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An audit assessing the effectiveness of the ATO in achieving revenue commitments has suggested significant shortcomings – but the Tax Office is not fully on board with the recommended changes.
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Auditor-General casts doubt on effectiveness of ATO
14 September 2016
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The report concluded that it is “unclear” whether the ATO achieved the revenue commitments made to government for all budget-funded compliance measures over the period 2010-11 to 2014-15.
“The main shortcoming is the absence of an accurate measure of business-as-usual baseline revenue raised from comparable pre-existing compliance activities. The ATO also did not accurately monitor the additional expenses incurred in implementing compliance measures,” the report said.
“The lack of clear business-as-usual baseline levels to enable accurate attribution of revenue and expenses to compliance measures, along with inaccurate attribution, undermines the assurance to government that the agreed amount of additional revenue is actually being raised and that the additional resources provided are used as agreed.”
Notably, the report said that the lack of an accurate baseline resulted in the “significant overstatement of revenue” attributed to one relatively large measure.
The report also said the ATO’s monitoring of revenue and expenses associated with compliance measures could be improved.
“It has not had methodologies in place to accurately calculate additional revenue and expenses for all measures when they are implemented, and does not have a comprehensive set of performance indicators for both business-as-usual and measure-related compliance activity that covers revenue, operational information, estimated expenses and rates of return,” the report said.
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However, the ATO does not agree specifically with the point that it is “unclear” whether its revenue commitments have been met, arising from compliance measures over the period 2010-11 to 2014-15.
“Nevertheless, the ATO does agree that it could have better documented assumptions for estimating revenue. The ATO has agreed to provide more information in funding proposals about levels of pre-existing activity and ‘indirect’ revenue, where relevant,” the ATO said.
The ATO also acknowledged that there are some situations where the reporting of the outcomes of compliance measures could be made more consistent or improved.
“The ATO will not depart from the case-by-case approach it takes to the reporting of abnormal outcomes, but will prepare guidance on this topic,” it said.
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