Tax collectors haven’t attracted a reputation for an exceptionally helpful or understanding approach over the years, but things are changing in the Australian Taxation Office — and that change has come from within.
Like all regulators, the ATO cannot ensure 100% compliance with 100% assurance, so it has to target its resources where the risk of non-compliance is highest. The corollary is trying to understand the pain points for low-risk groups, which represent the majority of taxpayers, rather than simply pointing to the rules and threatening stiff penalties.
“In simple terms, our client and industry engagement strategy is directed at making it as easy as possible for people to comply with their obligations and making it hard for those who choose not to,” explained assistant commissioner James Beeston in a recent speech on client and industry engagement.
It’s all part of the Tax Office’s reinvention plan that began when Chris Jordan took over as commissioner four years ago. Feedback from the community suggested Australians wanted the agency to “fix the basics, provide certainty, tailor services to their needs and help them navigate the system”.
According to Beeston, cultural change inside the agency was essential for it to change its relationships with citizens and businesses on the outside in a meaningful way.
“We consulted widely on our culture – both outside of the office, and with our own staff,” he told the Tax Institute’s Victorian chapter at its annual forum.
“The upshot being that although we had a strong culture supporting our administration of the tax system, we recognised that there were some cultural attributes that inhibited us — such as risk aversion and a silo mentality — and others that we really wanted to reinforce — such as a commitment to service and integrity.”
The “client experience” was front and centre in the ATO’s new culture strategy. It wasn’t so long ago the concept of taxpayers as “clients” of a government agency sounded strange; now being client-focused is first on the list of five cultural traits Tax Office officials are expected to embody.
“This harks back to our mission of placing the client, both internal and external, at the centre of everything we do,” said Beeston, adding that two other traits on the cultural wish list — staff who are “empowered and trusted” as well as “future-oriented” — are also crucial to a more effective kind of client engagement.
“Our staff want to be empowered and confident in making decisions. They want to take action to continue to innovate and change the system for the benefit of our clients, rather than being slaves to bureaucratic rule-making.”
While the past four years have not been trouble-free with the usual budget cuts, job losses, technology issues and a failure to settle a new enterprise bargaining agreement, Beeston said the reinvention program had been “taken to heart” by most staff and the culture had changed a lot since 2012.
“Our staff understand that change is the norm, and have the mindset to put the client at the centre of what they do. They also recognise that they are doing this with the full support of the organisation’s leadership.”
The assistant commissioner noted the attempt to be client-centred has involved a shift from “policing” to “coaching” for the majority of taxpayers, and pointed to some of the practical implementation of that idea.
The newer information makes deductions easier to understand than ever and “certainty letters” that assure taxpayers their return won’t be reviewed later are more common. Technology has also made it easier for the ATO to do this of course; without the growth of pre-filled information, a lighter-touch approach might have been a harder sell.
At the same time, Beeston said it was “extremely important” to take care of basic fundamentals of good customer service like making the website more logical and easier to navigate (and cutting thousands of redundant pages), making call centres less painful, and tailoring letters for different taxpayers’ circumstances.
“We fundamentally believe that, for those clients who wish to engage with the system and comply, our resources are much better placed in the prevention rather than in the correction space.
“In other words, we are much more efficient and effective in helping the many to comply with their obligations than waiting to catch out and correct those who wanted to comply but didn’t quite manage to.”
He also thinks if you asked the public, most of us would agree with that sentiment.
Of course there will still be disagreements between the ATO taxpayers, particularly those with a lot of money at stake, but to make everything smoother and more efficient for both sides, the focus has moved from the past to the here-and-now.
“In some of our most traditional work – our active compliance program – we have shifted our emphasis to reflect the early engagement principle,” Beeston explained.
“Up until a few years ago, our focus with the largest 100 public groups and our high wealth taxpayers was on lodged tax returns and seeking to verify the tax outcomes for events that might have occurred many years ago. Today our focus is real-time.”
This basically involves talking to taxpayers with more complex affairs months ahead of them submitting the documents, to minimise disagreements and make sure the ATO’s interpretation of the rules is clear.
“The objective of this real-time engagement is very much to understand significant and unusual events that have taken place in the relevant income year, and reach a shared understanding of the correct tax outcomes.”
Beeston also spoke about how the new approach has changed the way Tax deals with privatisations of state or federal government entities and assets, as well as the public-private partnerships that typically build new public infrastructure projects.
Early engagement is also now a much bigger feature of how the ATO performs its role on the Foreign Investment Review Board. Beeston said he would not pretend those “frank … purposeful” discussions were always cheery but said everyone benefits from knowing where the regulator stands.
“In our minds, this type of early engagement is really important for the system as a whole.”
At the same time, among the many examples of making compliance easy, Beeston said “the other side of the coin” was that the ATO would “stridently” deal with non-compliance and, at times, litigate cases where it believes “the health of the tax system” is at stake.