Measuring ABR Integrity 2016 · 2 Australian Business Register t Background BACKGROUND Measuring ABR Integrity is an annual program to determine the accuracy of ABR data (ABN in use

Measuring ABR Integrity 2016

© Australian Taxation Office for the Commonwealth of Australia, 2016

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the Australian Taxation Office or the Commonwealth endorses you or any of your services or products).

Published by Australian Business Register, Canberra. October 2016 / JS 37921

Our commitment to you

The information in this publication was current at October 2016. We regularly revise our publications to take account of any changes to the law, so make sure that you have the latest information.

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Australian Business Register t Contents

CONTENTS

Background 02

Summary of results 03

Detailed results by entity type 05ABN status 05

Legal name 07

Postal address 08

Business address 09

Email address 10

Industry activity 13

Contact name(s) 14

Associates 15

Other observations 16Completion rate 16

Understanding of obligation / client experience 16

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Australian Business Register t Background

BACKGROUND

Measuring ABR Integrity is an annual program to determine the accuracy of ABR data (ABN in use and key fields) by sampling ABN holders across all entity types with an even mix of characteristics (for example, recent and aged registrations) to answer questions regarding the data we hold.

Measuring ABR Integrity 2016 was conducted from 6 April 2016 to 31 May 2016 using data extracted on 1 April 2016.

As of 2015, ABN holders with an email address were sent an email with a link to complete the questionnaire online. Those without an email address were sent a letter with information to access the questionnaire online. ABN holders were given 2 weeks to complete. Those who did not respond were followed up via phone contact during business and after hours.

The results were then sent to the ABS for statistical analysis. The methodology is the same as last year.

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Australian Business Register t Summary of results

SUMMARY OF RESULTS

Between 2015 and 2016, the overall ABN in use rate has increased with the majority of key fields also showing improvement. The concept of ‘minor / insignificant error’ was first introduced in 2015 and can now be compared in conjunction with ‘completely correct’. Whilst what might be classed as insignificant or minor is subjective, the interpretation is that the data is useable from the ABN holder’s perspective (or they would have been marked as ‘incorrect’). The results are summarised below.

Figure 1: Key field integrity of the Register*

Completely correct – Survey 20 Completetly correct – Survey 21

Minor/insignificant error – Survey 20 Minor/insignificant error – Survey 21

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AssociatesContactnames(s)

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* Useable = Completely correct + Minor / insignificant error

With our ongoing compliance program (including bulk cancellation), overall ABN in use rate has improved by 5.4% (4.3 percentage point increase). Comparing the completely correct rate across the key fields (excluding Legal Name which is already over 95%), there is an average improvement of 3.2% (1.7 to 4.6 percentage point increase in 5 out of 7 key fields).

As mentioned above, we can now compare data usability by combining ‘completely correct’ and ‘minor / insignificant error’, which shows improvement across all key fields (except for Legal Name which moved from 99.6% to 99.4%).

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For key fields, the data integrity program in 2015–16 focused on completeness (for example, missing address elements) and validity (for example, invalid email format). Accuracy (currency) of data, which is the primary purpose of the survey, is still reliant on ABN holders to update the ABR (or other tax systems where synchronisation with the ABR is in place).

The compliance program, in addition to improving overall ABN in use rate, also contributed to the improvement in key field accuracy (as non‑operating business tended not to keep their information up‑to‑date).

The findings from Measuring ABR Integrity 2016, in conjunction with other intelligence (for example, Agency Data Quality Survey), have shaped our data integrity program for 2016–17. For example, we are piloting ‘reconciliation to source’ initiatives for contacts and associates as they have the lowest accuracy rate. Email address is another key area for improvement (see more details in the email section of this paper).

The following sections of the paper will present accuracy measures for ABN in use and each key field in more detail with breakdowns by entity type and other findings from the survey.

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DETAILED RESULTS BY ENTITY TYPE

ABN status

Figure 2: Correctness of ABN status by entity type*

ABN still in use – Survey 20 ABN still in use – Survey 21

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TotalTrustSuperPartnershipIndividualGovernmentCompany


Marked improvement in the ABN in use rates for companies, partnerships and trusts can be attributed to our bulk cancellation program (using ASIC deregistration data and new criteria for partnerships and trusts). Superannuation funds and government entities remain stable as expected.

For the first time, we have seen the ABN in use rate peaking for individuals despite ongoing bulk cancellation program and desk‑based compliance activities. In order to gain insight into this finding, we have analysed the raw data from the samples to see if there is any emerging patterns.

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In the survey, 480 individuals were sampled with 255 responding. 194 out of 255 (76%) indicated their ABN was in use. For the remaining 61, we asked why and from when the ABN was not in use. The results (with 1 who did not answer) are profiled below.

ABN not in use (individuals)

Within 12 months

1–2 years ago

3–5 years ago

More than 5 years ago Total

Used the ABN for a while but no longer operating 6 11 3 4 24

Got the ABN to start an enterprise but did not go ahead 4 4 4 0 12

Changed entity / business structure 1 2 1 2 6

Applied in error – discovered not required for the activity 2 2 0 0 4

Other (please specify) 4 5 4 1 14

Total 17 24 12 7 60

The standout result is that 41 out of 60 (68%) indicated the ABN was not in use for 2 years. Within this timeframe, we cannot cancel the ABN using our current bulk cancellation criteria and will have to rely on other compliance activities or voluntary cancellation. Also worth noting is that ‘enterprise not going ahead’ is the second most common reason (excluding ‘Other’). Lastly, analysing the text specified in the ‘Other’ category revealed that most could have chosen one of the set answers instead (highlighting there is always some degree of user error in a ‘survey’ environment).

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Legal name

Figure 3: Correctness of legal name by entity type*

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Legal name accuracy remains stable and high across all entity types. For those who indicated ‘minor / insignificant’ and ‘incorrect’, we asked for more information. Analysing the information provided, the residual inaccuracy has a large degree of ‘user error’:n expecting the business name / trading name to be shownn individual name changed by marriage (without updating the ABR)n partnerships indicating one of the partners have left.

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Postal address

Figure 4: Correctness of postal address by entity type*

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Postal address accuracy continues to improve across most entity types mainly due to removal of non‑operating business. This is a key field that primarily relies on ABN holders to inform us of changes. We cannot automatically use other data sources as ABN holders can use different postal addresses in their dealings with the ATO and other government agencies.

Unsurprisingly ‘address changed’ is the most common reason when the ABN holders indicated the address is incorrect.

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Business address

Figure 5: Correctness of business address by entity type*

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Business address accuracy continues to improve across most entity types mainly due to removal of non‑operating business. This is another key field that primarily relies on ABN holders to inform us of changes. There is potential in reconciling with the business address provided in income tax returns to detect change.

Unsurprisingly ‘address changed’ is the most common reason when the ABN holders indicated the address is incorrect.

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Email addressAs email address is an optional field, ABN holders were given different choices when responding to whether the recorded email (or lack of) was an accurate reflection of their circumstances. The results are presented below.

Figure 6: Detailed email responses

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Recorded email correct

Recorded email incorrect

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Have email but not recorded

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In compiling a ‘completely correct’ figure, ‘recorded email correct’ and ‘still don’t have email’ are interpreted as such (reflecting the ABN holder’s view that what we showed was correct). This is consistent with how we presented the figure in 2015.

If we focus just on those with e‑mail address recorded (see Figure 8), the overall accuracy is higher (87.3%) which compared favourably with other key fields (for example, postal address which is at 86.1%). The high accuracy is attributed to the email validation and cleansing program conducted in 2015–16. All new registrations since January 2015 already have email addressed validated. In 2015–16, all stock email addresses were re‑validated with blatantly invalid ones (for example, [email protected]) removed from the system.

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Figure 7: Email address recorded and correct by entity type*

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Figure 8: Breakdown by entity type (using those with recorded email as base)

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For those with no email address recorded (see table below), instead of being an accuracy measure, we can interpret the results as over 60% of ABN holders expected their email address to be recorded. Whilst the email address might not have been provided initially, this is a reflection of their current mindset.

Figure 9: Breakdown by entity type (using those without recorded email as base)

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Industry activity

Figure 10: Correctness of industry division by entity type*

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This measure refers to the accuracy of the industry activity (using the text description of the 4‑digit ANZSIC code). As background, ABN applicants provide their main business activity as free text. Prior to December 2013, the system coded the ANZSIC using backend logic (and the applicant did not see what we coded at the time of registration). Since December 2013, we introduced a point of capture coder (POCC) where a ‘smart’ dropdown is presented with choices (based on the free text entered) for the ABN applicant to select from to improve accuracy.

As evident from the results, accuracy continues to improve across all entity types due to the continual use of the POCC. We also have an ongoing data integrity program to fix invalid ANZSIC ranges (9999x) in aged registrations. Superannuation funds are outliers as the ANZSIC code is predetermined (minor inaccuracy is attributed to the ABN holders’ perception that they should be described differently).

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Contact name(s)

Figure 11: Correctness of contact name by entity type*

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The results are somewhat mixed mainly due to the volatile nature of the data element (contact more likely to have changed rather than address) and the lack of proactive update in general. In particular, if there are multiple contacts recorded, we showed them all. Hence, overall completely correct accuracy is the lowest across all key fields (and there is a 1% decline between 2015 and 2016). On a positive note, the usability rate has increased by 4.6%, suggesting at least one contact is correct.

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Associates

Figure 12: Correctness of associate information by entity type*

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TotalTrustSuperPartnershipCompany




Associates accuracy remains stable across all applicable entity types (individuals and government entities by default have no associate). Partnerships and superannuation funds are more prone to membership changes and experienced minor deterioration in completely correct accuracy (also due to the lack of proactive update in general).

Also worth noting is that for companies and trusts, business rules only enforce a minimum number of associates at the time of registration. There is an additional response choice ‘all listed associates correct and there are more not listed’, which is counted as ‘completely correct’ for consistency with previous year.

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OTHER OBSERVATIONS

Completion rateMeasuring ABR Integrity is run as a review where information to be completed online was requested under Section 15 of the ABN Act. Subsequent follow‑up also emphasised the non‑voluntary nature of the review (and stayed away from using the term ‘survey’).

Measuring ABR Integrity 2015 2016 Change

Completion rate 58% 57% –1%

The final completion rate is comparable to previous year.

Understanding of obligation / client experienceAnalysis of de‑identified responses (for those who had indicated information shown was incorrect) indicated there is still a lack of understanding of the obligation to update the ABR when circumstances changed (36.6%).

Top 4 responses are as follows:

Reason for not updating the ABR 2016

Didn't know you needed to 23.1%

36.6%Didn’t think about it 13.5%

Provided the details to the ATO for another reason and thought they would flow through to update the ABR 24.4% 24.4%

Other 20.1% 20.1%

We also asked about ease of update and reason if the response was ‘difficult’ or ‘very difficult’ (based on free text analysis showing the top 2 responses).

Ease of update 2016

Very easy 13.9%

37.8%Somewhat easy 23.9%

Neither easy nor difficult 36.5% 36.5%

Difficult 16.0%

25.7%Very difficult 9.7%

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Reason (collated from free text) for indicating difficult / very difficult to update 2016

Could not update desired information online 21.1%

Difficult / complicated / confusing process 19.0%

There are still over 25% of ABN holders experiencing difficulties to update their ABN whilst the reasons point to lack of understanding and possibly issues with obtaining / using AUSkey.

abr.gov.au | sbr.gov.au

Documents

Measuring ABR Integrity 2016 · 2 Australian Business Register t Background BACKGROUND Measuring ABR Integrity is an annual program to determine the accuracy of ABR data (ABN in use