The Australian Taxation Office is the Australian Government’s principal revenue collection agency and administers Australia’s tax system and significant aspects of Australia’s superannuation system. It administers legislation governing tax, superannuation and the Australian Business Register and supports the delivery of government benefits to the community. Improving tax compliance is a major policy goal as non-compliance can reduce the overall tax base, increase the costs of administration and lead to an uneven playing field for businesses doing the right thing.
As part of the legislation the Deferred Goods and Services Tax (DGST) Scheme allows businesses to defer the payment of GST on taxable imports until the goods have been sold. This helps businesses manage their cash flow. Cash flow is important for businesses because it helps them meet everyday business needs and avoid taking on more debt. This means there is a strong driver for businesses to be on the Scheme. Participation in the Scheme allows 13,000 businesses to defer payment of $26 billion in GST annually.
To be on the Scheme, businesses must comply with requirements including digital lodgment of monthly activity statements and being up to date on all lodgments and payments due to the ATO. At any one time about one in three businesses do not comply. The ATO can revoke access to the Scheme if a business does not fully comply, which negatively affects cash flow and means the business will need to reapply to be reinstated.
BETA partnered with the ATO to test behaviourally informed methods of communication (variations on emails) aimed at improving compliance among businesses in the Scheme. We ran two separate randomised controlled trials to test the effectiveness of these emails.
The first trial evaluated the impact of sending a ‘cooperative’ or ‘direct’ toned reminder email to existing businesses who were found to be non-compliant with the Scheme. The aim was to encourage self-compliance, educate businesses on their tax obligations and reduce recurrent non-compliance. Both emails improved compliance rates but variations in the tone of the reminders did not affect the compliance rate.
The second trial tested the effectiveness of sending a welcome email to new businesses who had just registered on the Scheme. The aim of the email was to educate the businesses from the first point of contact to promote good compliance behaviours and engagement with the ATO. The email contained a planning prompt recommending businesses set up a monthly calendar reminder about their DGST obligations. It did not improve compliance.