The psychology of voluntary compliance

I have mentioned before in this column that one of the privileges and pleasures of being national president is the opportunity to attend national and state conventions. This month, it has been the State Taxes Conference in Perth. The State Revenue Offices give their unstinting support to this conference and The Tax Institute is extremely grateful for that support.

One of the papers this year, presented by Jim Richards from the Northern Territory Revenue Office, was about the psychology of voluntary compliance and how revenue authorities internationally are going about altering the mindset of populations so that compliance is seen as the norm.

It was not about the usual approach of "the carrot and the stick", but a study of approaches that focus on convincing taxpayers that compliance is business as usual. A key message was that revenue authorities should regularly acknowledge that the great majority are doing the right thing. This encourages people to accept that compliance is the norm and the preferred behaviour.

I thought this was a good message but, on reflection, realised that the Australian revenue authorities fall far short of this in the area of trust taxation (whether state or Commonwealth). The messages we receive, both express and implicit, are that trusts are rorts. It is not the right message, as the vast majority of trusts are compliant and used quite appropriately in commercial and family transactions.

This is the message that should be widely conveyed and the revenue authorities (and the press, which will eventually get the message from the authorities’ behaviour) should be encouraged to spread that message.

Ken Schurgott

Ken Schurgott is President of the National Council at The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.


See all

Follow Us