Recommendation 2.1

The IGT recommends that with respect to the PAYG instalments system, the ATO:

  1. improve its ‘welcome letter’ to provide taxpayer specific information, including:
  • the circumstances that triggered entry into the system;
  • a payment schedule of default instalment amounts;
  • an explanation of how to make variation elections;
  • how the ATO processes an exit from the system; and
  • where to find additional information;
  • where instalment amounts or reporting frequency have been varied, provide confirmation to taxpayers together with an updated payment schedule;
  • accompany the welcome letter with a brochure containing more general information;
  • provide a comprehensive PAYG instalments guide on the ATO website;
  • update its Notice of Assessment to set out any outstanding instalments; and
  • improve ATO staff education and support by, for example, aligning scripting for those handling telephone enquires with the comprehensive PAYG instalments guide and provide access to the PAYG instalments eligibility form and associated training.
  • Recommendation 3.1

    The IGT recommends the ATO:

    1. consider using a single accounting method for administering the income tax regime including the PAYG instalments system as a long term goal; and
    2. alert taxpayers and/or their tax or BAS agents to their unpaid PAYG instalment amounts through pre-filling and inform them that such amounts must be paid irrespective of any refund or debt arising from their income tax assessment.

    Recommendation 3.2

    The IGT recommends the ATO:

    1. modify its call centre scripting, for dealing with taxpayers’ request to update their addresses, to require its staff to check if a taxpayer has an existing ICA and ask all necessary questions to determine if the address on it needs to be updated;
    2. where taxpayers have unpaid or unreported PAYG instalments, take prompt action to confirm the taxpayer’s address by alternative means such as telephone; and
    3. engage with the Department of Human Services and software developers to:
      1. consider, as a long term goal, providing functionality that allows taxpayers to set address preferences for where they wish to receive different types of correspondence and more detailed notification of any correspondence that has been received in their myGov inbox; and
      2. ensure that, on linking of myGov accounts to the ATO, the existing address for correspondence is not overridden where the taxpayer uses a BAS or tax agent.

    Recommendation 3.3

    The IGT recommends the ATO:

    1. as soon as practicable after it has detected that a taxpayer’s address is outdated, take prompt action to update the address, for example, by attempting to contact that taxpayer by alternatives means, such as telephone; and
    2. develop procedures and policies for determining the appropriate deferred lodgment and payment dates when issuing multiple PAYG instalment Activity Statements and train its relevant staff accordingly.

    Recommendation 3.4

    The IGT recommends the ATO:

    1. for taxpayers who have lodged an income tax return but not lodged corresponding BASs by the due date, automatically supress any obligations to report and pay PAYG instalments for that income tax period;
    2. for taxpayers who would otherwise require a manual finalisation of the PAYG instalments label, issue targeted communications encouraging them to delay lodgment of their income tax return until 21 July; and
    3. where a manual finalisation of the PAYG instalments becomes necessary, any related debt recovery action should be delayed pending the completion of this task.

    Recommendation 4.1

    The IGT recommends that the ATO improve its monitoring of the entry and exit criteria of the PAYG instalments system by:

    1. periodically reviewing, at least every three years, the threshold entry criteria;
    2. better informing those no longer meeting the entry criteria that they may choose to voluntarily remain in the system; and
    3. seeking to provide additional functionality, in its new Practitioner Lodgment Service, to allow BAS and tax agents to voluntarily enter or exit their clients into or out of the system.

    Recommendation 4.2

    The IGT recommends the ATO:

    1. educate and warn taxpayers of the risk of underestimation of PAYG instalment amounts particularly where repeated and/or excessive underestimations occur;
    2. enforce penalties in appropriate circumstances where such taxpayers have repeatedly not adhered to warnings; and
    3. publish statistics on its enforcement activities including the number and quantum of penalties imposed.