At the November 2008 NTLG meeting, it was agreed that a workshop would be held in early 2009 to seek NTLG members’ perspective on the compliance environment and assist in the development of 2009–10 Compliance program.
NTLG action item 0811/02 refers.
The Compliance program sets out our view of compliance with the tax and superannuation systems by the Australian community. It also outlines our concerns about where compliance is at risk and the actions we are taking to address this.
It was agreed to discuss the topic at the 27 March 2009 NTLG meeting in lieu of the proposed workshop.
It is anticipated that the discussion will include members’ perspective on emerging compliance challenges that may impact on the integrity of the tax administration system, and the 2009-10 Compliance program.
Response
The Commissioner and Second Commissioner Jennie Granger will lead the meeting discussion.
Pre-reading background material has been provided for this agenda item.
Please note that specific papers which will form the basis of the discussion will be provided at the meeting.
Meeting discussion
Second Commissioner Jennie Granger circulated a document to stimulate the discussion around the key risk areas, and in the context of the current economic conditions. The proposed top level compliance risk focus areas included:
- challenges arising from the global economy
- coverge of income tax risks, including expanding coverage of the wealthy, small and medium and large markets
- compliance with superannuation obligations
- small business compliance, and
- serious abuse of Australia’s tax and superannuation systems.
Members were invited to comment on the risk focus areas and advise of any additional topics.
Members were asked to advise of key compliance risks for tax practitioners. The Tax Agent Services Bill and 'safe harbour' provisions were identified as an issue, in that taxpayers need to understand their obligation to provide accurate and honest information to tax agents, and not rely purely on safe harbour provisions. It is expected that the new Board will provide more guidance.
The discussion moved to focus on the draft Compliance program, which was to be shared with the JCPAA in early April. Members were invited to forward any comments or feedback. The high level themes will require more specificity, and members commented that empathy and understanding were key themes.
Members queried if capacity existed to provide any incentives to ‘trusted taxpayers’ as part of the ACA proposal. The Commissioner advised that the benefit is seen as a reduction in compliance costs plus the 'no surprise' element, and is interested in making compliance easier where possible. Members were advised that the risk picture for the coming year was unlikely to be significantly different to previous years.
Members raised the issue that the current economic circumstances created a new operating environment for a number of tax agents. Members were invited to advise if there were specific areas or topics where the Tax Office could assist in providing assistance or guidance for tax agents. Advice has already been provided to large corporates regarding redundancy payments for example. Insolvency issues may also arise.
Members were advised that a range of issues associated with natural disasters were being addressed, eg record re-construction, for individuals and businesses, and were invited to provide feedback. The importance of retaining information relating to the occurrence of natural disasters was acknowledged as the consequences are usually long lasting beyond the event. Members commented positively on the approach being adopted by the Tax Office.
The use of benchmarks, developed by GST, was discussed. They have proved to be useful as an educative process, and additional benchmarks have been requested. It was acknowledged that benchmarks are useful as a diagnostic tool to provide assistance and may be used as part of an overall compliance strategy.
The attitude of Tax Office auditors, particularly during audit visits for smaller entities, was raised. The Commissioner advised that a message has been issued to staff to be conscious of current circumstances and the impact of current economic conditions. Members were invited to advise the office of any negative experiences. The Commissioner reassured members that Tax Office approaches had not altered, the message to staff is to apply current policy with a level of empathy. There has been approximately a 20 percent increase in payment arrangements in recognition, and it was acknowledged that this would be a sensitive issue this year.
The Commissioner advised that in the booklet 'Large business and tax compliance' there is an offer to encourage voluntary compliance and agreed to extend the offer to all segments. The professional associations were encouraged to provide factual situations to enable the Tax Office to provide assistance to minimise concern and angst. They were also encouraged to assist members in the escalation of issues where there may be 'blockers'.
Members raised some concern associated with ‘audit visits’, with approximately 6,000 to be conducted by June. They would appreciate the opportunity for tax agents to be involved. The protocols associated with these 'obligation support visits' had been discussed at the 23 March 2009 Lodgment Working Group meeting, with agreement that tax agents are welcome to be present with their clients during these visits. There have been 300 visits to date with positive outcomes. The objective of the visits is to assist small business as an early intervention exercise and is not classed as an audit.
The Commissioner thanked members for their comments and confirmed the desire to consult and collaborate.
Members were invited to forward any comments on the Compliance program within the following two weeks if possible, however there would be further opportunities to comment. The program will be an on-line product this year, and is expected to be released in early August.
Post meeting update
Natural disaster assistance
A policy to assist with the re-construction of tax records, and accompanying fact sheets have been developed with assistance from tax professionals and clients. Feedback from groups included those affected by the Victorian bushfires, plus a group from Queensland, who were not directly affected by the floods. On site assistance has been provided in the re-construction of records and the lodgment of income tax returns and activity statements.
The Tax Office has developed some products to assist tax agents and their clients in times of natural disasters covering administrative assistance and the reconstruction of records. The information on Assistance for tax agents affected by natural disasters is now available on the Tax Professionals section of the website.
Sections within Agenda items
Last Modified: Friday, 3 July 2009
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