The Commissioner added his welcome to members and guests from The Treasury.
The following topics were highlighted by the Commissioner as ongoing key areas of focus:
The Commissioner also outlined that continuing to improve the support provided to tax practitioners and in turn, improving their ability to support their client's compliance, is an ongoing objective for the ATO.
Alison Lendon, First Assistant Commissioner, Business Solutions and John Ryan, First Assistant Commissioner Major Programs attended the meeting to provide members with an overview of the ATO's technology plan with a focus on an online program - ATO Online 2015.
A major component of the ATO's planned technology centres around online capability. The ATO has a dedicated work program to deliver enhancements to the way individuals, businesses and tax professionals are able to interact with us.
There are significant challenges for the ATO developing a forward work program in the current environment that includes delivering on the Government's agenda, for example initiatives such as superannuation reforms.
The first iteration of ATO Online is an individual portal release envisaged for early 2013, allowing citizens to see all their active superannuation accounts in the one place online, and to update their details with the ATO (including addresses and bank accounts). As a component of this release, citizens will also be able to go online to enter into payment arrangements with the ATO and check on the progress of their tax returns.
It is expected that once established, the new ATO online services will provide the platform that can be used to support the future Tax Agent and Business Portals. In the interim the ATO is planning to make some small enhancements to the existing portals recognising that the stability of existing portals is a priority for the community.
It is intended that as the new platform continues to be developed, it will provide the ability for the community to access services from a variety of devices such as smartphones, personal or tablet computers.
As future online systems are developed the ATO will look for opportunities to continue to build on the advantages standard business reporting (SBR) can potentially provide to both the ATO and small business, in particular, substantial reduction in business reporting costs.
The ATO is also looking for opportunities to increase the uptake of current existing online services and working towards reducing outbound paper, for example reducing paper activity statements where clients are already using an electronic option.
- There was discussion about whether the ATO had considered the possibility of capturing email addresses on income tax returns.
- The ATO advised that this was currently under consideration for a future tax time release.
- Obtaining confirmation of the lodgment of tax returns and other varied documentation by the legal profession was raised. It was commented that with no channel available for the legal profession to deal with the ATO electronically there is no alternative than to lodge returns and documents by paper using registered mail.
- A member asked whether there is an issue for the ATO in relation to segments within the community who are not technologically enabled or proficient. The member asked how the ATO caters for this in moving to more electronic transactions.
- The ATO acknowledges that there is work to be done to transition the community to new online channels and that there will be some that will have difficulty in doing so. The ATO also recognises that communication with the community must be focused and deliberate to alleviate any confusion or complexity that may arise by offering more channels and options.
Paul McKenzie, Assistant Commissioner Micro Enterprises and Individuals provided members with information regarding data matching strategies and the impact these are having for the ATO, the community and other administrations.
The ATO continues to expand and enhance its data matching strategies to assist the community in meeting their obligations under self-assessment. This includes augmenting the data the ATO collects, programs such as the ATO's pre-filling service, income matching and other compliance strategies, as well as supporting other government agencies.
There are two types of data. The first is annual legislative data, such as reporting from banks and other financial institutions on interest and dividends, government welfare payments from Centrelink and the Department of Veterans' Affairs, private health insurance details and superannuation fund membership data.
The second is special purpose acquisition data acquired under the Commissioner's powers, such as the acquisition and disposal of shares and real property. Special purpose acquisition data does not necessarily have a tax file number attached to it and is therefore potentially of lower integrity than annual legislative data.
The ATO has a program of continuously working with the providers of third party data to assist them in providing data earlier than the legislatively required date to enable pre-filling data to be available to the community as soon as possible. There is an increasing expectation by taxpayers that some or all of their information will be available when lodging their income tax returns soon after the end of the financial year.
Paul outlined that the use of pre-filling for e-tax lodgments has increased significantly from 2007 to 2010 and has almost reached parity (that is, every e-tax lodger using the pre-filling service). There have been similar results in relation to tax agents' usage of pre-filling in electronic lodgment service (ELS) lodgments.
In the past the ATO's income matching focus has been on simple discrepancies such as interest, dividends and employment income provided by third parties. Over the last three years, this focus has been expanded to treat a growing range of more complex risks through data matching within a high volume, low cost framework, rather than through low volume high cost audit approaches. These include omitted income risks such as:
- capital gains tax from the disposal of shares and property
- foreign source income, and
- contractor income from payments made by government agencies.
Paul also highlighted for members that the ATO has seen a reduction in the number of taxpayers omitting small amounts of interest over the last four years as a result of a targeted advisory letter strategy.
There was general discussion about the possibility of pre-filling data in partnership and company returns. The ATO advised that the data available is less sophisticated than that collected for inclusion in individual income tax returns. The availability and timing of relevant information may limit the usefulness and may not correspond with the lodgment requirements of these entities. As a possible first step the ATO may consider implementing alert messages, advising of potential transactions that may have an impact on return preparation as opposed to pre-filling a return label with reported income. This would be similar to existing alert messaging arrangements for individuals in pre-filling, for example the alert service in e-tax and the tax agent portal advising of share disposals that may give rise to possible capital gains tax obligations.
Rob Heferen, Deputy Secretary of the Treasury attended to continue a discussion from an earlier meeting at which members were invited to put forward suggestions to reduce compliance costs or complexity in taxation and superannuation administration for small business. Members were contacted prior to this meeting to encourage them to canvass their members and bring forward ideas for discussion.
In his preface Rob highlighted to members the need to guard against unintended consequences where a policy change in one area of the tax or superannuation systems may add to or change the level of complexity in other areas of these systems, perhaps to the detriment of another sector of the small business community.
Members discussed a range of ideas and offered observations to Treasury and ATO attendees. Below is a summary of those discussions.
- The role of trusts and discretionary trusts in small business structuring. An example was given of how small business concessions do not take into account a trust structure.
- Matters in relation to the PAYG instalment system including:
- letters issued to small businesses welcoming them to the instalment system were described as confusing by tax profession members and often generated an unnecessary call from their client. It was suggested that the letter would provide more context if it was sent with the first business activity statement (rather than as a standalone item)
- a suggestion that consideration is given to an increase in the tax payable threshold for entry to the system (currently $500)
- an observation about the general complexity of the PAYG instalment system.
- Weekly remittance of PAYG withholding amounts. Business entities that withheld PAYG withholding amounts totalling more than $1 million in a previous income year must generally pay these amounts to the ATO electronically twice weekly. A member raised this as potentially detrimental to the cash flow of some businesses and suggested an increase to the threshold.
- The inclusion of an additional label on the business activity statement that can be used to report superannuation guarantee payments. Some members also suggested that the timing of this would not necessarily be appropriate for all as the lodgment of the business activity statement is more frequent for some than the superannuation guarantee requirement. A comment was also noted that the superannuation guarantee charge statement form, to be completed for late payment, is quite complicated.
- A member commented that more local, state and federal government agencies sharing information would assist to reduce the reporting burden for small business.
- There was general discussion about Treasury's increased engagement with the small business community during which an example of consultation between Treasury, the ATO and the Law Council of Australia in relation to Division 6 of Part III of the Income Tax Assessment Act 1936 was cited a very good exercise. It was noted that it helped to understand the issues that the ATO and The Treasury face.
- It was suggested that small business would welcome engagement in the consultation process at the formative stage of new measures and in the development of regulations.
- A member also suggested that Treasury guests at future meetings may benefit from the reintroduction of a previous standing agenda item through which an invited small business operator provided their perspective on taxation and superannuation administration.
Rob thanked members for their contributions and welcomed further ideas and suggestions to be directed to the forum secretariat firstname.lastname@example.org at any time.
The ATO to explore the possibility of reintroducing an agenda item through which an invited small business guest shares their perspective on the taxation and superannuation systems
A member raised an item for discussion prior to the meeting in relation to the due date of the annual report for the taxable payments reporting new measure. It was suggested that the required timeframe of reporting by 21 days after the end of the reporting period will significantly increase the workload for many businesses.
The Taxable payments annual report is due 21 July each year. The Commissioner has the discretion to vary the due date.
Post meeting update
The first Taxable payments annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In this first year if you lodge your business activity statement quarterly, you may lodge your Taxable payments annual report by 28 July 2013.
The Commissioner presented John Malkovich with a certificate of appreciation and acknowledged his personal commitment and contribution during his tenure on the forum as the representative of the Small Business Advisory Group. A representative of the recently formed Small Business Partnership will be welcomed to the next meeting scheduled in 2012.
The Commissioner thanked members for participating in open and frank discussion and for their support for the directions of the ATO.
The next meeting of the Commissioner's Small Business Consultative Group is scheduled for Thursday 24 May 2012.
Last Modified: Wednesday, 6 June 2012