Improving tax compliance through behavioural insights

Presented by ANU College of Asia & the Pacific

The Behavioural Economics Team of the Australian Government (BETA) and the Australian Taxation Office (ATO) have recently conducted a number of trials on tax compliance.

Two trials aimed to improve businesses' compliance with the deferred GST (DGST) scheme: one with non-compliant businesses in the scheme and the other with new businesses joining the scheme. The DGST scheme allows businesses to defer the payment of GST on taxable importations into Australia. This helps businesses manage their cash flow. To be on the Scheme businesses must comply with all their tax obligations, including lodging digital.

To further enhance compliance with the DGST Scheme, BETA and ATO designed and tested behaviourally informed methods of communications. These communications aimed to address behavioural biases that may be affecting business managers such as cognitive overload and loss aversion.This paper will present the behavioural biases affecting tax compliance, behaviourally informed messages used and the design of these trials. The effect of behaviourally informed messages on tax compliance in these trials will be also discussed.

Su Mon Kyaw-Myint is a trial designer and a data analyst at BETA. Su Mon has a Bachelor of Medical Science and a Master of Applied Science (immunology). She then completed a Ph.D. in population health at ANU. Su Mon has many years of experience as a researcher in the Australian Public Service.

Sherolea Leonidas is currently an Assistant Director in the Service Delivery Individual Services Department at the Australian Taxation Office. She has worked with the ATO for more than 10 years. She is the head project leader for the Deferred GST trials and National coordinator for DGST compliance reviews.

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