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Performance report

The performance report for the 2017–18 financial year is divided into the following two sections:

The IGT’s commitment to performance measurement and analysis is central and ongoing. Our consideration and monitoring of our deliverables and performance measures underpin our annual corporate planning process as well as our day-to-day service delivery to the community.

Performance statement

This statement measures and assesses the IGT’s performance in fulfilling our purpose and our key deliverables.

The purpose of the IGT is to improve tax administration by providing the following deliverables:

  1. effective handling of tax administration complaints;
  2. identify and prioritise areas of tax administration for improvement; and
  3. conduct reviews and make recommendations for improvement to the Government, the ATO and the TPB.

These deliverables are monitored and assessed by reference to the performance measures, the results of which are included in the following sections.

Deliverable 1 — Effective handling of tax administration complaints

The effectiveness of the IGT’s tax complaints handling function was assessed against the following five performance measures:

Each of these measures is further discussed below.

Performance measure — Number of complaints received compared to complaints completed

In the 2017–18 financial year, the IGT received a total of 2405 complaints with 88 per cent resolved in the same period—see Table 2 below.

Of the complaints received during this financial year, 2185 related to the ATO (91 per cent), 70 related to the TPB (3 per cent) and 150 related to other matters (6 per cent), for example, referrals to other jurisdictions for consideration.

Table 2: Numbers of complaints received and resolved

 
Agency
Complaints received Complaints resolved
Carried forward from 2016–17 Received in 2017–18 Total handled in 2017–18 Total resolved in 2017–18
ATO 149 2185 2334 2055
TPB 4 70 74 66
Other 1 150 151 142
Total 154 2405 2559 2263

Every complaint is allocated to a dedicated IGT 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 most 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 in a complaint.

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 the 2017–18 year, over 40 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 that 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 taxpayers due to the tax law secrecy provisions. If required, the IGT may also serve formal notices requiring officers of the ATO or TPB to provide information relevant to the IGT’s investigations.43 In the 2017–18 financial year, no such notices were issued.

In total, 1555 investigations were undertaken by the IGT during this financial year. Approximately 99 per cent of the investigations commenced this financial year related to the ATO with the remainder relating to the TPB.

Over 86 per cent of all investigations undertaken in the 2017–18 financial year were completed during the same period—see Table 3 below.

Table 3: Numbers of investigations commenced and completed

 
Agency
Investigations commenced Investigations completed
Carried forward44 from 2016–17 Commenced in 2017–18 Total undertaken in 2017–18 Completed in 2017–18
ATO 106 1427 1533 1325
TPB 4 18 22 18
Total 110 1445 1555 1343

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 independent surveys to evaluate the performance of the IGT’s complaints handling service.

Approximately 55 per cent of the complainants who were contacted by ORIMA provided feedback. This represents an increase from the 40 per cent and 51 per cent of complainants who responded in the two previous years respectively.

The feedback received in the survey continues to demonstrate high levels of satisfaction. Table 4 below shows that in 2017–18, 80 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 91 per cent reported satisfaction with the professionalism of IGT staff.

Table 4: Complaints handling feedback survey results

Views of IGT’s complaints handling service Proportion
satisfied
Proportion
dissatisfied
Overall satisfaction with the IGT’s complaints handling service 80% 14%
Overall satisfaction with the outcome of the complaint 59% 27%
Professionalism of IGT staff 91% 5%

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, many have still expressed high levels of satisfaction with the IGT’s complaints handling service and the professionalism of our staff. In particular, it should be noted that of the complainants that were dissatisfied with the outcome of their complaint, approximately 40 per cent expressed that they would still use the complaints handling service in the future.

The survey also provided opportunities for the IGT to further improve performance to meet the service expectations of the community. One such area that requires improvement is awareness of the IGT’s role as the taxation ombudsman particularly amongst vulnerable taxpayers including unrepresented individuals and small businesses. To address this, as stated earlier, we are implementing a communications strategy which includes a quarterly newsletter, increasing the IGT’s presence on social media and presenting at appropriate forums including in regional centres.

In May 2018, the IGT also established an automated survey to obtain contemporaneous feedback from complainants whose concerns were resolved over the telephone. Such complainants were invited to participate in the survey after they had completed their telephone call with IGT officers. Of the 40 per cent who took part in this survey,
95 per cent expressed satisfaction and willingness to use the IGT complaints handling service again. This is another positive outcome for the community as well as the IGT.

IGT officers also receive feedback directly from complainants. During the 2017–18 financial year, 190 complainants provided such feedback of which 86 per cent were positive in nature. The majority of the positive feedback received was directed at the specific IGT officer managing the complaint and expressed overall satisfaction with the officer’s professionalism, helpfulness and quality of service. Such positive comments were made irrespective of whether they had achieved their preferred outcome.

Examples of cases in which positive feedback was given are provided below:

Example 1

A small business owner lodged a complaint with the IGT expressing concern that the ATO had failed to refund his business’ GST credits totalling approximately $50,000, despite the ATO’s agreement to do so some months prior. The ATO had instead applied the GST credits against the taxpayer’s existing debt which was being repaid through a payment arrangement.

During the IGT investigation, ATO officers explained that they had advised the taxpayer’s tax agent that, as a term of the payment arrangement, future credits on the business’ account would be offset against the debt. The IGT officer reviewed the ATO’s systems, including the recordings of the relevant telephone conversations, and confirmed that such advice had been given. However, the IGT officer sought the ATO’s agreement to refund the retained credits as the size of the retained credits would have had a significant impact on the cash flow of the taxpayer’s business and the taxpayer had continued to make repayments in accordance with his payment arrangement.

As a result of the IGT investigation, the ATO agreed to refund the GST credits and the taxpayer commented: “I really, really appreciate the help and it has gone as smoothly as I could have hoped. We’ve finally got an outcome after 3 or 4 months [in dealing with the ATO]”

Example 2

A tax practitioner approached the IGT to seek assistance regarding the ATO’s approach to collecting tax debts from his client. The ATO and his client had previously agreed to a payment arrangement for a tax debt that had remained unpaid for some time as well as another tax debt that would have become due and payable shortly. Under this arrangement, the ATO agreed to not take any debt recovery action as long as the client paid the agreed instalments. The taxpayer had been paying these amounts. However, after a couple of months, the ATO issued a Director Penalty Notice (DPN) to the client as an ATO officer had made an error in calculating the amount of the instalments, i.e. the ATO had not included the recently raised debt in the calculations. Whilst the ATO apologised for the error and agreed to a new payment arrangement that included the recently raised debt, it declined to withdraw the DPN as it believed that it had been validly issued.

The IGT commenced an investigation. Initially, the ATO confirmed its unwillingness to withdraw the DPN and advised that it would not take further debt collection action if the new payment arrangement was honoured. The IGT considered such action disproportionate in the circumstances and asked the ATO’s internal technical advisers to consider the fairness in maintaining a DPN in such unique circumstances.

As a result, the ATO reconsidered the matter and agreed to withdraw the DPN.

Example 3

A disability support pensioner approached the IGT for assistance after the ATO had offset her income tax refund against a re-raised debt from 2003. She explained that she was previously not aware of the debt and had intended to use the refund to purchase a mobility scooter as her current one was no longer serviceable.

During the IGT’s investigation, the ATO agreed to reverse the offset and returned the income tax refund to the pensioner. In addition, the ATO agreed to an affordable payment arrangement for the debt. The pensioner was very grateful as a new scooter could be purchased so that she could do her daily activities and maintain a reasonable quality of life.

Example 4

A small business owner lodged a complaint with the IGT concerning the ATO’s refusal to provide him a $14,000 refund from Business Activity Statements (BASs) that were lodged more than four years late due to difficult life events and a mental illness that he was suffering from at the time. At that time, he had asked the ATO for an extension of time to lodge the BASs, however, the ATO did not grant such an extension and now would not process the late-lodged BASs.

During the IGT’s investigation, the ATO agreed to reconsider its position after it was pointed out that the law would allow the ATO to refund GST credits that had accrued before 2012 if the ATO had received a notification of an entitlement to a refund. As a result, the ATO concluded that the complainant’s deferral lodgement request was such a notification and paid the $14,000 refund to the complainant.

Performance measure — Feedback from the ATO and the TPB about the IGT’s complaints handling function

IGT and ATO senior officers engage directly to discuss the progress of complaint investigations, the effectiveness of the complaints handling service and other complaint related matters on a weekly basis. These meetings provide a forum for the IGT and the ATO to exchange professional and independent real time feedback on the complaints handling service and identify improvement opportunities.

The IGT also engages with the TPB as required, which is reflective of the smaller proportion of complaints that are received regarding TPB actions.

As a result of our ongoing communications with the ATO and TPB during the 2017–18 financial year, the IGT has continued to receive positive feedback regarding our tax complaints handling service. An example of such feedback concerned the IGT’s early identification of an increased number of complaints about the ATO’s processing of Tax File Number applications in January 2018. ATO senior officers acknowledged the value of the IGT complaints handling service in assisting the ATO to quickly identify the issue and take action.

Performance measure — Feedback from staff about the IGT’s complaints handling function

The IGT complaints handling staff attend regular internal training and analysis forums where staff provide real time feedback as well as discuss innovative ideas and potential improvements. In addition to these forums, staff submit improvement opportunities for consideration, prioritisation and action on a range of matters that may assist them to better perform their role.

Performance measure — Percentage of complaints not requiring an internal review of the original decision

The IGT seeks to maintain the high standards of its complaints handling service. IGT case officers’ decisions are reviewed by other more senior officers before finalisation to ensure decisions are based on sound principles and transparently communicated to the complainant as well as the ATO or TPB. Such communication demonstrates accountability for IGT officers in individual cases and empowers complainants in their dealings with the tax administration system.

Complainants are also provided opportunity to seek clarification of IGT decisions to ensure that they clearly understand the reasoning and appreciate that all relevant views and information were considered. They are also made aware of their right to request a review of the initial IGT decisions which would be conducted by an officer who was not previously involved in the complaint investigation.

Of the 2263 cases finalised in the 2017–18 financial year, 13 requests for internal review were made to the IGT. Of these requests, six were withdrawn by the complainants after initial discussions with IGT staff, who were able to clarify matters for the complainant, and two did not progress to a review due to inadequate further information being provided by the complainant. The remaining five requests did lead to a review — the original IGT decision was upheld in three of them whilst two are still ongoing.

Deliverable 2 — Identify and prioritise areas of tax administration for improvement

The themes emerging from complaint cases, international trends as well as the discussions in stakeholder forums and input captured throughout the year assist the IGT to identify tax administration issues of greatest community concern or significance in achieving a fairer, more efficient and transparent tax administration system.

Prior to the establishment of the IGT complaints handling service and the IGT effectively becoming the taxation ombudsman, public consultation was the primary means of identifying and prioritising topics for review in developing the work program of our systemic reviews. However, in recent years, the themes emerging from our complaints handling service are increasingly becoming the major source for identifying the topics of future reviews. For example, the GST refunds and PAYG instalments reviews as well as the IGT’s first own initiative investigation into the ATO’s management of tax evasion referrals reflect this trend.

Performance measure — Issues identified from complaints for further review

As mentioned above, complaints data is a rich source for analysis and identification of themes and areas where broader reviews may be usefully employed to deal with recurring issues. However, broader review is only one of a number of different ways in which recurring issues may be appropriately addressed.

In some instances, the ATO or TPB may acknowledge an issue identified by the IGT during the course of a complaints investigation and an ABI may emerge without the need to conduct a broader IGT review. Another possibility is that the ATO or TPB may acknowledge an issue but offer to conduct their own review before the IGT takes further action. For example, the ATO carried out its own review of its use of Fraud or Evasion opinions45 after a number of IGT complaint investigations revealed there were matters that needed to be addressed.46

Where themes arising from IGT complaint investigations are not otherwise addressed, they are further tested during the development of the IGT work program and may lead to a broad review following processes of prioritisation and topic selection.

Situations may arise where issues are identified that require immediate action. In these circumstances the legislation47 allows the IGT to commence investigation on his own initiative. In this financial year, the IGT commenced two such investigations, namely the Garnishee review and the investigation into the ATO’s management of tax evasion referrals.

Performance measure — Issues identified from stakeholder forums

The IGT extensively consults with the broader community, which includes taxpayers, tax practitioners and their representative bodies, particularly when developing our work program and in conducting reviews. The IGT also consults with the Government and its agencies, such as the ATO, TPB, Australian National Audit Office (ANAO), Ombudsman and Treasury. Input is also sought from the Minister as well as parliamentary committees.

The IGT also captures 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. Table 5 below lists the IGT’s speaking engagements for the 2017–18 financial year.

Table 5: IGT speaking engagements during 2017–18

Speaking engagements
Date Organisation Type of function Location
4 July 2017 NSW Ombudsman Discussion Group Sydney
2 August 2017 CPA Australia Discussion Group Newcastle
8 August 2017 Chartered Accountants Australia and
New Zealand (CAANZ)
Discussion Group Melbourne
16 August 2017 CPA Australia Discussion Group Gosford
16 August 2017 Institute of Public Accountants (IPA) Discussion Group Sydney
23 August 2017 Society of Consumer Affairs
Professionals
Symposium Sydney
5 September 2017 IPA Discussion Group Sydney
12 September 2017 Law Council of Australia (LCA) Discussion Group Brisbane
15 September 2017 Carnegie Mellon University Discussion Group Adelaide
4 October 2017 MTA Accounting Discussion Group Ballarat
5 October 2017 Law Institute of Victoria Discussion Group Melbourne
27 October 2017 LCA Workshop Sunshine Coast
1 November 2017 CPA Australia Discussion Group Sydney
3 November 2017 IPA Conference Sydney
21 November 2017 Association of Taxation and Management Accountants Discussion Group Sydney
22 November 2017 Deloitte Roundtable Discussion Brisbane
23 November 2017 La Trobe University and Edith Cowan University Symposium Melbourne
27 November 2017 Ernst & Young Discussion Group Perth
29 November 2017 Australian and Pacific Ombudsman Region Roundtable Discussion Perth
29 November 2017 CPA Australia Discussion Group Sydney
19 January 2018 Australian Tax Teacher’s Association Conference Melbourne
16 March 2018 The Tax Institute Conference Cairns
5 April 2018 UNSW Conference Sydney
3 May 2018 National Taxpayer Advocate, IRS International Bureau of Fiscal Documentation Conference Amsterdam
30 May 2018 CAANZ Practice Forum Brisbane
15 June 2018 CAANZ Practice Forum Sydney
18 June 2018 CAANZ Practice Forum Adelaide

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.48 Two such reviews were conducted during the 2017–18 financial year, namely the Future of the tax profession review, which the Commissioner had requested, and the Fraud reviewwhich was requested by the Senate Economics References Committee. More information is provided on these reviews in the previous chapter.

The IGT may also respond to requests for submission from the Minister, Parliamentary committees and other government agencies. In this financial year, the IGT made submissions to the House of Representatives Standing Committee on Tax and Revenue’s Inquiry into the ATO’s 2016–17 Annual Report,49 the Treasury’s public consultation on the proposed Tax Debt Transparency Measures50 as well as the Secretary of Treasury’s investigation into Small Business Dealings with the ATO.51 More details regarding these requests is provided in the previous chapter and copies of the submissions are available at www.igt.gov.au.

Performance measure — Prioritise identified issues

Following analysis of the feedback received from broad-ranging consultation with the community as well as complaints data, the IGT prioritises identified issues by assessing their relative impact on delivering a fairer, more efficient and transparent tax administration. Other relevant factors which are also considered include available resources and the competing priorities faced such as ministerial direction to undertake a review and co-ordination with the activities of other government agencies.

The issues which have been prioritised for broader review are identified in the IGT’s publicly announced work program. Following this announcement, however, there may be a need to reprioritise the topics for review to enable the IGT to respond to emerging issues expeditiously. For example, the IGT was required to re-prioritise his work program to enable him to quickly commence the Fraudand Garnishee reviews and address concerns that impacted the community’s confidence in the administration of the tax system.

Deliverable 3 — Conduct reviews and make independent recommendations for improvement

The conduct of reviews is determined by the bespoke nature of each review and generally involves a consideration of submissions made by stakeholders as well as investigation of ATO or TPB systems. The review process requires detailed research and analysis, including international comparisons with comparable jurisdictions, to identify best practice for areas requiring improvement and to develop the necessary recommendations. A continual focus of each review is the ongoing engagement and consultation with the ATO and TPB throughout the review cycle, both at the operative and senior management levels.

Performance measure — Conduct reviews and investigate identified issues

During the 2017–18 financial year, the IGT completed three reviews, namely the PAYG instalments, GST refund and Fraud reviews. We publicly released the report of the PAYG instalment review whilst the reports of the other two were transmitted to the Minister for release as they contained recommendations to Government.52

Two reviews are still in progress namely the Garnisheeand the Future of the tax profession reviews. Table 6, below, lists all reviews and their status as at 30 June 2018.53 They have been outlined earlier in this report and are described in more detail on the IGT website, www.igt.gov.au.

Table 6: IGT reviews and their status at 30 June 2018

IGT review Status at 30 June 2018
Aspects of the Pay As You Go Instalments System Report publicly released
GST Refunds Report transmitted to Minister
ATO’s fraud control management Report transmitted to Minister
Future of the Tax Profession In progress
ATO’s use of Garnishee Notices In progress

Performance measure — 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, the vast majority of the IGT’s recommendations are accepted in full or in part. This trend continued in this financial year with the ATO agreeing to all 7 recommendations in the PAYG instalment review either in full or in part. No reviews into the TPB’s activities were completed this year.

Recommendations for improvement to taxation administration may be effectively implemented in five ways.

Firstly, recommendations made for government policy consideration generally require legislative change.

Secondly, recommendations 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 may have initially disagreed, in full or in part, may later be substantively implemented by the relevant agency. Some examples of the adoption and implementation of the IGT’s recommendations have been included earlier in this report.

Fourthly, IGT recommendations may be subsequently adopted by others, for example the Black Economy Taskforce report that was released this financial year recommended the expansion of the TPRS which is consistent with recommendation made by the IGT in the Employer obligations review.54

Lastly, as mentioned earlier, the ATO or TPB may acknowledge an issue identified by the IGT, during the course of a complaints investigation, and an ABI may emerge without the need to conduct a broader IGT review. In the 2017–18 financial year, the ATO had agreed to 12 ABIs and the TPB had agreed to 5. As shown in Table 7 below, the ATO has implemented 16 ABIs, which include some agreed to in the previous financial year, whilst the TPB has implemented three.

Table 7: Implementation status of Agreed Business Improvements

 
Agency
Number of Agreed Business Improvements
Carried forward from 2016–17 Created in 2017–18 Implemented in 2017–18 In progress as at 30 June 2018
ATO 15 12 16 11
TPB 0 5 3 2
Total 15 17 19 13

Analysis of performance against purpose

As evidenced above, the IGT has continued to fulfil his central purpose of 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 and 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 to improve tax administration, provide assurance to the community and foster confidence in the tax system. The increasing demand for IGT services continues to present challenges particularly in relation to allocation of resources. In this financial year, the flexibility of service delivery was improved to meet those challenges in the face of growing numbers and complexity of complaints particularly from vulnerable individuals and small business as well as events that required the IGT’s assurance to bolster confidence in the administration of the tax system.

Statutory statement

I, Ali Noroozi, as the Accountable Authority of the IGT, present the above 2017–18 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.

Financial performance

The IGT received an unmodified audit report on the 2017–18 financial statements from the ANAO. These statements are reproduced in full later in this report.

The IGT ended 2017–18 with an attributable surplus of $353,731, compared to a surplus of $483,620 in 2016–17.

The entity has sufficient cash and reserves to fund its liabilities as and when they fall due.


43 Section 9 of the Ombudsman Act 1976 which operates by virtue of section 15 of the Inspector-General of Taxation Act 2003.

44 Note: 23 investigations which were reported in the 2016–17 annual report as having been commenced in that year have been recategorised as having been commenced in this financial year. This is due to the ATO recording the investigation notice as having been received in this financial year and the desire to align ATO reported figures.

45 See McIlory T, ‘Australian Taxation Office overhauls fraud and evasion procedures’ (Australian Financial Review (17 May 2018) <www.afr.com.au>; Where the Commissioner forms an opinion that a taxpayer may have engaged in fraud or evasion, the ATO may examine and amend assessments outside of standard periods of review (typically 4 years).

46 See IGT, ‘Work Program 2017’ (2017) <www.igt.gov.au>.

47 Subsection 8(1) of the Inspector-General of Taxation Act 2003.

48 Subsection 8(3) of the Inspector-General of Taxation Act 2003.

49 Above n 40.

50 Above n 41.

51 Above n 42.

52 IGT, GST Refunds (2018).

53 IGT reviews are conducted under paragraphs 7(1)(c) and (d) of the Inspector-General of Taxation Act 2003 which provide for the power to investigate systems established by the ATO, TPB or the taxation laws.

54 Above n 29.