Show download pdf controls
  • Recommendations

    The recommendations were around:

    Database management

    Consider means by which the quality of the private group database can be improved, as this would facilitate communication with private groups. We [ChantLink] recognise that this is difficult to achieve, and would need to be an ongoing effort as relevant contact details change over time.

    Communications from private groups to the ATO

    The majority of private groups in this research had little or no need to deal directly with the ATO as their accountants managed all or most of their financial affairs. However, in part, lack of contact was related to a lack of knowledge of the best way to contact the ATO when queries arose. The only means of obtaining information from the ATO that business people from private groups raised in this research were:

    • searching the website for information – it was generally assumed that finding relevant information in this way would be time consuming and difficult
    • ringing the ATO call centre (while not specifically addressed in this research, most did not appear to be aware that there was a specific business phone number). The general assumption here was that the person answering the call would have no specialist knowledge of businesses, would have no knowledge of the caller’s business and would only be able to answer basic queries

    This suggests the need to provide private groups with clearer information about the ways they can get in touch with the ATO, in particular channels that have been devised specifically for business, such as the business line. Further, it is our [ChantLink] understanding that business people from private groups can ring, leave a message for the ATO and an appropriate person from the ATO will be in touch with them within 24 hours. No respondent in this research mentioned this, and there is no easily accessible description of this service on the ATO website.

    There was also a significant concern amongst some respondents that raising an issue with the ATO could result in them being ‘targeted’ by the ATO, and this concern resulted in a desire to avoid contact with the ATO where possible. It is difficult to know what specific action the ATO can take to address this issue, but it is a potential concern that the ATO should be aware of in dealing with private groups.

    Communications from the ATO to private groups

    We [ChantLink] recommend that the ATO identifies all requirements that apply to private groups as their turnover increases and communicate these changes with relevant private groups. For example, private groups moving from an annual turnover of under $20 million to $20 million plus will need to change from submitting BAS quarterly to monthly, and they will be subject to ASIC audit. Private groups are not necessarily aware of new requirements as their turnover changes, and those not aware would appreciate advance notification of impending changes.

    Recognise resource limitation and improve flexibility

    There was quite a strong belief amongst private groups that the ATO did not recognise the resource restrictions that private groups operated under. One means by which such recognition could be signalled is by considering actions the ATO could take to increase the flexibility of the way it deals with private groups, and publicise this approach to increased flexibility. Based on this research, we [ChantLink] anticipate that relatively few private groups would want or need to take advantage of increased flexibility. However, it would greatly improve perceptions of the ATO amongst those private groups where flexibility would offer a significant benefit.

    Several ways in which increased flexibility could potentially be achieved are by:

    • allowing private groups to nominate the specific date of the month (or one of several dates) for lodgment of their BAS. Private groups wanted the calculations necessary to complete their BAS to fit in with their natural workflow, and for some, this meant that the 21st of the month was not the most convenient time
    • where a problem occurs with processing of BAS and subsequent GST refunds, instituting means to discuss the issue with the private group as soon as practical, rather than waiting for a specified timeframe to elapse.

    An additional benefit of the ATO taking action of this nature is that it would flag to private groups that the ATO does indeed recognise that private groups are different to other types of organisations.

    Classification of businesses by turnover

    Consider the way in which turnover is measured and the impact this can have on classification of some private groups. In particular, in this research, it was identified that businesses providing payroll services are classified based on the size of the total tax and other benefits they pay on behalf of their clients, rather than on their actual business size. This results in an inaccurate classification of these businesses by size. Although this issue was not identified in this research with businesses other than those providing payroll services, it is possible that similar inaccuracies may exist in relation to other business types.

    Similarly, some private groups with high turnovers but small margins held the view that turnover were an inappropriate measure of size of the organisation. Thus, the ATO could consider implementing other measures of organisation size.

    Promotion of benefits of corporate governance

    In encouraging more robust corporate governance amongst private groups, the ATO could focus on the key benefits identified by those private groups that have instituted various corporate governance procedures. These were that formal developed systems and processes embedded within the culture of the business:

    • assist in managing the business growth
    • are becoming increasingly commonly necessary in order to tender for specific types of contracts with large corporates and government bodies
    • will assist the business in obtaining finance now or in the future
    • will assist the business in the future should it wish to consider a merger with another business, sale of the business or a planned listing of the business.

    Promotion of benefits of succession planning

    In encouraging the development of succession planning within private groups, the ATO could focus on the key benefits identified by those private groups who have succession planning. These were that it:

    • is easier to develop a succession plan when there is no immediate imperative to do so. It is very difficult to develop an appropriate plan when under the stress of serious illness or death of senior owners / partners in the private group
    • facilitates possible future operations of the private group, such as merging with another business, selling the business or planning to list the business.
      Last modified: 19 Dec 2018QC 57678