While the digital bells and whistles of the private sector garner much of the attention, the impact of digital is no less pronounced for the public sector. The Australian Taxation Office’s digital transformation offers some insight into the challenges and possible gains of digital transformation at an enterprise level.

It has been a bumpy road so far for the ATO. The department has struggled to maintain its IT systems, including 22 IT outages in the last two years.

Neil Olesen, Second Commissioner of Taxation, concedes some things could have been done differently, but in terms of digital services the ATO is “in not too bad a shape”.

Olesen says there is now light at the end of the digital transformation tunnel and the ATO is beginning to see results.

“[2017] was in fact the most successful tax time we’ve had in terms of ease of experience, client satisfaction, volumes, and speed of processing,” Olesen said while speaking at The International Conference on Tax Administration in Sydney today.

A large part of that success was the pivot to digital services and their relatively successful, if still underway, digital transformation, according to Olesen.

“[Digital] channels are providing significant benefits to people who use them, in terms of their ease and efficiency, and greater certainty. And they also give us, critically from our perspective, the ability to engage at scale and in real time, or in close to real time,” Olesen said.

“More than ever we are focused on digital solutions to improve client experiences and make it easier for tax payers to meet their obligations.”

Neil Olesen, Second Commissioner of Taxation. Source: Ato.gov.au

One of the more interesting digital factors driving change in how data is accessed and disclosed.

Digital Disclosure

For example, improved digital record keeping and sharing is helping governments to fight tax evasion at a global level. But there are also less formal ways of accessing financial data, Olesen said.

He pointed to the recent disclosures of tax evasion through the Panama and Paradise papers, and hinted the ATO had access to more.

“Interestingly they’re the two that you hear about. But there are [a] double digit [amount] of other ones that you don’t hear about and [they] find their way into out hands,” Olesen said.

“The truth is that it’s getting much harder to hide stuff in this digital age. The tendency of disgruntled people wanting to share information with us really works to our advantage.”

For law abiding citizens digital has helped alleviate the burden of compliance and improved their experience, Olesen said.

The ATO’s transformation has been underpinned by a focus on client benefits. It is Olesen’s number one rule for managing digital change and he gave an example to illustrate his point – myTax.

Success Story: myTax

MyTax is the digital self service option that allows Australians to lodge tax returns online. It has been a “huge step forward” in the ATO’s digital offering and provided a “foundational platform” for the delivery of other digital services, Olesen said.

The service was made available to all taxpayers in 2016 and is now used by more than 3.5 million Australians. MyTax streamlines a once onerous task but there are also less obvious benefits.

According to Olesen, the software now provides realtime feedback and prompts users when there data or claims appears “abnormal”. This process improves as more data becomes available, demonstrating a real life use case of data and analytics.

“As a digital experience myTax is real time engagement at scale.”

It was developed in-house by the ATO and the “real breakthrough” came when analysis was able to be conducted at near real time, a far cry from the days it took initial models to run, Olesen said. Overall it’s led to more than 170,000 clients self adjusting their claims down to the tune of 80 million dollars. The bottom line benefits are obvious, but importantly it also greatly improved the transparency of tax returns for clients, Olesen said.

Perhaps the best example of the ATO’s digital success is the speed in which it can achieve user outcomes. 75 per cent of tax refunds issued last year were delivered within five days of lodgement, Olesen said. It’s a stark contrast to 2015 when they ATO didn’t issue any returns within a week.

“The digital era gives us some brand new tools to meet [tax] challenges… While we certainly are not there yet, we are all on our way,” Olesen said.

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