Recommendation 2.1

The IGT recommends that the ATO incorporate the following initiatives into its Analytics for Client Engagement Program or related projects aimed at minimising tax debt:

  1. a program to identify the underlying causes of cash flow and payment difficulties for micro business and individual taxpayers and develop preventative strategies;
  2. an online facility which taxpayers and their advisers can use to prepay anticipated tax debts – for example through the myGov website and Tax Agent Portal;
  3. facilitate discussions with software developers, insolvency practitioners and small business advocates to promote the benefits of incorporating the business performance review tools (such as the ATO's Business Viability and Assessment Tool) into commonly used accounting software;
  4. make publicly available a personal financial management tool such as the Debt Serviceability Tool; and
  5. identification of taxpayers who are most likely to experience cash flow difficulties and encourage them to seek professional advice.

Recommendation 2.2

The IGT recommends that the ATO, as it designs and implements new debt strategies:

  1. continue to use existing research findings to target debt activities to those taxpayer segments which comprise substantial amounts of recurrent and/or aged tax debts, such as micro businesses and individuals; and
  2. incorporate feedback loops to facilitate continuous improvement.

Recommendation 2.3

The IGT recommends that the ATO:

  1. better inform the public about its debt strategy by, for example, publishing its approach to debt collection, including any changes or modifications thereto; and
  2. as an interim measure, whilst awaiting the result of its research projects, take earlier, more frequent and proportionate debt recovery action to minimise the necessity to take firmer action at a later time.

Recommendation 2.4

The IGT recommends that the ATO:

  1. jointly develop with other relevant agencies, a suite of educative materials for small business owners on their legal responsibilities; and
  2. continue to implement and refine the integrated risk treatment plan, for phoenix activity across the organisation, which incorporates the new inter–agency powers, engagement with intermediaries and assessment tools for measuring the success of the plan.

Recommendation 2.5

The IGT recommends that the ATO:

  1. publish further statistical information and analysis, currently only available internally, to better inform the public about tax debt and strategies to address them; and
  2. undertake further statistical analysis to develop improved metrics, which are reported publically, to better describe the effectiveness of its debt strategies in relation to such issues as improving payment on time, payment behaviour over the longer term and the benefit to the economy.

Recommendation 3.1

The IGT recommends the ATO:

  1. expand its new training framework to include programs aimed at improving the commercial awareness and understanding of taxpayer behaviours for those staff who make decisions with respect to payment arrangements; and
  2. develop streamlined viability and capacity to pay tools which incorporate industry benchmarks for use in lower risk debt cases.

Recommendation 3.2

The IGT recommends the ATO:

  1. consult with relevant government agencies to more appropriately identify the contemporary nature of 'serious hardship' and to use appropriate tools in identifying individual cases;
  2. review its guidance and publications to make the circumstances clearer as to where a release is likely to be granted and where it may not be granted for 'serious hardship' cases (including system procedures for staff decisions, such as alternatives to release).

Recommendation 3.3

The IGT recommends the ATO:

  1. engage with taxpayers in discussions on remission of interest as a means of supporting prompt payment of debt by, for example, including on payment reminders that partial remission may be granted where debts are paid promptly; and
  2. based on the findings of its research into 'tipping points' and the 'next best action' consider remitting interest in appropriate cases to further encourage prompt payment.

Recommendation 4.1

The IGT recommends that the ATO improve the process for issuing garnishee notices by:

  1. developing improved processes to correct data mismatches between the ATO Integrated System and Receivables Management System;
  2. encouraging financial institutions to challenge garnishee notices where they believe notices may have been issued to the incorrect bank account;
  3. reviewing its officers' adherence to policy of making every effort to telephone taxpayers, particularly lower risk taxpayers; and
  4. adopting a unified approach between debt and legal officers when issuing garnishee notices for all cases.

Recommendation 4.2

The IGT recommends that, consistent with recommendation 2.3(b), the ATO act sooner and take proportionate actions to prompt company directors to address impending insolvency.

Recommendation 4.3

The IGT recommends that the ATO amend its processes for issuing Departure Prohibition Orders to require Second Commissioner approval and that SES officers be ultimately responsible for the maintenance of DPOs.

Recommendation 4.4

The IGT recommends that the ATO formalise the authorisations required to take security over assets and allocate these authorisations to appropriately senior officers.

Recommendation 4.5

The IGT recommends that, where the criteria for offsetting credits against debts are met, the ATO provide guidance to staff to inform taxpayers of their right to request the discretion 'not to offset' be exercised at the outset of discussion relating to, for example, disputed debt or payment arrangements.

Recommendation 4.6

The IGT recommends that the ATO incorporate into its procedures and guidance the need to consider the impact of its actions on other creditors as it pursues tax debts.

Recommendation 4.7

The IGT recommends the ATO consider merging the Debt Business Line into the Compliance Group.

Recommendation 4.8

The IGT recommends that the ATO:

  1. improve Debt Business Line team leader supervision of staff including requiring team leader approvals in appropriate cases;
  2. align case allocation systems with the debt staff capability matrix once developed;
  3. implement a network of advisory staff in the Debt Business Line to support escalation of issues, development of precedents and an effective database of debt decisions; and
  4. improve the enforcement of recording details of debt cases on its systems to promote better management of particular lower risk cases.

Recommendation 5.1

The IGT recommends that the ATO measure and publish information relating to the performance of External Debt Collection Agencies, including the use of benchmarking, on aspects such as the:

  1. efficiency of the pursuit of collectable debt;
  2. sustainability of payment arrangements; and
  3. impact on taxpayers and their long–term payment compliance behaviour.

Recommendation 5.2

The IGT recommends the ATO:

  1. publish the types of debt collection work for which it engages External Debt Collection Agencies and the types of cases referred to them; and
  2. provide External Debt Collection Agencies with more frequent estimates of the volume of cases to be referred so that they can better manage resources and meet performance obligations.

Recommendation 5.3

The IGT recommends the ATO:

  1. better inform the public about External Debt Collection Agencies' role particularly in relation to how they are required to act with respect to disputed debts, enter into payment arrangements and remit interest;
  2. increase taxpayer awareness on how they can make complaints about the actions of External Debt Collection Agencies from the outset; and
  3. assist External Debt Collection Agencies to give more consideration to taxpayers' circumstances.