfaction with the officer's professionalism, helpfulness and quality of service.
Examples of positive feedback are provided below:
A tax practitioner was unable to update his client's bank account details for their activity statement accounts in real time using the Tax Agent Portal. In lodging his complaint with the IGT, he sought to understand when the ATO would be expected to rectify the system issue.
The IGT commenced an investigation of the matter and asked the ATO to provide evidence of how this issue has been logged and prioritised on the ATO's systems. During discussions with the IGT, the ATO acknowledged the impact of this issue on tax practitioners and confirmed that the system issue has been recorded and its rectification prioritised.
As a result of this investigation, the IGT obtained the ATO's commitment to test and implement a solution to the bank account update issue following the completion of major IT works that were underway at the time. This agreed business improvement was subsequently implemented.
The tax practitioner, who was satisfied with this outcome, emailed the IGT officer, stating "Again thank you for your kind support and consideration. Your assistance in this matter plus your continued complete understanding and professional processing of my complaint is beyond reproach and is greatly appreciated. Thank you once again."
A taxpayer approached the IGT with concerns that the ATO had offset his expected tax refund against an old tax debt that the ATO had previously reversed. The taxpayer explained that this debt originally arose as a result of an ATO audit. He had been in the process of preparing an objection to the audit decision when, without explanation, the ATO had 'wiped the debt' from his account. The taxpayer assumed that the ATO auditors had reversed their decision and, as consequence, extinguished the debt. However, the ATO had recently explained to him that it did not extinguish the debt but had merely decided not to pursue the debt. The ATO's decision to re-raise the old debt and offset his expected refund placed the taxpayer into financial hardship as he needed the refund to pay for urgent medical bills.
The IGT investigated the matter and found that the ATO had not previously explained to the taxpayer why the old debt appeared to have been 'wiped' from his account or that the ATO may decide to pursue it at a later time. The IGT also formed the view that the ATO had not considered the taxpayer's circumstances in deciding to re-raise the old debt and offset it against his expected refund.
As a result of the IGT's investigation, the ATO agreed to release the taxpayer's refund and also agreed to extinguish his old tax debt. Although the ATO had since improved its process for alerting taxpayers to debts which are not pursued, it acknowledged that clearer guidance was needed for its staff when they make decisions to re-raise debts to ensure appropriate consideration of taxpayers' circumstances. Accordingly, the ATO agreed to review its relevant procedures with a view to making them clearer.
The taxpayer was very satisfied with the outcome of the IGT's investigation and commended the IGT officer's assistance.
A taxpayer received a workers compensation payment due to a court judgement. As a result, the taxpayer was required to pay back income protection payments that he had received from the insurance provider. The taxpayer had already paid tax on the income protection payments and requested the ATO to refund the tax that had been paid. However, the ATO had refused to refund the tax paid on the basis that the tax paid on the income protection payments cannot be returned to the taxpayer under the relevant tax law.
The taxpayer approached the IGT with concerns that the ATO's decision resulted in an unfair outcome as it meant that he was effectively being double taxed for one compensation payment.
The IGT commenced an investigation and discussed resolution options with the ATO. As a result of the IGT's investigation, the ATO acknowledged that the outcome was unfair and took a pragmatic approach which was consistent with an ATO taxation ruling on a related issue. Rather than refunding the tax paid on the income protection payment, which would have been prohibited under the law, the ATO agreed to reduce the assessable amount of the workers compensation payment by the amount that the taxpayer had repaid to the insurance provider.
As a result of the IGT's investigation, the ATO apologised to the taxpayer for the manner in which it had handled the matter at first instance. In addition, the ATO agreed to improve ATO officer awareness and understanding of the appropriate treatment of such payments to ensure that a fair and reasonable decision is made at first instance in the future.
The taxpayer was satisfied with this outcome and telephoned the IGT officer, stating "I really do appreciate everything you've done and thank you very much for taking the time to help me out".
Performance measure — Feedback from the ATO and the TPB about the IGT's complaints handling function
The IGT senior management engages directly with senior ATO officers to discuss the progress of complaint investigations, the effectiveness of the complaints handling service and other complaint related matters on a scheduled weekly basis. These meetings provide a forum for the IGT and the ATO to provide professional and independent real time feedback on the complaints handling service and identify improvement opportunities.
The IGT also engages with the TPB on the complaints handling service as required, which is reflective of complaints levels regarding the TPB.
As a result of our ongoing communications with the ATO and TPB this year, consistent positive feedback was received regarding our complaints handling service as well as the identification of improvement opportunities.
Performance measure — Feedback from staff about the IGT's complaints handling function
The IGT complaints handling staff attend regular internal training and analysis forums to discuss current complaint issues and raise improvement or innovation ideas about the complaints service. These forums provide an opportunity for staff to provide real time feedback and discuss improvement opportunities. For example, this year, staff identified that complainants needed increased support during the complaints handling process and, as a result, identified improvements have been implemented to enable staff to provide the required support.
Performance measure — Percentage of correspondence that meets IGT quality standards
The IGT seeks to maintain high standards of communication throughout its complaints handling service, including written correspondence, through a number of measures. Consistency in style and approach is achieved through a structured process that incorporates specific tailoring of correspondence for the individual circumstance. Management review is also a feature of this process.
Complainants are also provided with an opportunity to clarify written correspondence to ensure that the communication is clearly understood and that relevant views and information have been considered. In the event that such correspondence is not of sufficient quality, it is reconsidered and re-issued. This financial year, over 99 per cent of cases were finalised without correspondence needing to be re-issued.
Periodic review is also undertaken of a random sample of correspondence with particular focus on whether the principles of procedural, interpersonal and distributive fairness have been appropriately applied. Observations and improvement opportunities are reported to management and staff for consideration and action.
During this financial year, it was observed that, whilst ultimate decisions were correct, enhancing the clarity and understanding of the complainant's perspective and personal circumstances, in more unusual and complex correspondence, could improve their perceptions of fairness or equity.
Deliverable 2 — Identify and prioritise areas of tax administration for improvement
In prior years, the IGT had relied on public consultation as a primary means of identifying tax administration issues of concern and prioritising topics for review in developing the work program. The themes emerging from our complaints handling service are increasingly informing this program of broader reviews.
Performance measure — Issues identified from complaints for further review
As mentioned earlier, we record and analyse complaint data in order to identify themes and determine areas where broader reviews may be usefully employed to deal with recurring issues.
A broader review may not always be the appropriate response to a recurring issue. For example, ATO debt collection activities continued to be the most common issue arising in complaint cases in this financial year. However, we had conducted a broad-based review into this area relatively recently.44 It would be inappropriate to conduct another review before allowing sufficient time for the implementation of the recommendations in that report to bear fruit.
Similarly, we have received significant SG-related complaints but again many of the issues raised have already been examined by the IGT relatively recently.45
Having analysed the complaint data, including consideration of areas that had been recently reviewed, a number of potential topics were identified as being best suited to a broader review. These were then further tested during our consultation on the current work program. As a result, as mentioned earlier, the following two topics became part of the work program and review into them is currently underway:
- Aspects of the PAYG instalments system; and
- ATO's verification of GST refunds.
A further area that was subsequently identified and was deemed to require prompt action was the ATO's management of tax evasion referrals received from the community. This has become the subject of an 'own initiative' investigation as previously mentioned.
Performance measure — Issues identified from general stakeholder forums and work program consultation for review
As in prior years, we undertook extensive community consultation to develop our work program. Submissions or input were received from a range of stakeholders including taxpayers, tax professionals and their representative bodies as well as government agencies, such as the ATO, TPB, ANAO, Ombudsman and Treasury. Input was also sought from the Minister as well parliamentary committees.
The IGT also capture areas of concern during the year through broader engagement with the public such as through the media (including social media), the IGT website as well as presenting at or participating in conferences, seminars and tax practitioner discussion groups.
The themes emerging from complaint cases, international trends as well as the submissions to the work program and input captured throughout the year, assist the IGT to identify issues of greatest community concern or significance in achieving a fairer, more efficient and transparent tax administration. More information on the identified issues is presented in the IGT's work program which is available on the IGT's website.
Performance measure — Issues identified from investigations requested by the Minister, Parliament, parliamentary committees or relevant agencies
The Minister, Parliament and parliamentary committees of either House of Parliament, including Joint Committees, as well as the Commissioner and the TPB may request the IGT to undertake a review.46
As mentioned earlier in this report, in this financial year, the Economics Committee has requested the IGT examine the ATO's management of the risk of fraud and associated issues. The IGT accepted this request on 27 June 2017, publicly announced the terms of reference and invited submissions to this review, namely the ATO's fraud control management review.
The Commissioner has also requested that the IGT undertake two reviews namely the Future of the tax profession and the Influencing willing participation in the tax and superannuation systems reviews. The former review was commenced on 6 June 201747 and the latter review was identified as a potential review that might be undertaken, competing priorities and resources permitting.48
Performance measure — Prioritise identified issues
The IGT prioritises the identified issues by assessing their relative impact on delivering a fairer, more efficient and transparent tax administration, as well as time and resources available and the competing priorities faced such as ministerial direction for the IGT to undertake review and co-ordination with the activities of other government agencies.
The current work program reflects the process of prioritisation by setting out three selected review topics, four additional reviews that may be conducted and a number of areas that were identified but ultimately not chosen with an accompanying explanation.49 For example, as stated earlier, ATO debt collection and unpaid SG were areas that were identified but not selected because they had been the subject of IGT reviews in the recent past.
As mentioned earlier, after the announcement of the current work program, we commenced the ATO's fraud control management review at the request of the Economics Committee as well as an 'own initiative' investigation into ATO's management of tax evasion referrals from the community. As a result, there is reduced likelihood that we will be able to conduct any of the four additional reviews identified in the current work program.
As is apparent from the above, the IGT has sought to be innovative and responsive in the design of the work program. The IGT has effectively leveraged his expanded powers to conduct broader reviews and 'own initiative' investigation into issues identified through the complaint handling service. At the same time, some flexibility has been built into the work program to allow prompt action to address significant issues that may arise.
Deliverable 3 — Conduct reviews and make independent recommendations for improvement
The conduct of reviews is determined by the bespoke nature of each review. They generally involve a consideration of all the submissions made as well as investigation of ATO or TPB systems. Detailed research and analysis is also required, including international comparison with comparable jurisdictions, to identify areas requiring improvement and determine the best course of action. Engagement and extensive consultation with the ATO or TPB at all levels is necessary throughout the review cycle.
Performance measure — Investigate identified issues
This financial year, the IGT publicly released reports of two completed reviews and commenced three additional reviews on the current work program. Furthermore, in response to a request by the Economics Committee, the IGT commenced a fourth review, namely the ATO's fraud control management review. Table 5, below, lists these reviews and their status as at 30 June 2017.50 They have been outlined earlier in this report and are described in more detail on the IGT website.
Table 5: IGT reviews and their status at 30 June 2017
The IGT's performance in conducting reviews and making recommendations for improvement is measured with regard to the following two performance measures which are discussed below.
Performance measures — Report the findings and recommendations of the reviews
The reports of IGT reviews contain recommendations for improvement together with the relevant agency's responses.
The ATO and TPB have statutory independence in their respective jurisdictions. The IGT is also an independent statutory appointment, but is not empowered to direct the Commissioner or the TPB. Historically, however, the vast majority of the IGT's recommendations have been accepted in full or in part, with this trend continuing in this 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 2016–17
The recommendations for improvement may be effectively implemented in four ways. Firstly, recommendations made for government policy consideration generally require legislative change.
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 be substantively implemented by the relevant agency over time.
Lastly, IGT recommendations may be subsequently adopted by others such as the Tax and Revenue Committee, Economics Committee and the Government's SG Cross Agency Working Group, who as mentioned before, have echoed some of the IGT's observations and recommendations in their respective reports.51
Analysis of performance against purpose
As evidenced above, the IGT continues to fulfil his central purpose in improving the tax administration system by providing an effective complaints handling service to the community, identifying issues which require further investigation as well as conducting reviews into the prioritised issues including making independent recommendations for improvement.
This view is also supported by the demand which the IGT continues to experience for our tax specialist expertise both in terms of assistance in resolving taxpayer and tax practitioner complaints about the ATO and the TPB and conducting broader reviews into systemic issues which seek to improve tax administration, provide assurances to the community and foster confidence in the tax system. The increasing demand for IGT services also presents challenges such as maintaining high service levels. In this financial year, innovative approaches were successfully implemented to meet these challenges in the face of growing numbers and complexity of complaints as well as the relocation of our office.
I, Ali Noroozi, as the Accountable Authority of the IGT, present the above 2016–17 annual performance statement of the IGT, as required under subsection 39(1) 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.
The IGT received an unmodified audit report on the 2016—17 financial statements from the ANAO. These statements are reproduced in full later in this report.
The IGT ended 2016—17 with an attributable surplus of $483,620, compared to a surplus of $888,021 in 2015–16.
The entity has sufficient cash and reserves to fund its liabilities as and when they fall due.
41 Section 9 of the Ombudsman Act 1976 which operates by virtue of section 15 of the IGT Act.
42 For the period July 2016 to March 2017.
43 233 positive, 18 negative and 6 neutral.
44 IGT, Debt collection (2015).
45 Above n 2; see also above n 18.
46 See subsection 8(3) of the IGT Act.
49 Above n 48.
50 IGT reviews are conducted under paragraphs 7(1)(c) and (d) of the IGT Act which provide for the power to investigate systems established by the ATO, TPB or the taxation laws.
51 Above n 38, n 18 and n 19, respectively.