In this section

• Purpose
• Program overview
• Strategic initiatives overview
  • Our progress in 2020–21
• Progress of our strategic objectives
  • Strategic objective: G1 Government
  • Strategic objective: G2 Government
  • Strategic objective: C1 Client
  • Strategic objective: C2 Client
  • Strategic objective: W1 Workforce
  • Strategic objective: O1 Operational
  • Strategic objective: O2 Operational
  • Strategic objective: F1 Financial
• Performance results overview
  • Performance results – program 1.1
  • Results analysis – program 1.1

Purpose

The ATO’s purpose is to contribute to the economic and social wellbeing of Australians by fostering willing participation in the tax and superannuation systems.

We have two aspirations for 2024:

• building trust and confidence
• being streamlined, integrated and data-driven.

Our purpose is underpinned by eight strategic objectives, as shown in the ATO corporate plan 2020–‍21. This year the ATO Executive endorsed eight priority areas for increased focus, identified as strategic initiatives in the corporate plan.

Program overview

The ATO program aligns with the ATO corporate plan 2020–21 and presents our performance and achievements in relation to the strategic objectives and strategic initiatives for 2020–21.

The strategic objectives are grouped into five perspectives: Government, Client, Workforce, Operational and Financial.

Following an overview of the strategic initiatives and progress for the year, a summary of outcomes, performance and analysis for each strategic objective is provided.

Strategic initiatives overview

The eight strategic initiatives introduced in the ATO corporate plan 2020–21 served as priority areas for 2020–21. They support our focus on the most transformational or significant activities to deliver on our strategic objectives, and fulfilling our aspirations for 2024.

Each of the eight strategic initiatives contribute to multiple strategic objectives, as shown in the diagram below, with the primary objective they contribute to highlighted.

How our initiatives interrelate with our objectives

Our progress in 2020–21

The first six of our strategic initiatives set out below demonstrate our ongoing commitment to transformation and are crucial to realising our 2024 aspirations. Our work on these initiatives in 2020–21 focused on undertaking foundational design work and the development of roadmaps, which positions these items well to further progress in 2021–22.

Focus on what matters most will simplify the way we work, streamline processes and improve our operations to ensure we act quickly and adjust to a changing environment. In 2020–21, we prioritised the key challenges that represent the biggest opportunities for the ATO, including:

• selecting 3–5 enterprise metrics to ensure we focus on what matters most for the ATO
• improving our definitions around client experience ownership and accountability
• understanding and improving end-to-end processes through building on the positive outcomes arising from the Better as Usual program
• increasing the agility of our staff to respond to new and shifting priorities.

Optimise interactions through self-service channels will modernise and streamline client interactions with the ATO. By creating better experiences, we aim to make self-service channels the preferred option for the majority of clients and their agents. In 2020–21 we developed a roadmap to provide a clear vision for our future service. It aims to optimise our services to be simple, helpful and respectful while solving key challenges to drive service evolution beyond 2024. Our new service strategy will see three directional shifts:

• ensure content guides traffic and builds confidence to self-serve
• close the gaps in the ATO’s digital self-service ecosystem
• drive transition and adoption of self-service.

Unlock our data potential is about driving improvements in our use of data, information and insights to deliver value for clients and stakeholders, and inform decision-making across everything we do. The Data and analytics strategic framework, developed in 2020–21, will position our future data and analytics capability to be data-driven, empower our people to leverage data and ensure we have the right infrastructure. Four emerging capability shifts for the future include:

• strengthen our data foundations
• transform the data and analytics experience
• evolve automation and artificial intelligence
• build our data and analytics organisation of the future.

Improve small business tax performance will ensure greater integrity in the tax and superannuation systems by levelling the playing field to ensure no one has an unfair advantage and making it easier for businesses to participate in the system. We conducted a series of interviews with small businesses, their advisors, and key enabling partners, to gain a better understanding of irritants. These workshops and our collaboration with existing consultative groups provided valuable insights enabling us to co-create potential solutions and address some of the core challenges faced by small businesses now and into the future.

Strengthen cybersecurity is focused on reducing the risk and impacts of cyberattacks, helping to maintain government and community trust and confidence in our management of the significant amount of digital data we hold. In 2020–21, we undertook a benchmark assessment of the ATO’s cyber-maturity against the National Institute of Science and Technology Cybersecurity Framework and have continued to focus on compliance with the Australian Cyber Security Centre Essential Eight. We developed the ATO’s Strengthen Cyber Roadmap, which outlines the global and organisational cyberthreat context in which we operate, including the tangible risks. It presents scaled options for cybersecurity investment through to 2024 and outlines opportunities for improvement into three core cybersecurity themes: conforming with requirements, maturing our capability and sustaining organisational health.

Embed new ways of working aims to empower the ATO workforce with the right culture, capability and staff experience. Informed by our changing operating environment, the insights we have gathered through pilots and surveys identified five focus areas to further optimise productivity, mobility, flexibility and agility. During 2020–21, we developed a surge workforce strategy to support different ways of mobilising and structuring our workforce. We are implementing an end-user workspace strategy, which includes updated tools and technology to support contemporary and flexible ways of working. Our wellbeing program has supported staff in managing fatigue through three campaigns: Going the Distance, Keeping Connected and Top it Up.

Deliver government stimulus measures was a significant focus for the ATO in 2020–21 as we continued efforts to support the community through the COVID-19 pandemic. We effectively and efficiently implemented and delivered new and extended government stimulus measures in line with government and community expectations, including JobKeeper Extension 1 and 2 and the JobMaker Hiring Credit. We also continued to deliver the Cash Flow Boost and Early Release of Super. We diverted staffing resources to enable payments to be processed in the shortest available time frames, while applying integrity and risk models designed specifically for the stimulus measures to ensure eligibility criteria were met.

For more details about our performance against this strategic initiative, see Strategic objective: G1 Government.

Establish the Commonwealth Business Registry Service will see us progressively establish the Australian Business Registry Services (ABRS) to simplify business registration and further unlock the economic and social value of business registry data for Australia. The ABRS will be a custodian of trusted business information and a world-class provider of associated services. In 2020–21, registry functions managed by the Australian Securities and Investments Commission (ASIC) moved to the ATO, marking a major milestone for the Modernising Business Registers program and merging the ATO's Australian Business Register with 31 business registers administered by ASIC.

For more details about our performance against this strategic initiative, see Strategic objective: C1 Client.

Strategic objective: G1 Government

Performance summary

The ATO aims to provide the community with confidence in our administration of the tax and superannuation systems that support the collection of the right tax at the right time, for the wellbeing of all Australians. We focus increasingly on approaches that help taxpayers to get things right up front, rather than requiring correction later and we balance this approach by taking firm action against those who deliberately do the wrong thing.

Of the eight performance measures for strategic objective G1, we fully met three targets, partially met two, and failed to meet three targets.

Supporting the community through the COVID-19 pandemic

A significant focus in 2020–21 was our continued efforts to support the community through the COVID-19 pandemic, including the diversion of resources to deliver stimulus measures and support impacted clients. We also adjusted our compliance approaches in line with government and community expectations.

We worked closely with Treasury to implement new and extended economic stimulus measures to help businesses recover, including JobKeeper Extension 1 and 2 and the JobMaker Hiring Credit. We also continued to deliver the Cash Flow Boost and Early Release of Super.

The government stimulus measures the ATO delivered over the course of the 2019–20 and 2020–‍21 financial years include:

• JobKeeper Payment scheme – $88.8 billion in payments made to 1.07 million entities; the measure was finalised on 28 March 2021
• JobMaker Hiring Credit – $6.6 million in payments made to around 2,050 entities; the measure is ongoing until 6 October 2022
• Early Release of Super – $37.8 billion of superannuation was approved for early release to 3.05 million individuals; the measure was finalised on 31 December 2020
• Cash Flow Boost – $35.7 billion in cash flow boost credits were assessed for around 820,000 businesses ($35.4 billion paid to 30 June 2021); the measure was finalised on 30 September 2020.

In addition to ensuring eligible participants received the benefit of stimulus measures promptly, another important aspect was acting decisively where taxpayers deliberately sought to claim stimulus they were not entitled to. We applied integrity and risk models, designed specifically for the stimulus measures to ensure that eligibility criteria were met.

Of total payments for JobKeeper, we identified overpayments of $470 million. Of these overpayments, $89 million was recovered as at 30 June 2021 from ATO compliance cases and $91 million was voluntarily disclosed and repaid. An additional $89 million is being pursued and approximately $180 million is not being pursued. Amounts recovered after 30 June 2021 will be included as total revenue effects in future years. Total revenue effects for 2020–21 also includes $274 million of ineligible claims made which were rejected prior to payment, as well as a projected $763 million of future claims that would have been made without previous ATO intervention. In total, through our compliance activities as at 30 June, we stopped, recovered or prevented around $1.1 billion in JobKeeper payments and reduced cash flow boost overpayments by around $97 million. We expedited, and where appropriate, funded litigation cases on JobKeeper and Cash Flow Boost in the Administrative Appeals Tribunal (AAT) and the Federal Court to get clarity on important aspects of these stimulus payments.

Ensuring integrity in the tax and superannuation systems

We continued to focus our compliance efforts on individuals and entities that present a risk to Australia’s tax and superannuation systems by intentionally doing the wrong thing.

Our taskforces enable us to focus on areas of significant risk, and achievements for this year include:

• The Tax Avoidance Taskforce exceeded its 2020–21 outcomes for planned liability and cash collections, raising $3.03 billion in tax liabilities and almost $1.3 billion in cash collections (apportioned figures).
• The Serious Financial Crime Taskforce raised approximately $121 million in liabilities and $145 million in cash collections. The taskforce also launched a public ‘Identikit’ to inform the community of the impacts of serious financial crime and educate them about the types of criminals they should be aware of.
• The Black Economy program raised $736.2 million in liabilities and an estimated $534.7 million in cash collections.
• The Phoenix Taskforce raised $157.2 million in liabilities and $68.5 million in cash collections.
• The Superannuation Guarantee Taskforce raised $49.4 million in liabilities.

During the year, we worked with clients across all markets to ensure the integrity of the tax system, including large public and multinational companies, privately owned and wealthy groups, small businesses, individuals, tax practitioners, and superannuation funds. For example, we:

• extended our program of work with the ‘Top 1,000’ companies to increase assurance that they are reporting the right amount of income tax and GST and to identify areas of risk for further action – we engaged with over 150 clients through the combined assurance reviews with a total business income of more than $120 billion
• continued and extended our work with the ‘Top 500’ and ‘Next 5,000’ largest and wealthiest private groups to increase assurance that they are reporting the right amount of income tax and GST, and taking further action where we identified areas of risk
• we pursued litigation cases – in the courts and the AAT – that are significant to the integrity of the tax system, including cases involving promoter penalties, freezing orders, and engagement in artificial schemes and egregious conduct to avoid the payment of tax
• continued our small business assurance programs and enhanced our analytics and validation checks, allowing more real-time messages for those using our online services to lodge activity statements, prompting them to self-correct and prevent inadvertent errors prior to lodgment
• expanded the data available in our pre-fill service to include reminders to taxpayers who earn foreign income, and increased reminders to those who invest in cryptocurrency
• ensured the pre-fill service was able to provide JobSeeker amounts to simplify the return process and increase accuracy of individual income tax returns being lodged (JobKeeper amounts paid to employees by their employer were also pre-filled as a part of our regular practice to pre-fill salary and wages)
• delivered the Superannuation Guarantee Amnesty project, which ran from 24 May 2018 to 7 September 2020, providing employers with a one-off chance to catch up on unpaid super
• published data on lost and unclaimed super for greater transparency of the information we hold and to help people locate superannuation money they may have lost track of
• worked closely with stakeholders, including businesses, professional tax associations and the superannuation industry, to implement a range of new superannuation rates and thresholds, including the superannuation guarantee rate, transfer balance cap threshold, and contribution caps.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis, starting with the first measure for G1: Confidence – Community confidence in the ATO.
• Return to the list of contents In this section.

Strategic objective: G2 Government

Performance summary

The tax and superannuation systems need to continually evolve to remain fit for purpose in underpinning Australia’s revenue base. They need to be easy to comply with, transparent in their operations and provide a seamless client experience.

The ATO uses insights from the data we hold and our understanding of our clients to provide advice to Treasury and government on how proposed policies will operate in practice. We apply technical expertise to contribute to the design of new measures, helping to achieve the policy intent while ensuring integrity in the system and making it easy for taxpayers to meet their obligations or claim their entitlements.

The ‘influence’ measure for strategic objective G2 achieved a rating of very good, meeting the target.

Designing for a better tax and superannuation system

Through analysis of revenue implications, administrative and compliance impacts, we provide input into policy and law design, and the development of legislation for new measures. In 2020–21, we contributed policy and legislative advice to two Federal Budgets and the Mid-year Economic and Fiscal Outlook (MYEFO) process, resulting in government announcements of 77 measures impacting the ATO and our clients.

We also share our analytical expertise with Treasury to assist in advice to government and the community and, in 2020–21, we contributed:

• policy costings
• tax data to help with the analysis of economic trends and impacts from stimulus measures
• revenue and expense forecasts, and data on the impact of JobKeeper on the community
• input to the Tax Benchmarks and Variation Statement published by Treasury.

Providing advice and guidance

The COVID-19 pandemic saw some individuals and businesses receive income types they had not received before, such as stimulus payments, income support payments, stand-down payments and redundancies. It also saw a large number of people entitled to different deductions, such as deductions for expenses as a result of working from home and expanded instant asset write-off for businesses.

In recognition of this, we provided additional help and guidance and undertook communication activities to help taxpayers understand how to treat income types, what they were entitled to claim, and how to easily claim entitlements. We used a range of channels to reach the community, including a new Tax essentials web page, communications through the media and social media, as well as public and private rulings. In 2020–21, there were 216,000 views of our Tax essentials page and we issued 1,045 social media posts, 44 public rulings and 3,977 private rulings.

We also continued our work to build and improve resources for primary and secondary school students about the purpose of the tax and superannuation systems and how the systems contribute to the wellbeing of all Australians. More than 20,000 users across 1,941 secondary schools are registered for our new Tax, Super + You website – to be released in 2021–22 – with 531 users across 365 schools registered on the Paying it forward website for primary schools.

More information about these resources is available at ato.gov.au.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis of the measure for G2: Influence – Government and Treasury perceptions of the ATO and the quality of our advice.
• Return to the list of contents In this section.

Strategic objective: C1 Client

Performance summary

We aim to improve the experience of our clients by interacting with them at the right time, providing certainty in our communication, and making appropriate adjustments for individual circumstances – including those impacted by COVID-19. We are enhancing our online services to meet the growing demand for digital interactions and expanding self-serve options that enable the community to easily manage their interactions at a time that suits them.

Of the two performance measures for strategic objective C1, we fully met both targets.

Supporting clients impacted by COVID-19

This year, we redesigned some of our work and diverted resources to assist clients through the COVID-19 pandemic by providing quicker access to refunds, deferral of lodgments and payments, and providing low-interest payment plans.

Across all of our client groups, we maintained our focus on communicating how to access stimulus measures, tailoring our response to their circumstances, and making it easy for them to comply with their obligations. For example:

• Recognising that the pandemic would result in many people having to work from home for the first time, we made it easier to claim deductions for working from home expenses, extending the ‘shortcut’ method for the 2020–21 income year. We also made dealing with new payment types easier for our clients by pre-filling information relating to JobSeeker into employees’ tax returns, and pre-filling JobKeeper that was passed onto employees by employers as a part of our regular practice to pre-fill salary and wages.
• We issued public advice and guidance to help taxpayers manage the tax implications of the ongoing COVID-19 pandemic, adopting practical and pragmatic approaches. This included guidance on the treatment of rent concessions for tenants and landlords, the residency implications for non-resident employees with unplanned presence in Australia as a result of international travel restrictions (including related guidance on employer obligations), and fringe benefits tax considerations for employers where employees’ work patterns had been impacted by COVID-19. We also provided timely guidance on the tax implications of State and Commonwealth government payments and assistance.
• We continued to demonstrate our commitment to supporting small businesses, ensuring all clients with in-progress audits were contacted, either directly or through their agents, and offered assistance. Our engagements were tailored and where clients advised us of COVID-19-related impacts, we offered support and additional time in consideration of their circumstances. Our key message was that help is always available to small businesses that need it and are willing to engage with us.
• We committed to swift resolution of disputes that arose from the coronavirus economic response packages by prioritising the resolution of stimulus objections. This ensured members of the community had certainty on their eligibility and information on alternative support available.
• For tax practitioners, we acknowledged the challenges they faced in managing their clients’ lodgment obligations in the context of accessing stimulus payments. We implemented a range of practical support options, including access to a tailored lodgment program, penalty relief for late lodgments, and the ability to assist their clients to enter into flexible payment plans online.
• We streamlined application processes to obtain excise permits and licences for the production of alcohol-based hand sanitiser; relaxed licensing requirements for the sale of takeaway alcoholic beverages; and deferred excise payment by petroleum and alcohol companies, consistent with deferrals of other taxes during COVID-19.

Given the significant impact of the pandemic on the community, we adjusted our debt collection approaches in three phases to enable clients to get back on track:

• Help and assist – focusing our interactions on understanding the client’s circumstances and providing the appropriate support
• Advice about future action – gradually reintroducing messages about potential future action for clients who continue not to engage
• Additional action – recommencing firmer and stronger actions where appropriate, having regard to the client’s circumstances.

Our approach is based on ‘knowing our clients’ and assisting them to get it right, every time.

Better as Usual

We continued our Better as Usual program, which focuses on improving the end-to-end client experience, recognising that a single person may be interacting with us at different stages in a process, or in different roles. In its second year, the program drove continuous, systemic and sustained improvements to our internal processes, enhancing both the client and staff experience.

We finalised reviews of over 50 ATO activities that have the highest client impact, and incorporated safeguards into processes to prevent unintended consequences to our clients. We also set up enduring review mechanisms to maintain oversight, especially when processes change, or new processes are developed.

Through increased engagement and reporting, our Complex Issues and Cases Program team brought additional visibility and objectivity to our most complex and contentious cases, ensuring we have a holistic and tailored approach to resolving issues for those cases that don’t fit neatly within our standard processes.

We continued to drive system enhancements, to improve outcomes for our staff and clients, increasing our visibility of the impacts of our action across all our interactions with clients. This year we also increased our emphasis on keeping good notes and records of evidence, to reduce rework and ensure that ‘downstream’ steps are efficient and effective for our clients and the ATO.

Having piloted our review approach, in 2021–22, we will focus on establishing an Enterprise Performance Improvement Centre to drive further improvements to our business processes.

Improving the online client experience

In 2020–21 there was a significant increase in client interactions with our online services – including income tax returns, early release of super applications, JobKeeper and Cash Flow Boost – and 1 July 2020 saw the highest number of online lodgments in our history, with 740,000 processed. We boosted our capacity to ensure clients could easily access our online services when they sought to, including during peak times.

In April 2021, we Iaunched Online services for business, our replacement for the Business Portal and electronic superannuation audit tool (eSAT). Following extensive consultation and testing with the business community and approved self-managed superannuation fund (SMSF) auditors, this contemporary and easy-to-use digital platform provides a secure channel for businesses to manage their tax and superannuation obligations. It can be accessed on multiple devices and introduces new features, including functionality for users to:

• organise a payment plan
• obtain copies of income tax returns
• view communication history
• use ’switch ABN’ to access all businesses a client manages with a single log in
• lodge auditor contravention reports (ACRs) and audit complete advices (ACAs), including bulk ACA lodgments through the secure mail channel.

Whole-of-government service delivery

The ATO is the lead delivery agency for the Modernising Business Registers program which will progressively bring together more than 30 ASIC registers and combine them with the Australian Business Register on a new single platform.

These modernised registry services will be provided through the Australian Business Registry Services (ABRS). The ABRS supports streamlined business registry interactions and maintains trusted registry data used to unlock social and economic value for the Australian community.

For more information on the ABRS, see Program 1.3 Australian Business Registry Services.

Single Touch Payroll enhancements

As at 30 June 2021, 782,000 employers are reporting through Single Touch Payroll (STP), covering 12.7 million employees. During Tax Time 2020, we received 17.4 million income statements from 719,000 employers on behalf of 12.3 million individuals, some with multiple employers.

This year we continued to improve STP by:

• strengthening STP data sharing with Services Australia to support more efficient administration of the social security system
• deploying a whole-of-government solution for agencies to automatically exchange data, resulting in improved client services.

STP Phase 2 reporting becomes mandatory from 1 January 2022 when the service will be expanded to include additional payroll information from employers. This expansion will reduce the reporting burden for employers who need to report employee information to multiple government agencies. It will also make it easier for people to claim their entitlements.

The ATO’s STP communications campaign was recognised through the 2020 Australian Marketing Institute Awards for Marketing Excellence, as ACT state winner in the category for ‘Integrated Marketing Communications Program’, demonstrating the effectiveness of our strategies to support Australian employers to transition to STP.

More information about STP is available at ato.gov.au/STP.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis, starting with the first measure for C1: Compliance cost – Adjusted median cost to individual taxpayers of managing their tax affairs
• Return to the list of contents In this section.

Strategic objective: C2 Client

Performance summary

The ATO works to maintain strong relationships with tax practitioners, digital service providers, relevant industries, other government agencies and international partners, recognising their roles in helping us to deliver efficient and effective tax and superannuation systems for all Australians. We also co-design policy changes and develop guidance with the APRA fund industry to ensure the effectiveness of superannuation initiatives.

The ‘working together’ measure for strategic objective C2, met the performance target with a result of 71%.

Engaging with tax practitioners

Our engagement programs for tax practitioners are designed to foster strong working relationships and help us understand tax practitioners’ needs and areas of concern. This enables us to make improvements and tailor our interactions and services to meet those needs.

Our supported lodgment program offers tailored support to registered tax agent and BAS agents (registered agents) where their practice has been affected by issues such as illness, loss of a key staff member, or COVID-19. We also undertook an extensive communications program to help tax practitioners understand stimulus measures and how their clients could access these measures, and how to treat the various types of payments received or expenses incurred as a result of the pandemic.

Following the release of Online services for agents in 2019, we continue to build contemporary solutions and digitise more of our outbound communications. Over 40% of registered agents are now using our communication preferencing service, enabling them to receive digital correspondence on behalf of their clients. Over one million pieces of correspondence have been delivered to registered agents digitally since the service was deployed in early 2020. In 2021–22, we will deliver work to allow digital service providers to build this functionality into their software, supporting agents to manage their client communication through their natural systems.

Working with the Tax Practitioners Board

Our strategy to address high-risk registered agents includes working with the Tax Practitioners Board (TPB) to share intelligence early and to ensure that behaviours of the highest risk agents are addressed. During 2020–21, we shared over 770 referrals (both evidence-based and intelligence-based) and recorded almost 1,700 information exchanges.

Tax practitioners played an important role in supporting their clients to access stimulus measures. When the measures were implemented, the ATO identified a risk that a small number of tax practitioners might seek to misuse or inappropriately access stimulus payments on behalf of their clients or for themselves. We worked directly with 457 tax practitioners identified as higher risk and undertook reviews of their clients’ stimulus claims. In some rare cases, tax practitioners were seeking to manipulate their clients’ or their own position to gain access to or increase their entitlements. In reviewing the effectiveness of this strategy, it was identified that claims made by these tax practitioners reduced following our engagement. Where concerning behaviour was uncovered, these matters were referred to the TPB.

Digital service providers

We partner with, and provide valuable support to a growing number of digital partners, including digital service providers (DSPs), other government agencies, third parties, and industry representatives. We co-design future digital solutions with our partners to improve the tax and superannuation experience for the community throughout the various stages of software development.

We understand the demands on industry and engage early with DSPs to ensure time frames and impacts are considered when we are designing tax and superannuation solutions. As part of this, our Digital Partnership Office provides critical and specialised support to industry to ensure they can successfully adopt, develop and consume ATO digital services and ATO-maintained ‘whole-of-government’ services.

The work we undertake with our digital partners and their representatives serves as a key element of our success in building better tools for clients, whether they deal with us via ATO online services or through commercial software.

We collaborate with our partners on the design of future services and to improve the operation of the tax and superannuation systems. Comprehensive support is also provided to DSPs by:

• providing ‘on-boarding’ and technical support throughout their full software development lifecycle – design, build, test, certify and live production incident management
• implementing support for new projects and digital services
• sharing important research and intelligence with our partners to inform the strategic direction of our digital offerings for the community
• informing about upcoming consultations and engagements (many of which the ATO leads and facilitates)
• supporting the broader industry via presenting important information at industry events.

This year we supported over 550 DSPs and conducted over 100 consultation exercises to collaborate and co-design new services, including JobKeeper Payment Scheme extension, JobMaker Hiring Credit scheme, Modernising Business Registers, STP Phase 2, Digital Services Gateway, Tax Time 2021 and SMSF Rollover version 3.

We also consulted with over 50 DSPs to undertake a review of the DSP Operational Security Framework, resulting in an improvement to our security requirements and reducing the risk of exposure of ATO client data through application programming interfaces. As part of this, we established a set of minimum requirements for tax practitioners to uplift client verification processes.

Our proposed future changes (including the introduction of a ‘Strategic Partner’ model) will ensure we are well placed to continue supporting and engaging DSPs, and to work together on our future service offerings.

International partnerships

We continue to build strong relationships with international tax administrators through our membership of the Organisation for Economic Co-operation and Development (OECD). This includes the Commissioner of Taxation’s role as a Vice Chair of the OECD’s Forum on Tax Administration (FTA), and active participation in the Forum of Heads of Tax Crime Investigation and Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC) initiative. The ATO continues to work closely with Treasury and the OECD on tax challenges arising from the digitalisation of the economy.

The 13th FTA Plenary Meeting was held virtually in December 2020 and brought together 53 advanced and emerging tax administrations from across the globe. As a result, the heads of tax administration agreed on global actions to meet the current economic and administrative challenges; including an ambitious agenda for the next year focused on enhancing resilience, tax certainty and the digital transformation of tax administrations.

The ATO is also a member of the Joint Chiefs of Global Tax Enforcement (J5) alliance, which continues to support the development of a shared understanding and approach to addressing serious financial crime internationally. In February 2021, the J5 met to discuss priority areas, including:

• global tax crime initiatives
• enablers of offshore tax crime and associated financial crimes
• abuses of virtual currencies
• advances in data platforms.

The annual J5 Challenge was held in March 2021, with the ATO, AUSTRAC and Australian Federal Police (AFP) participating on behalf of Australia. This year the event focused on identifying new and innovative ways to investigate and treat cybercrime threats in the cryptocurrency and FINtech (financial technology) sectors. This international collaboration is necessary to understand and respond to threats, allowing J5 agencies to leverage each other’s information, powers and capabilities.

This year, the Criminal Investigation Division of the US Internal Revenue Service (IRS) seconded an officer to the ATO-led Serious Financial Crime Taskforce, with arrangements including liaison with the Australian Crime Intelligence Commission (ACIC) and AFP. This secondment demonstrates the strength of our collaboration and the relationship between Australia and the US through the J5.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis of the measure for C2: Working together – Partner perceptions of how the ATO is working with them to administer the tax and superannuation system.
• Return to the list of contents In this section.

Strategic objective: W1 Workforce

Performance summary

We provide staff with the right tools, communication and support to enable them to focus on delivering for the community. Our workforce strategies aim to create a positive culture that is underpinned by integrity and is agile and responsive to the changing environment. The high engagement results we achieved in the Australian Public Service (APS) Employee Census 2021 show that our efforts have been effective. We also maintained our overall wellbeing index score, indicating our workforce support strategies served our people well through a uniquely challenging time.

Of the four performance measures for strategic objective W1, all targets were fully met.

Supporting staff to adapt to changing ways of working

A focus for 2020–21 was supporting our workforce to work in responsive and contemporary ways, ensuring they continued to deliver for the community whilst adapting to changes in our environment due to the COVID-19 pandemic. Our approach to supporting our staff through these changes has ensured that we were able to maintain record levels of employee engagement and perceptions of wellbeing.

In 2020–21 we:

• equipped our workforce to work more flexibly and to move to different work, as community needs and our priorities changed
• supported staff to undertake critical work for other government agencies as part of the APS Surge Reserve workforce
• piloted a hybrid mix of working from the home and office in locations where COVID-19 restrictions had eased and staff were able to return to the office
• placed emphasis on mental health, including introducing a new resource hub with practical tools and tips for employees and managers
• helped staff to stay connected by supporting our leaders to manage remote working effectively, and by keeping them informed through targeted, timely, and clear communication
• introduced new tools to assist remote working and virtual collaboration, including improving call and video functionality from ATO devices
• partnered with the Department of Home Affairs to lead a project on behalf of the APS Chief Operating Officers (COO) Committee to form a position on how the APS should develop work arrangements and workspaces into the future.

Our efforts to provide a safe and healthy work environment through the COVID-19 crisis were recognised in the 2021 Comcare National Work Health and Safety Awards, as joint winner of the Prevention Award, for demonstrating outstanding success in ’Creating a safer workplace together’.

Driving positive cultural change

To ensure our ongoing ability to deliver on the needs and expectations of government and the community we continued to strengthen our culture by shaping everyday practices that align with our cultural traits. Our continued focus will guide our workforce to achieve a culture that builds trust and confidence through improving the client and staff experience.

Integrity underpins our culture, and is at the forefront of everything we do. In March 2021, we implemented a new ‘Speak Up’ initiative to help empower staff to raise concerns and report potential integrity issues through a simple process.

We continue to strive towards creating a workplace culture where diversity and inclusion are valued and nurtured. The ATO was recognised for this important work through the Australian Workplace Equality Index Awards 2021, with ‘Gold Employer’ status for the fourth time.

Transforming our workforce capability

Workforce capability is fundamental to positioning the ATO and APS to service the community. Building on the recommendations of the APS Review, the Australian Public Service Commission (APSC) established a number of APS professional stream strategies. This approach has been designed to increase capability in critical disciplines and functional areas. The APS Data Professional Stream was launched in September 2020, following the Digital Professional Stream and the Human Resources (HR) Professional Stream during 2019–20. ATO Chief Operating Officer Jacqui Curtis leads the HR Professional Stream and the building of HR capability across the APS.

Underpinned by our 2024 Workforce strategy and Capability framework, the ATO has adopted a professional stream approach, which is aligned to the APS workforce initiatives. This approach provides guidance and strategic direction on workforce capability strategies across ten ATO professional streams and helps to:

• identify capability gaps and requirements
• target capability investment
• shape tailored career and learning pathways for staff in each professional stream.

To support our professional streams and build a talent pipeline that positions us to continue serving the community into the future, in 2020–21 we:

• conducted a successful pilot of a new Indigenous entry level development program, ‘Jumpstart’
• engaged the largest ATO graduate intake of over 440 graduates in February 2021
• delivered the ATO’s flagship talent development programs to 88 senior leaders at the senior executive service (SES) and executive level (EL) 2 classifications
• delivered a refreshed and contemporary mandatory training package ensuring our staff understand their obligations in relation to safety, security and diversity
• piloted a suite of new courses that provide staff with micro-credentials in key areas of development, including data literacy, leadership and management
• delivered a new cybersecurity training package to increase awareness of the key role that ATO leaders play in protecting our data and systems
• delivered dedicated COVID-safe workplace support – providing guidance about self-care and safety and management when working remotely and in the office
• conducted targeted programs and staff engagement campaigns to assist staff to maintain their wellbeing, engagement and resilience through the pandemic.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis, starting with the first measure for W1: Culture – Level of employee engagement.
• Return to the list of contents In this section.

Strategic objective: O1 Operational

Performance summary

Investment in our data and analytics capability is critical to achieve our 2024 aspiration to be data-‍driven, streamlined and integrated. The ATO holds and has access to a wealth of data which we use to make it easier for people to comply with their obligations, and hard not to.

Our Unlock Data Potential strategic initiative is focused on improving the way we collect, manage, share and use data, to build confidence and drive actions that maximise value for the ATO and the community. To help us achieve this, we are strengthening our infrastructure to ensure the right data is available for our staff and clients, that we have the right tools and capabilities to understand and use the data in innovative ways, while ensuring the use of our data is ethical and soundly governed.

The measure for strategic objective O1 fully met the performance target.

Delivering high quality services

Data and analytics enable us to engage early with clients to help them get things right from the start and to identify those who are not doing the right thing. In 2020–21, we used our data and analytics technology to pre-fill over 85 million pieces of data, including information relating to COVID-19 support measures for employees. We also:

• issued 97% of JobKeeper payments within four days with the help of online eligibility checks
• made over 160 data exchanges with federal and state government agencies to support their response to COVID-19
• validated over 100 data files to help financial institutions consider refinancing loan applications from small businesses as part of the COVID-19 Banking – Bridging Finance JobKeeper Enrolment Data Matching legislated work program
• prevented over 240,000 ineligible entities from receiving cash flow boost credits using our system-based checks
• provided over 360,000 real-time prompts to taxpayers to check amounts in their 2019–20 income tax returns, resulting in an estimated $41 million revenue protected, as well as saving those taxpayers from subsequent compliance action and the risk of penalties
• sent over 140,000 nudge messages to clients to consider the tax consequences of their cryptocurrency sales.

Improving data and analytics capability

We continued to improve the capability of our staff and provided tools for them to better access, analyse and use data. This year we:

• delivered CbC Interact, a tool that makes unstructured data from country-by-country (CbC) reporting statements discoverable, accessible and usable for staff – this has expanded the data available for analytics and reduced manual effort in analysing the information
• successfully piloted tertiary-level data literacy micro-credentials, with 103 staff receiving credits towards a graduate certificate program.

We also actively participate in the APS Data Professional Stream. The stream will lift the capability of the APS workforce to generate deeper insights from data to inform decision-making in policy development, program management and service delivery. We are the agency lead for the data roles initiative for this stream, which involves reviewing and refreshing the data and analytics job profiles.

Improving data sharing governance

We take an active role in data sharing across all levels of government. For example, we provided data on Single Touch Payroll and stimulus measures to the Department of Treasury and the Australian Bureau of Statistics to provide broader insights into the economic impacts of COVID-19. We also provided data to Services Australia enabling them to deliver services to the community and ensure appropriate access to COVID-19 related financial assistance.

We are collecting more data than ever before, and understand the Australian community continues to be concerned about how large organisations use, manage, draw insights from and share their data. To help maintain community trust and confidence, in June 2021 we published six ATO data ethics principles. These principles will guide how we conduct data and analytics activities and share data with other agencies. The data ethics principles are included in the ‘Safe, secure and inclusive’ mandatory training for staff, which is refreshed annually.

More information about how we use data and analytics is available at ato.gov.au/dna.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis of the measure for O1: Tax returns – Proportion of pre-filled data items unchanged.
• Return to the list of contents In this section.

Strategic objective: O2 Operational

Performance summary

Meeting community expectations that our systems will be secure and available when required is now more important than ever. We have been focused on investing in secure infrastructure, making more of our services available digitally, and boosting capacity amidst unprecedented demands through our administration of the economic stimulus programs.

The ‘availability’ measure fully met the performance target.

Designing systems and digital services to meet increasing demands

In 2020–21, we increased capacity in our systems to meet the expected surge in demand for our services. This helped to ensure those already facing financial hardship and many other challenges, could quickly and easily access economic stimulus and any tax refunds they were entitled to.

On the first day of Tax Time 2020, we processed more than 740,000 lodgments received via our online service channels (including income tax returns, early release of super, JobKeeper and Cash Flow Boost) – a remarkable increase of more than seven times the 100,000 lodgments processed on the same day in the previous year.

Our Optimising Interactions strategic initiative is focused on creating better services and making self‑service channels the preferred option for the majority of our clients and their agents. This year, we invested in optimising our online self-help content to make it easier to access via search engines and worked with Services Australia to encourage the use of ATO self-service channels. This included:

• promoting the ATO’s online calculators via the myGov digital assistant
• directing clients to the ATO website and online tools from the Services Australia website
• ensuring tools and calculators are easily visible on the ATO website.

More information about self-help services is available at ato.gov.au.

Providing secure and integrated online services

In 2020–21 we continued to invest in myGovID, providing online users with an easy and secure method of proving their identity online and helping them to better protect their identity and data. We expanded client access to myGovID by including Australian citizenship certificates and ImmiCards as accepted identity documents, enabling clients to achieve a greater online identity strength.

Other improvements included renewing the myGovID credential and making accessibility improvements to support screen readers in iOS and Android.

The Digital Identity program has been a critical enabler to support individuals and businesses to access a range of government online services and stimulus measures. By the end of 2020–21, there were:

• 3.5 million downloads of myGovID
• 2.7 million myGovID accounts created
• 1.3 million unique Australian business numbers (ABNs) linked in RAM
• 1.9 million ABN authorisations established in RAM.

Investing in cybersecurity

We continue to invest in a multilayered cyber-defence capability that ensures adherence to privacy legislation, maintains data integrity, and promotes our vision of building community trust and confidence. This year we deployed Secure Internet Gateway (SIG), a security system that controls access into and out of the ATO via the internet, protecting our systems from malicious programs and viruses.

The ATO’s Cyber Resilience program provides greater protection of our client data from breaches and cyberthreats. In August 2020, the government launched Australia’s Cyber Security Strategy 2020 – to sharpen focus on protecting government networks from the growing threat of malicious cyber-activity. A Cyber Hub Pilot is planned for 2021–22. The ATO has established connections with the three agencies involved in the pilot (Department of Home Affairs, Department of Defence and Services Australia) – and will use the insights and learnings to help shape and inform our future transition to the Hub’s model.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis of the measure for O2: Availability – Key digital systems availability.
• Return to the list of contents In this section.

Strategic objective: F1 Financial

Performance summary

We continue to drive operational excellence through considered investment decisions and strategies intended to ensure our enterprise systems and practices evolve with technological advancements. This supports our ability to meet client expectations in a cost-effective way and deliver on our priorities for the community on time and within budget.

Of the two performance measures for strategic objective F1, we fully met both targets.

Improvements through innovation and change

Innovation is recognised as a core skill across the ATO and this year’s theme – ‘delivering differently’ reflected our outcomes-focused response to the ongoing COVID-19 environment. As part of our ‘Innovation month’ initiative, we released an innovation skills companion – a centralised resource for staff to further develop their knowledge and skills in how to be innovative and make improvements.

We foster a continual improvement mindset, looking for ways to eliminate irritants in our systems and processes. In 2020–21, we implemented Identity Manager, which automates staff access checks and helps to assure the integrity of ATO systems. Identity Manager also improves the staff experience by providing close to real-time updates, and notifications for managers to review accesses.

Our ‘Focus on what matters most’ initiative is about ensuring we work on the highest value activities. In 2020–21, this program focused on identifying ‘challenge areas’. Work has commenced to address the challenges and will be a focus for 2021–22. This work includes:

• creating and embedding a small set of enterprise metrics with ambitious targets
• developing an Enterprise Performance Improvement Centre to drive greater effectiveness and efficiency
• developing a new measurement system to capture work and activities on an end-to-end basis
• reviewing key accountabilities for delivering client outcomes.

Developing our strategic procurement capability

In December 2020, the ATO received a Bronze award in the ‘Building Entity Capability’ category of the 2020 Commonwealth Procurement Awards for Excellence, recognising our work in developing procurement and contract management training programs that are readily accessible, fit‑for‑purpose and tailored to staff needs.

We continue to develop these programs and invest in our strategic procurement capability by using a blend of internal and external solutions to remain up to date with policy and legislative requirements and industry best practices. This reflects our commitment to delivering contemporary procurement outcomes and maintaining the integrity of our processes.

Financial management in a dynamic environment

The ATO maintained strong fiscal discipline throughout the year and managed resources within budget during challenging circumstances.

We supported the government’s stimulus initiatives in response to the COVID-19 pandemic through ramped-up recruitment and expenditure on our contingent workforce, while redeploying some existing experienced staff to deliver for the community. This approach provided:

• greater flexibility in capacity and extended working hours to support the community
• national distribution of the workforce across our various locations
• access to newly trained employees to manage workload pressures.

We continued to focus on supporting investment in change to underpin the ATO’s 2024 Strategy, government initiatives and our business as usual work. This included:

• access to specialised capabilities required to deliver on new government initiatives, including stimulus measures, the data centre relocation and Modernising Business Registers
• funding for change investment, governed through the ATO’s Strategy and Integration Committee with appropriate planning, project management and benefits realisation
• centralised financial management and governance through the ATO’s Resource and Investment Committee.

More information and navigation

• See Performance results overview for a summary of Performance results – program 1.1 and results analysis, starting with the first measure for F1: Budget – ATO manages its operating budget to balance.
• Return to the list of contents In this section.

Performance results overview

The ATO has 20 measures for Program 1.1 to demonstrate how well we are achieving our purpose. These are set out in the Australian Taxation Office Budget Statements in the Treasury Portfolio Budget Statement (PBS), and in the ATO corporate plan 2020–21.

Our results for 2020–21 reflect a balanced performance in a challenging year where our focus was rightly on supporting the Australian community. This resulted in some performance targets for more traditional compliance programs not being met while we redirected our efforts to delivering the government’s stimulus package and ensuring quality services to the community throughout Tax Time 2020.

The performance targets for ATO measures were fully achieved for 15 measures, substantially achieved for two measures, and not achieved for three.

In 2021–22, we will build on the progress we have made this year, continuing to support Australia’s economic recovery, serving our clients through these difficult times, and administering the tax and superannuation systems for the benefit of all Australians.

The intention of the annual performance statement is to report on the performance criteria included in the PBS and corporate plan to accurately reflect the performance of the ATO in achieving its purpose. In considering our overall assessment of fostering willing participation we look at:

• the complexity of the tax and superannuation environment and how our activities influence the behaviour of clients in meeting their obligations
• the interrelated nature of performance criteria – results should be viewed as a suite of indicators, rather than in isolation
• the use of estimates for some criteria.

It is also important to look at trends in the results over time, both in absolute terms and relative to the performance target for the relevant year. We assess our performance targets annually to determine where existing results are expected to be maintained and where future performance is expected to be stronger – as well as where targets may need to be revised to better reflect the current environment. We will continue to monitor and assess performance as we build on the outcomes achieved to date.

Performance results – program 1.1

Our performance criteria are set out on pages 196–200 of the Australian Taxation Office Budget Statements (in the Treasury PBS), and pages 5 and 14–15 of the ATO corporate plan 2020–21.

[Additional notes for the Transparency Portal]

(f) For past year information on Correct reporting, see:

- Tax gap estimates in Part 3 of our 2018–19 report

- Tax performance in Part 3 of our 2019–20 report.

(g) For detailed current-year information on Correct reporting, see Tax performance in part 3 of this report.

(h) For past year information on Tax assured, see:

- Tax assured in Part 3 of our 2018–19 report

- Tax assured in Part 3 of our 2019–20 report.

(i) For detailed current-year information on Tax assured, see Tax assured in Part 3 of this report.

Confidence – Community confidence in the ATO

Community confidence in the ATO was tracking above target throughout the 2020–21 financial year.

In the first quarter, confidence was at its highest ever point of 70/100, reflecting our ability to deliver COVID-19 stimulus packages, while maintaining the quality of the tax and superannuation systems. The results reduced slightly over the next three quarters to 67/100 for quarter four.

The overall confidence score for 2020–21 was 68/100, which is higher than the 2019–20 score of 66/100, and above the target of 65/100.

Companies

This measure compares the number of companies registered by the ATO to the number of companies registered by the Australian Securities and Investments Commission (ASIC).

Not all companies that are registered with ASIC have taxation and reporting requirements, due to the nature of their corporate structure or if they are not yet operational. Therefore, the proportion is always expected to be well below 100%. The result remains fairly stable this year, with no significant change when compared to 2019–20. This is expected, as the ATO ASIC Registered Company client population continues to trend in line with Active Company Registrations data direct from the ASIC website.

Individuals

This measure compares active Individual clients (aged 15–64) in the ATO Client Register, to the Australian Bureau of Statistics (ABS) Estimated Resident population within the same age group.

The trends in registration of individuals are closely aligned to population growth.

The proportion remains fairly stable, with no significant change over the previous 12 months. The proportion is always expected to remain above 100% for the following reasons:

• The ATO’s definition of a ‘resident’ captures a greater number of people than the ABS estimated ‘resident’ population, because the duration of time spent in Australia to be considered a resident by the ATO is shorter than that required for the ABS definition.
• The ATO currently has difficulties identifying and deactivating tax file numbers (TFNs) for expatriates, resulting in unused TFNs within the system. This is due to the ATO not currently receiving information relating to expatriates exiting the country.

Activity statements

On-time lodgment performance for 2020–21 activity statements due at 30 June 2021 was 71.0%. This is 3.6 percentage points below the 2019–20 end-of-year result and 7 percentage points below the end-of-year target of 78%.

Although the number of activity statements lodged has been increasing steadily, the on-time lodgment rate has declined due to the number of entities that are still expected to lodge. We are working to identify these entities to ensure our lodgment on time measure is reflective of only those required to lodge.

We are also continuing to address outstanding activity statements and seeking to influence on-time lodgment through the GST compliance program.

Income tax returns

On-time lodgment performance for 2019–20 income tax returns finished the year at 83.3%. This is 0.3 percentage points above the end-of-year target of 83%.

The majority of clients are engaged and compliant with their income tax lodgment obligations. There has been a trend of gradual improvement in the number of income tax returns lodged on time over the last few years, which has been driven by ongoing improvements in end-to-end strategies, including tax time messages, an increase in the quantity and timeliness of pre-fill data, and tailored client engagement designed to encourage a change in lodgment behaviour. There has also been an increase in the proportion of individuals lodging before the due date to access the low and middle income tax offset.

Payment – Proportion of liabilities paid on time by value

At 30 June 2021 results show the proportion of liabilities paid on time by value was 88.0%, which is 0.7 percentage points lower than the same time last year. This decrease in performance is reflective of the broader economic environment, which continues to be impacted by the COVID-19 pandemic. However, this result met the target of 88% indicating the majority of the community who have the capacity to pay, continue to meet their obligations on time.

Correct reporting – Tax gap as a proportion of revenue

For 2018–19, we estimate the overall net tax gap to be 7.3%, or $33.5 billion, meaning the ATO received more than 92% of tax revenue it expected to collect, the bulk of which was collected voluntarily. This result is in line with our expectations.

We are also publishing the four-year trend as a part of our ongoing commitment to provide more transparency into the operation of the tax and superannuation systems. The net tax gap is trending downwards over this four-year period, even with the slight increase in the latest year.

For tax gaps, we always caution against analysing year-to-year changes, but instead focus on medium- and longer-term trends as more meaningful indicators of the overall performance, and therefore health, of the tax and superannuation systems.

This year’s gap program focuses on the 2018–19 year, so the impact of COVID-19 will be more evident next year. This year’s gap program has been impacted by COVID-19 indirectly. For example, the small business income tax gap estimate is based on a random enquiry program. The estimate is a preliminary one prepared from a smaller sample size due to the impacts of COVID-19 on our audit program leading to lower confidence. As such, this is a preliminary estimate that will be updated in 2021–22 that will be calculated from a larger sample size.

For more information, refer to Tax gap estimates.

Debt – Ratio of collectable debt to net tax collections

At 30 June 2021, the ratio of collectable debt to net tax collections was 8.3%. This is an increase from the June 2020 result of 6.7%. The change in performance is reflective of the broader economic environment as a result of the COVID-19 pandemic.

Total revenue effects – Tax revenue from all compliance activities

The total revenue effects measure is an estimate of the additional tax revenue that comes from our client engagement activities and is a combination of audit yield and wider revenue effects. In 2020–‍21, total revenue effects was expanded to also include the reduction and collection of overpayments from administered stimulus programs.

Total revenue effects continued to be affected this year by a range of factors relating to COVID-‍19, including taxpayers’ ability to pay, our cautious approach to compliance, applying penalties and interest, debt recovery, and our focus on supporting the Australian community in delivering the government’s stimulus measures. In 2020–21, total revenue effects was $11.5 billion against a performance target of $15 billion.

For more information, refer to Total revenue effects.

Tax assured – Proportion of the tax base where the ATO has justified trust that tax paid is correct based on the proportion of income, deductions and tax offsets assured

For the 2018–19 tax year, we estimate 45.5% of the total tax reported to be assured. While this is a slight decline from the previous year, it is tolerable. It can be explained by a change in our assurance approaches for clients we engage with directly, including improvements in estimating how much GST we are assured is correctly reported. Using the previous method would have resulted in us assuring 46.6% of the 2018–19 tax base.

When changes are made that have a material affect on tax assured, we will explain this in the annual report and/or supporting web content.

In most cases, we can only assure tax reported by taxpayers once they have lodged and we have completed our data matching and one-to-one engagements. Due to this lag effect, our estimate for tax assured is for the 2018–19 tax year.

Further, in practice, we cannot gather third-party data or other evidence to compare against all tax returns. As such, our tax assured estimates will always be lower than the actual amount of tax that is correctly reported.

Any impacts on our assurance of tax reported from the bushfires and COVID-19 will materialise when we report on the 2019–20 tax year.

For more information, refer to Tax assured.

Influence – Government and Treasury perceptions of the ATO and the quality of our advice

In 2020–21, the ATO and Treasury continued to work together well with the relationship being highly effective for both agencies. Throughout 2021, we continued to work closely with Treasury on the design and implementation of a suite of measures in response to the COVID-19 pandemic. This included the rapid design and implementation of stimulus measures such as JobKeeper 2.0, and Budget 2020 measures such as loss carry back and temporary full expensing.

We also supported Treasury and the government by providing increased data, analysis and advice on revenue collections and the COVID-19 measures. This information also assisted other government agencies. The quality and timeliness of our analysis and advice elicited strong positive feedback from our government stakeholders.

During the year, we undertook quality assurance that proposed draft law can be interpreted and administered consistently with the policy intent. We continue to meet Treasury and government expectations, with the timeliness and quality of our advice on the administration of the tax and superannuation system in relation to new measures. Treasury provided positive feedback on the ATO’s contribution to completed measures.

Our budget process and working with Treasury on the development of new policy meant we were able to support the design of 77 measures impacting the ATO. Our advice supported the government’s focus to rebuild the economy with reforms to help businesses and individuals, strengthen the government’s digital economy framework and the superannuation system. This work reflects the government’s confidence in the ATO to deliver on its priorities.

Our Treasury secondment program continued to be important in developing capability for both agencies, as well as fostering collaboration and a stronger working relationship.

Compliance cost – Adjusted median cost to individual taxpayers of managing their tax affairs

This measure shows any movement in the cost to individual taxpayers of managing their tax affairs.

The adjusted¹ median cost of managing tax affairs for 2019–20 income tax returns decreased by 3.0% compared to the previous year² and the performance target is considered to be fully met.

Taxpayers who do not report an amount at the relevant label in the tax return are not captured in this calculation. However, over recent years, the ratio of taxpayers claiming cost of managing tax affairs to the individual taxpayer lodging population has been declining.

The cost of managing tax affairs includes the costs of preparing and lodging tax returns and activity statements, fees paid to tax advisers, and the costs of tax reference material. While external market forces can influence these, our strategies for making it easier to comply through the provision of better guidance and advice and contemporary and digital services also influence this trend.

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Footnotes

¹ AWOTE – average weekly ordinary time earnings (for full-time adults) – is used to adjust these costs.

² Calculation of median cost changed in 2020–21 to include only the ‘Other expenses incurred in managing tax affairs’ component of the relevant label in the income tax return. In previous years, the calculation additionally incorporated interest charged by the ATO, as well as litigation costs.

Digital – Proportion of inbound transactions received digitally for key services

In 2020–21, 94% of inbound transactions were received digitally for key services, an increase of 3 percentage points on the previous year.

Online lodgment of the taxable payments annual report (TPAR) increased by 19 percentage points over the same period, due to flow-through effects of the TPAR online form introduced in June 2019.

Online payment arrangements continue to increase, and this year’s result is 4 percentage points higher than 2019–20.

Significant drops in client-initiated role cancellations were experienced from July 2020 as a result of declining economic activity due to COVID-19. The year-on-year drop of approximately 22% peaked in early 2021. Role cancellation rates had returned to usual levels by June 2021.

Working together – Partner perceptions of how the ATO is working with them to administer the tax and superannuation system

For 2020–21, the overall result for partner perceptions of how the ATO is working together with them to administer the tax and superannuation systems was 71/100. This is an increase of 4 points on the previous year and achieves the target of equal to or better than the 2018–19 result.

This measure captures perceptions from tax professionals, APRA-regulated superannuation entities and DSPs. Perceptions across DSPs and APRA funds have significantly improved again this year.

The improved result reflects our continued investment in enhancing our partner relationships, including:

• co-designing the early release of super (ERS) policy response to COVID-19 with the APRA fund industry – over three-quarters of industry participants involved were satisfied with the level of engagement and consultation
• engaging with APRA funds to produce guidance about existing initiatives such as re-uniting superannuation and the implementation of SuperStream rollovers version 3
• engaging with DSPs to provide support around new initiatives, responses to economic stimulus measures, product roadmaps, industry perspectives and challenges, and knowledge sharing – to collectively deliver benefits to the community
• supporting tax practitioners with their lodgment requirements through deferrals and a flexible, empathetic approach as part of our ongoing natural disaster and COVID-19 response, and providing ongoing assistance with Online services for agents
• keeping tax practitioners and their representative bodies informed through the Tax Practitioner Steering Group, the Key Agent Program, speaking events and dedicated tax practitioner communications.

Culture – Level of employee engagement

The ATO’s strong culture positioned us well to meet the challenges of 2020–21 and to demonstrate our cultural traits – client focused, united and connected, empowered and trusted, future oriented, and passionate and committed.

Results of the 2021 Australian Public Service (APS) Census highlight that our employees continue to be highly engaged (76%). This remains above the average for large and extra-large APS agencies; and above the average overall, reflecting the effectiveness of our support strategies for staff through a challenging time.

Our continued investment in strengthening the ATO’s culture is evident in our sustained high engagement results over the last few years. Our next phase of transformation will focus on the elements of our culture that still challenge us and hold us back from truly living our cultural traits.

Gender equality – Female representation in the senior executive service (SES) and executive level (EL) classification levels

As at 30 June 2021, female representation at the SES classifications was 46.9%, an increase of 0.3 percentage points from the previous year and continuing a positive long-term trend.

The percentage of female staff at the EL classifications increased from 50.2% to 50.9%, which reflects the ATO’s ongoing commitment to achieving and sustaining gender equality.

With consideration of normal staffing fluctuations, the end-of-year targets for female representation at both the SES and EL classifications are considered to be met.

Indigenous representation – Proportion of ATO staff who identify as Indigenous

The ATO is committed to the engagement, development and retention of Aboriginal and Torres Strait Islander employees. As at June 2021, the proportion of our ongoing staff identifying as Aboriginal and Torres Strait Islander was 2.9%, above the target of 2.5%.

The ATO delivered employment strategies to support the development of our Aboriginal and Torres Strait Islander staff through affirmative measures recruitment and Indigenous secondment programs. We are committed to increasing Aboriginal and Torres Strait Islander representation in our ongoing workforce to 3.0% in 2021–22 and supporting inclusion within and outside of the ATO.

Staff experience – Employee perceptions around whether they have access to the tools and resources needed to perform well

Our result of 72% obtained from the 2021 APS Census is 9 percentage points higher than the average for large agencies and 7 percentage points above that for extra-large agencies and achieves our target. This is slightly below the 2019–20 result of 73% from the delayed 2020 APS Census conducted in November 2020; however, this is consistent with broader APS trends.

With the impacts of COVID-19 through 2020–21, the ATO continued to support large cohorts of staff to work remotely, while supporting others to return to the office.

This result reflects our continued work to support the remote desktop application (RDA) and virtual desktop platform (VDP), provision of equipment (such as laptops and monitors) to enable staff to work from home, and improvements to communication and collaboration tools available to staff working in the office and remotely.

Tax returns – Proportion of pre-filled data items unchanged

This year’s result of 89.5% for pre-filled data items unchanged is an increase of 2.4% on the previous year and is partly attributed to introducing a small tolerance for minor rounding and calculation errors. It is also partly due to our work with key reporters to ensure they provide quality data as early as possible.

The economic impacts of the COVID-19 pandemic resulted in a significant number of early lodgments in July 2020, as taxpayers sought to receive their 2019–20 tax return refunds. These lodgments were made before pre-fill data was available.

The result is solely focused on individuals who are not in business. It reflects the proportion of their total income where our pre-filling matches their final income tax result within the tolerance. This measure uses a dollar-based systems assurance approach, where pre-filling makes it easier for our clients to meet their obligations and increases trust and confidence in the accuracy of final tax outcomes.

The measure previously used tax return data from two years prior, to allow sufficient time for lodgment program periods to be completed and results to be assured by the ATO. From 2020–‍21 onwards, we are using data from the year immediately prior, to provide a more timely assessment. The calculation is still undertaken after the formal lodgment cycle has been completed.

Availability – Key digital systems availability

Measuring availability of our digital systems ensures that we understand the reliability of services for clients interacting digitally. In 2020–21, the overall result was 99.91% (99.9% when rounded to one decimal place), a 0.2 percentage point increase from the previous year and exceeding the current availability target.

The methodology for this measure comprises the availability of seven externally facing and two internal-facing key IT systems. Availability is the comparison between planned availability and actual availability of a system for users.

For external-facing systems used by our clients and partners (community, tax and superannuation professionals, and software developers), the average availability was 99.89%. For internally facing systems used by staff, the average availability was 99.98%.

Budget – ATO manages its operating budget to balance

During 2020–21 we continued our efforts to support the community through the COVID-19 pandemic, including the diversion of resources to deliver stimulus measures and support impacted clients.

We adjusted our compliance approaches in line with government and community expectations, and modified other activities, which enabled us to absorb costs in excess of $400 million over two years to deliver the stimulus measures and other COVID-19 related work.

The ATO started the 2020–21 financial year with an operating budget of $3,668 million. During the year the following budget changes occurred:

• COVID-19 Stimulus (increase of $174.8 million)
• Modernising Business Registers (increase of $108.0 million)
• Digital Identity (increase of $17.3 million)
• Superannuation Reform (increase of $6.8 million)
• Department of Home Affairs Tourist Refund Scheme Memorandum of Understanding (increase of $6.0 million)
• ASIC Machinery of Government Appropriation (increase of $4.4 million)
• Strengthening Australia’s Foreign Investment Framework (increase of $3.8 million)
• Reforming Australia’s Foreign Investment Framework (increase of $2.2 million)
• Single Touch Payroll (increase of $1.5 million)
• Superannuation facilitating the closure of eligible rollover funds (increase of $1.2 million)
• Digital Business Plan (increase of $0.9 million)
• ACNC Review Program (increase of $0.5 million)
• Own Source Revenue (including credit card merchant fees) (reduction of $52.4 million)
• Women’s Economic Security Package (reduction of $13.0 million)
• APSC Appropriation Transfer (reduction of $1.5 million).

The ATO’s 2020–21 financial result was an operating surplus of $49 million or 1.2% under budget. This includes lease principal repayments under the Australian Accounting Standards Board 16 leasing standard and excludes non-‍cash financial accounting adjustments, such as write-off expenses, depreciation, amortisation, finance lease and revaluation adjustments made for our financial statements.
The ATO’s operating surplus was driven by factors outside of the ATO’s control, including the reprioritisation of planned activities in response to the COVID-19 pandemic.
Refer to Part 5 - Financial statements for detailed information.

Cost of collection – Cost to collect $100

The cost of collection measures the cost of collecting every $100 of cash collections.

The cost to collect $100 decreased from $0.62 in 2019–20 to $0.54 in 2020–21, excluding GST and its administration costs. The decrease is largely due to a 10% increase in collections in 2020–21 and a 4% decrease in costs associated with collecting tax.

The decrease in costs associated with collecting tax was due to the ATO’s continued response to the global COVID-19 pandemic. Support of the government stimulus measures continued in the first quarter of 2020–21, with work returning to usual business activities in the second half of the year.

The significant increase in revenue resulted from the recovery in economic conditions and strong commodity prices. The fluctuations in revenue experienced over the last two years is expected to settle and move back towards pre-pandemic levels as the economy continues to recover. Uneven economic recovery may result in an unstable cost of collection ratio in the proceeding years.