Forget the paper trail - Working together allows clients to access their information electronically and automatically update their e-tax return

Objectives

The Australian Taxation Office is the Australian Government’s principal revenue collection agency. Its role is to manage and shape tax, excise and superannuation systems that fund services for Australians. The Tax Office has an electronic relationship with over 9.1 million Australian taxpayers, including 1.37 million Australians who lodged their return via e-tax in 2005. The Tax Office first released e-tax to the public in 1999. Feedback from early e-tax users indicated that they expected to be provided with information that they had previously supplied to the Tax Office (such as name and address details). Users also expected to be allowed the opportunity to validate the information that was provided. Similarly, users did suggest that information that is available to the Tax Office from other government agencies could be made available for inclusion in the e-tax returns. In 2002, the Tax Office began their Listening to the Community program, and in response, in 2003 developed the Easier, Cheaper and more Personalised program – continuously designing and testing changes to tax administration.

Medicare Australia plays an integral role in the Australian health sector. Its objective is to assist in improving health outcomes in Australia. Net medical expenses can be claimed as a tax offset if they exceed the necessary threshold. The usual processes involve accepting requests for net medical expense information, having these printed and sent to taxpayers. Given this information is only really needed to complete a tax return bringing these processes together appeared to have some benefits. Medicare Australia as part of their business objective of ‘delivering excellent customer service’ was willing to establish a secure interface to enable people to access their medical expenses information electronically. This electronic interface was set up to replace or reduce the existing paper process where requests for this information have been processed and provided over the counter or mailed to the individual for inclusion in their tax return. Annually 100,000 requests are handled by Medicare Australia, this can involve over 380,000 mail out items.

Experience has shown the Tax Office that some taxpayers don’t turn their minds to the need to keep tax related records such as net medical expenses until they start completing their income tax return. For e-tax users this means they will have to stop their “on-line” return while they wait for further information to complete their records. In some cases taxpayers have lodged their tax return with the incomplete data. They would then acquire the additional information and have to lodge an amended tax return. There is currently a cost to the Tax Office to process any amendment requests lodged via individuals. The introduction of an electronic interface between the Tax Office and Medicare Australia may reduce the number of amendment requests sent to the Tax Office that ultimately should lead to a reduction in overall processing costs for the office.

In 2003, the Tax Office and Medicare Australia agreed to undertake an initial pilot in the 2004 calendar year with a number of users, selection based on previous interactions with the Tax Office. The pilot allowed users to gain electronic access to their Medicare tax statement data which assisted their completion of the net medical expenses data section of their tax return. The users who agreed to participate in the pilot were sent instructions and an individual password. This password allowed them to access online directly from the e-tax application their net medical expenses data provided by Medicare Australia. The trial proved very successful from a user perspective, although it did raise the issue of scalability.

While it was recognised by both agencies that the client would be the main beneficiary, the initial cost estimates to implement a full production solution, identified that the existing Medicare Australia business model was prohibitively expensive for the perceived mutual benefit, as it would not be feasible to allocate a unique password to all taxpayers on an annual basis. The costs and the source of funds also led to further discussion as to who was getting the benefit – an important consideration from a budget perspective. So another method to authenticate the taxpayers and their relationship to the Medicare data had to be devised. The identification and authentication required by each agency were different, and a number of models were proposed. After consultation between both agencies a preferred solution was agreed upon.

By reviewing the design objectives and agreeing some constraints such as value for money, a more cost effective solution was developed. The solution satisfies the Medicare authentication and consent requirements, but rather than modifying the core Medicare model, the process development occurred within the Tax Office software and infrastructure. The solution will be deployed and all e-tax users will be able to populate their return with their Medicare expense details from July 2006.

Following the success of the Medicare Australia pilot, consideration was given by the Tax Office to other information that might be retrieved electronically to assist clients with the preparation of their income tax returns. A pilot initiative between the Tax Office and Centrelink in 2005 allowed customers to have the option to receive a more seamless service from both agencies.

Centrelink delivers a range of services to the community including assisting people to become more self-sufficient and to improve their chances of finding employment. Many of the support payments provided by Centrelink are classed as taxable income and need to be included in annual tax returns.

After verifying their identity using a common identifier, in this case the Tax File Number (TFN), Centrelink customers who choose to use e-tax are able to retrieve and populate the relevant sections of e-tax with their payment summary data. This eliminates the need for them to enter the data from the hard copy payment summary and reduces the likelihood of transcription errors or omissions. The overall reduction in processing time means that those who are entitled to a tax refund may receive their refund more quickly.

In June and July every year, Centrelink receives a significant number of over the counter and phone requests for early or duplicate for payment summaries. As more customers elect to use e-tax, many of these additional contacts will be eliminated, freeing staff to deal with other customer enquiries.

Customer feedback from the pilot indicated a high level of customer satisfaction with e-tax in general and very positive comments about the availability of pre-populated Centrelink data. Further enhancements by the end of the 2007 financial year will simplify the data transfer process.

From 2006 e-tax users will be able to pre-populate information from both Medicare Australia and Centrelink directly to their e-tax return, which will reduce the time to complete a return and reduce the amount of paper needed to complete an e-tax return.

The Tax Office has also worked with Centrelink to implement the 30% child care tax rebate initiative announced in the 2004 government election. In 2006 e-tax users will be able to download Centrelink information to assist them when making a claim for the 30% child care tax rebate.

The Tax Office is currently implementing a pilot solution where people can download bank interest and managed funds data from selected institutions. In future years the Tax Office may look to pre-populate information from share registries.

Key Players

Australian Taxation Office
Centrelink
Medicare Australia
Department of Human Services

Key Findings

The win-win-win element in each project is essential for overall success. In this case a win for the client, in time savings and increased convenience, and a win for each agency through cost savings and enhanced customer service delivery.

A key factor for multi-agency project success is to collectively agree on outcomes of the project for each agency so that all parties are working to a common shared goal. Agreement of outcomes, intent, assumptions and constraints is essential at the beginning of a project to ensure the project remains focussed on shared outcomes. It is important to take the time at the beginning of the project to clearly communicate to all participants the common messages from a managerial, business and technical level. Throughout the project lifecycle revisit the process outcomes to ensure that developments continue to meet the original objectives.

While it is not always the case, in this project the initial costing constraints led to a review of the solution which in turn led to a better overall outcome.

Multi-agency projects can lead to further avenues for working collaboratively that not only enhance existing projects but through establishing relationships allow new ways of working together on innovations.

1. Structures and Processes

Issues	Response	Key Learnings
Each agency may have a different design methodology or Project Management methodology.	Use an agreed design methodology that supports an end-to-end process map, and support it through the project lifecycle. If a single methodology cannot be achieved, then at least ensure that agencies understand each others processes	An agreed design methodology for the end to end process outcome and ensure that client useability remains prominent within the design objectives.
Each agency may use language in a different way.	Establish agreed definitions of key terms with a glossary. Also include a list of acronyms and their meanings.	Agree on language in the initial stages of the project.

2. Culture and Capability

Issues	Response	Key Learnings
The Tax Office and Medicare had previously not collaborated on a project.	Establish joint projects and ensure regular communication flow through formal and informal channels.	Where agencies do not have a history of working together – more time is needed at the beginning of the project to establish relationships and to gain a shared understanding of varying culture and capabilities.
In large organisation like the Tax Office, Medicare and Centrelink it is often difficult to identify the appropriate people from both business areas and IT.	Establish clear roles and responsibilities for all participating areas of the agencies. Offer representation to all stakeholder groups.Ensure that all key groups are represented.	Identify champions within each agency and stakeholder group. Develop sound and logical arguments to inform all stakeholders, particularly for those people who may not be conversant with the benefit of the project.

3. Information Management and Infrastructure

Issues	Response	Key Learnings
Costs of infrastructure redevelopment.	Ensure that the solution designed is cost effective to implement and maintain.	Do not over engineer the solution because it appears to be technically elegant
Re-inventing the wheel	Identify key projects and initiatives that may inform the current process	Learn from previous project and use what works and modify what didn’t.

4. Budget and Accountability Framework

Issues	Response	Key Learnings
Initial cost projections did not support the project.	Review and revise the initial design.	The business case benefits must always support the outcome. A cost vs benefits analysis should be completed to ensure the project is beneficial for all stakeholders.
Legislative frameworks regarding privacy and security of data.	Develop a solution that complies with legislative framework.	Look for ways for the legislative framework to promote rather than impede the business objectives.

Sources

Interviews

Paul Madden – First Assistant Commissioner – Business Solutions – Australian Taxation Office
Jeff Mitchell – Manager Research and Innovation – Medicare Australia
Amit Munjal – Senior Researcher – Medicare Australia
Denise Callander – e-tax Project Manager - Centrelink

Key publications:

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