Australian Taxation Office applies behavioural insights to tax and debts

27 November 2013Behavioural Insights Unit

Categorycase study

Tagscase study, tax, trial

The Australian Taxation Office (ATO) has been using insights from behavioural science to trial different ways of getting people to pay their fines and lodge their tax forms on time.


Undertaking a randomised controlled trial where they sent 1,000 new letters to randomly selected customers, and old ones to the rest, the ATO has tested:

  • A change in language and formatting such as an ‘amount due’ box – this pushed response rates up by 5-6%
  • The use of social norms to highlight that most people lodge on time – this drove a 12% increase in response rates
  • Social messaging such as “paying tax is a fair way for everyone to contribute to the Australian community”.

They are even trialling changes to the scripts given to call centre operators, to make the interaction more action-oriented and ensure customers feel a sense of ownership over the process.

This is a great application of some of the lessons from behavioural science, some of which have been summarised in the UK Cabinet Office’s report on Applying Behavioural Insights to Reduce Fraud, Error and Debt. The tax trials that the UK’s Behavioural Insights Team ran with HM Revenue and Customs recently won an Innovation Award at the UK Government’s Civil Service Awards. Their trials involved rewriting tax reminder letters with BI principles, which are estimated to have brought forward around £210 million of tax revenue.

The ATO’s trial also has similar elements in approach and effect size to two trials we have been running in NSW: the RCT is similar to one we ran in the tax, debts and fines space with the Office of State Revenue (results of which we are hoping to publish soon), and the changes they are making to interactions with customers is similar to one that is currently being run in NSW to support injured workers in their return to work.

We are really looking forward to reading more about the ATO’s results, set to be released in the Public Service Commission’s State of the Services report later this month.

Read more about the ATO trial