Transforming tax returns into compelling data sets.

The ATO’s purpose is to contribute to the economic and social wellbeing of Australians by fostering willing participation in the tax and superannuation system. To support this purpose, the ATO developed a number of strategic objectives – many of which can be achieved through the power of automation and artificial intelligence (A&AI). For example, one of the ATO’s objectives states, “We use data, information and insights to deliver value for our clients and inform decision-making across everything we do.”

Operationally, the ATO can be seen like a ‘supercomputer’ – running complex algorithms that are the tax laws, delivering an output for each taxpayer of how much they have to pay, and how they need to pay it. Historically that ‘supercomputer’ was pre-dominantly powered by humans, with some tech. But to remain relevant in our tech-driven world, the ATO recognised it needed to harness the power of A&AI within a highly integrated ecosystem. Several main drivers were behind this pivot. These range from simplifying complex processes to generate new insights from an ever-increasing data landscape, to supporting more granular treatment of that data down to the individual taxpayer (individual, small business or large enterprise), to enhancing the role ATO people play in scanning, selecting and acting on data insights. Ethical use of A&AI is transforming both the taxpayer and staff user experience. And last but not least, A&AI supports the ATO’s strategic intention to be an innovative leader in tax and superannuation administration. 

In essence, A&AI allows humans to be more human. It removes tedious, repetitive tasks and supports employees to instead use their valuable time on tasks that require human judgement and empathetic support.

This is wonderfully highlighted by the ATO’s work on the Work-Related Expense (WRE) Claim Substantiation project. Alex Burrows, Deloitte Partner, explains, “The ATO is using Machine Learning to identify claims that need review, and piloting Computer Vision and Natural Language Processing (NLP) systems that in future will help staff efficiently process evidence documents submitted for substantiation. The goal is for AI to do the initial check for thousands of WRE claims and flag only the highest risk ones for review by a staff member. They can then use their specific expertise and customer service skills to make an informed decision.” Further to this, A&AI supported citizens during tax time by providing ‘in the moment nudging’ when filling in their returns. That is, the AI identified claims made when filling in a tax return that appeared out of step with the individual’s ‘nearest neighbors’ – taxpayers that are in similar circumstances – and gave a real time nudge to ask the individual to ensure the particular claim was accurate before lodging their tax return. This real time interaction was effective in influencing individuals to reduce their claims and enabled the ATO to focus its post lodgment compliance activity on higher risk claims.

The ATO’s tax gap analysis has shown that around 90% of the overall Australian total tax liability is paid voluntarily; with compliance action only adding an additional 3%. It sees maintaining and improving voluntary compliance as key to sustainably reducing the tax gap. Digitisation is integral to that, and helps make it easier for citizens and corporations to comply.

Marek Rucinski, Deputy Commissioner, Head of Data and Analytics, ATO, has been really pleased with the outcomes AI has helped the ATO to deliver. He believes that automation and AI will be even more pervasive in future. He concludes, “this will allow us to see huge potential to increase efficiency and effectiveness in our interactions and experiences over the coming years.” 

In short, A&AI is a mission critical capability for the ATO, adding significant value across the organisation, and emerging as a core pillar of its ongoing success. 

Want to learn more about digital leadership in government? Join us at the AFR Government Services Summit on 15 February as state and federal government leaders explore the future of the public sector in this new, ever-changing economy.