Centre for Tax System Integrity

Research Projects and Surveys

Responses of Small and Medium-sized Business to Tax Compliance

The ATO Compliance Model was developed initially with the Cash Economy Task Force as a procedural model for the management of non-compliance and as a means of improving cooperation between the business sector and the Tax Office.

The model assumed that interactions with non-compliant businesses would as likely as not be intrusive and impose compliance costs on business. In order to respect taxpayers' rights and not hamper business efficiency, the idea was to give taxpayers an opportunity to explain and correct anomalies in their taxation records before progressing to higher levels of intrusiveness (for example, full audits). The model rested on the supposition that low levels of intervention could improve compliance behaviour and it was only necessary to be more interventionist if the taxpayer failed to provide a satisfactory account of their activities or were unwilling to cooperate with enquiries (see pdf version of Braithwaite, V. & Braithwaite, J., An evolving compliance model for tax enforcement. In N. Shover & J.P. Wright (eds), Crimes of Privilege, Oxford University Press, New York & Oxford, 2001.

The success of the model with small and medium-sized business has been evaluated through qualitative and quantitative studies. The industry focussed studies have been in building and construction, and the used car sales industry. Another study has involved interviews with large and medium-sized businesses from a variety of industries.

Chief Investigators

Professor Neal Shover, Univesity of Tennessee
Dr Eliza Ahmed
Dr Valerie Braithwaite
Dr Greg Rawlings
Mr Jason MacCrae
Dr Vivienne Waller
Dr Nathan Harris

Data Sets

  • Four separate studies were conducted, in May-June 2000, December 2003- February 2004, March-June 2004 and June-November 2004. These involved interviews with small business owners and in some cases ATO staff.
  • Community surveys (CHFAS and ATSFONS) have also been analysed, selecting out those respondents who were owners of or partners in a business.

Key Publications

Waller, V.
Tax morale amongst used car dealers
. RegNet Occasional Paper No 7. Regulatory Institutions Network, Australian National University, Canberra, 2006.
(pdf version)

Harris, N. & McCrae, J.
Perceptions of tax and participation in the cash economy: Examining the role of motivational postures in small businesses. Centre for Tax System Integrity Working Paper No 80, Australian National University, Canberra, 2005.
(pdf full version) (pdf abstract)

Shover, N., Job, J. & Carroll, A.
The ATO Compliance Model in action: A case study of building and construction. In V. Braithwaite (ed) Taxing Democracy: Understanding Tax Avoidance and Tax Evasion. Ashgate, Aldershot, 2003.
(pdf version)

Rawlings, G.
Networks of influence and the management of SME tax compliance in Australia. Centre for Tax System Integrity Working Paper No 78, Australian National University, Canberra, 2005.
(pdf full version)

Ahmed, E. & Braithwaite, V.
Understanding small business taxpayers: Issues of deterrence, tax morale, fairness and work practice, International Small Business Journal 23 2005: 539-568.

(pdf full version)



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