Predicting the Tax Compliance Behaviour of MSME

Australian Tax Office (ATO)

Securing Australia’s national revenue through improving individual and company compliance with tax law is a crucial task for the Australian Tax Office (ATO). However, predicting and influencing compliance behaviour is a complex affair. Tax administrators who must deal with the practicalities of implementing and creating compliance strategies require a model of compliance with genuine applicability to the real world.

As part of the ATO’s commitment to improving citizen compliance behaviours, Square Circle was commissioned to research what drives compliance behaviour in small and medium enterprises. Our real-world model of the social and economic drivers of SME tax compliance behaviour now informs the way that the ATO provides awareness, compliance and support services to Australia’s small business community.

The research program is based on the well established Theory of Planned Behaviour which links beliefs, perceived control, and behaviour. Other foundational constructs that underpin the research program include the concepts of the taxpayer identity and perceived cooperation by the Tax Office. By better understanding these social factors that impact compliance behaviours, the ATO can better design strategies for compliance management.

Square Circle, ATO Report

Predicting, diagnosing and addressing tax compliance requires a model which incorporates the social complexities of compliance behaviour.

Square Circle, ATO Report

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