Chartered Accountants Australia and New Zealand (CA ANZ) head of tax, Michael Croker, has made a submission to the ANAO regarding its inquiry into the costs and benefits of reinventing the ATO program.
While Mr Croker believes the reinvention program has resulted in "numerous, largely beneficial outcomes to the Australian community", he highlighted seven key areas that the ANAO should consider when conducting its inquiry.
Firstly, Mr Croker recommended that the ANAO benchmarks the ATO’s efforts against other tax agencies.
“To help establish this, we expect the ANAO may wish to explore benchmarking the ATO’s modernisation performance against tax collection agencies in comparable jurisdictions,” Mr Croker said.
“Many tax agencies around the world have embarked on projects similar to the ATO’s reinvention initiative. Such benchmarking should not be confined to the cost of administration vis-à-vis revenue collected, but also to the way in which modernisation is being achieved.”
The second point Mr Croker highlighted was the cost and benefit of treating different taxpayer segments in different ways, which has been badged as ‘tailored engagement and support’ by the ATO, resulting in a ‘light touch’ approach to individual taxpayers.
“The ATO mantra has been to make compliance easier for these taxpayers, combined with a so-called ‘light touch’ approach in terms of compliance activity,” Mr Croker said.
“However, there is now a sense that the ATO needs to re-adjust its compliance strategy towards individuals who have (in an online, self-assessment system) been over-claiming work-related deductions and towards the cash economy.”
Thirdly, Mr Croker criticised the lack of legislative simplification or government support.
“In our view, the lack of supportive legislative reform has hindered the ATO in fully achieving its reinvention goals. Specifically, there has been a limit to what the ATO can achieve with red tape reduction without corresponding amendments to the law,” Mr Croker said.
Mr Croker is also concerned about ATO personnel, given that the timing of the reinvention program has coincided with the retirement of a large number of experienced ATO personnel.
“Some CAs lament the loss of corporate knowledge within the ATO, particularly in areas which involve the interpretation of highly complex law. They feel it will take time for the new generation of ATO officials to attain the knowledge of those who have retired,” Mr Croker said.
“CA ANZ acknowledges the ANAO’s difficulty in quantifying the value of knowledge within an organisation, but perhaps some attention could be focused on the ATO’s investment in training and knowledge management systems.”
The ATO’s IT systems also got a mention in Mr Croker’s submission, who expects it to be one of the more important areas covered in the ANAO report, given the cost and scale of ATO IT.
“Whilst we acknowledge the fine balance which the ATO must tread in catering for differing stakeholders, the December 2016 and February 2017 outages have unfortunately resulted in the further delay of promised enhancements to the ATO’s tax agent portal, and intermittent outages in recent months have heightened tax and BAS agent concerns that all is not well with ATO IT,” Mr Croker said.
“In an environment where all stakeholders (not just agents) are reliant on ATO systems, the hidden cost of outages can be substantial, not just in monetary terms but also the impact on user confidence. “
Lastly, Mr Croker suggested the ANAO look into the ATO’s collection and use of data, as well as research conducted by the ATO.
“We have yet to see any substantial economic benefit to the community from the mass of data captured by the ATO (or other government agencies). In a tax specific sense, nor have we seen any enhancements which enable taxpayers to understand and access the information which the ATO holds about them,” he said.
“We understand the ATO conducts regular surveys of particular taxpayer segments. It also regularly explores community attitudes towards the ATO and to paying tax generally. Assuming there are now longitudinal surveys covering the period since the reinvention project commenced, it may be interesting for the ANAO to explore whether the survey results bear witness to the stated goals of the project.”