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  • Australian tax advisors research detailed findings

    Below are the key insights from 14 employees of ten Australian tax service providers. Five work for large accounting firms.

    Amount of expected business registrations per tax advisor

    Most participants stated that at this point in time, it was too difficult to estimate how many non-resident business clients they expect to represent and to register on the Simplified GST system. Registration numbers will depend on whether or not the non-resident business incurs expenses in Australia. In the event, they would register the non-resident business client for full GST reporting.

    The numbers below are indicative only and should not be used to estimate the total number of non-resident businesses likely to engage an Australian intermediary.

    Overview of non-resident businesses consulted Australian tax advisors might register

    Australian tax advisor

    Likely number of registrations

    Large accounting firm 1

    Unsure, currently trying to work out

    Large accounting firm 2

    5 (difficult to say)

    Large accounting firm 3

    50< (difficult to say)

    Number 1 – 2nd tier tax practitioner firm

    10

    Number 2 – High bulk tax practitioner firm

    5

    Number 3 – Medium inner tax practitioner firm

    40-60 (figure not trusted)

    Number 4 – 2nd tier tax practitioner firm

    5-10 per month

    Number 5 – 2nd tier tax practitioner firm

    20

    Number 6 – 2nd tier tax practitioner firm

    10< (difficult to say)

    Number 7 – Personal Tax focussed inner city tax practitioner firm

    Approximately 40

    Tax advisor handover to business staff long term

    While it is difficult to accurately estimate how many non-resident businesses would use Australian intermediaries to report GST, based on our research, we can say with some confidence, that if they were engaged, the vast majority of intermediaries would be likely to hand over the ongoing reporting role to the non-resident business after registering them for Simplified GST. Most intermediaries said that if the system were simple, most of their clients would opt to lower costs by reporting themselves.

    Figure 2: Overview of credential and activities preferences for tax advisors and their non-resident business clients (based on tax advisor conversations)

    Nearly all intermediaries we spoke to would most likely be registering their client, doing/setting them up for reporting initially and then, if easy, handover the ongoing reporting to the client. Clients most of the time are those who make payment.

    General online service needs and requirements

    In general, of the fourteen (14) tax advisors we spoke to:

    • 12 out of 14 said that they would register the business at the time they learnt that the business has or will have a reporting obligation. They would all expect to set up a credential at the same time. One said that they would do this when the client advised them to do so.
    • 13 out of 14 expected that the security of Simplified GST system would be on a par with that of other ATO systems.
    • 12 out of 14 indicated that initially they expected to register their non-resident clients, and report for them with, with the client making the payment in most instances. In subsequent reporting periods, provided that the reporting process was easy enough for the client to do, they expected to relinquish the reporting to their clients.
    • 12 out of 14 expected to have a credential for their tax firm, with access controls, as well as one assigned to the business so they could access the system as well.
    • 3 out of 14 highlighted the need to register some non-resident businesses retrospectively.

    Information needs

    The Australian tax advisors we spoke to were already aware of the new GST measure. They obtain their information via the following channels:

    Large accounting firms

    • High level connections with Treasury and specialist advisory units that are often consulted early as the law is drafted.
    • Tax technology business teams keep other teams updated of latest changes and news.
    • The Budget night coverage.
    • Direct messages from staff in the ATO.

    Tier two and other tax advisors

    • Government announcements.
    • News services and media announcements.
    • ATO news subscription services, including ato.gov.au.
    • Updates from the Big Four.
    • CPA Australia.
    • The NTAA.
    • Technical articles.

    Authentication solution needs and requirements

    With regards to the authentication solution, tax advisors:

    • 14 out of 14 did not consider free online email services and accounts, such as Hotmail (now Outlook)/Gmail/Twitter or Facebook as appropriate for the purposes of accessing an Australian government service.
    • 9 out of 14 wanted their current AUSkey to provide access the Simplified GST system.
    • 9 out of 14 said that they would prefer to have a credential issued by the ATO over a WoG credential.
    • 4 out of 14 said that they preferred to have WoG credential over an ATO credential.
    • 8 out of 14 said that they (managers) would not allow their staff to use their personal mobile devices for work. Many said that their organisations prohibited the use of personal devices to access client records and to process work.
    • 7 out of 14 said that they used personal devices for work purposes, but these were used only to read emails, and never to access the portal or client details. One of these said work policy would allow to access clients records in exceptional circumstances from a mobile phone, however, this was merely to ‘view only as opposed to modifying client records’.
    • 2 out of 14 would consider registering, reporting and paying GST from their personal mobile device if that was possible and work policy would allow it
    • 14 out of 14 conduct work on a desktop/laptop at work; 2 out of 14 have laptops and remote access to work
    • 13 out of 14 said that if credentials were set up at the individual level, staff would not want to provide their birth date or their personal tax file number.
    • 11 out of 14 would want one credential per tax service provider firm to act on behalf of all non-residents they represent, with staff access controls (user accounts - ‘just like the portal’).
    • 3 out of 14 would want one credential (for their organisation) that allowed staff, to access any non-resident business they represented.
    • 14 out of 14 believed that the non-resident business should also have its own credential.
    • 12 out of 14 never pay for their clients; 11 out of 14 register the business for their client and report and would hand over ongoing reporting to the client if it is simple once they are set up.
    • 14 out of 14 would want the credential be portable between devices rather than locked down to one (mainly desktops/laptops; for most not to mobile device)
    • 8 out of 14 would want the credential/user account transferrable between staff if it were issued at an individual level. The other 6 said they would set up new ones if an individual staff member leaves.
    • 13 out of 14 preferred a password over biometric access modes such as fingerprints and voice authentication.

    Simplified GST needs and requirements

    Tax advisors said that in regards to the Simplified GST system for non-residents:

    • 14 out of 14 would register their client with Simplified GST if the non-resident business had not incurred claimable costs in Australia. If they had incurred expenses in Australia, they would register the client for full GST reporting. Comment was made that a ‘middle ground’ would be useful, that is, allowing the non-resident business to claim input tax credits without having to go through the extensive proof of identity needed for full GST reporting.
    • 10 out of 14 of those who have businesses currently registered for full GST reporting would not opt out if they need to claim input tax credits.
    • 6 out of 14 had concerns about the non-resident business not going through proof of identity checks or obtaining an ABN. The concerns expressed were:
      • how the ATO would enforce GST reporting/payment by non-residents if they can’t be validated, and
      • if a non-resident charges GST in Australia (especially when dealing with Government), they might be required to show an ABN.
       
    • 11 out of 14 said quarterly reporting worked well for them. One would prefer monthly and two yearly reporting.
    • 9 out of 14 said they would welcome machine-machine reporting, but only if they had review and editing control over the data before it was submitted. 5 out of 14 said they preferred manual reporting.
    • 7 out of 14 said it would be easy to provide a tax ID from another jurisdiction, 4 out of 14 would expect push back or problems they think they could resolve, and 3 out of 14 said it would be very difficult depending on the country/client to provide this.
    • 10 out of 14 said offsetting a GST overpayment towards future debts as default would work ok, some had concerns if there is no future debt; 13 out of 14 wanted flexibility to request a refund if needed.
    • 11 out of 14 did not want any auto correct of GST payable. If this was provided they wanted the ability to retain control by overriding the auto correct as there might be good reasons for reporting a different amount.
    • 8 out of 14 would not expect 24 hour assistance and that assistance within Australian business hours was adequate.
    • 11 out of 14 reported SWIFT to be the preferred payment option of their clients, some (2 out of 14) stated a credit card might be used, and 3 out of 14 thought PayPal would be good.
    • 1 out of 14 would expect direct debit possible where the tax service provider makes the ongoing payments for the non-resident from their trust account.
    • 6 out of 14 expected the switch from simple to full GST reporting to be made easy.
      Last modified: 03 May 2018QC 55175