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  • Tax Profession Digital Implementation Group key messages 14 November 2019

    Welcome

    Chairs Colin Walker and Mark Morris welcomed members and guests and noted the apologies received for the meeting.

    Access to deceased taxpayer information

    Registered tax practitioners have had access to deceased taxpayer information via the tax and BAS agent portals. This will cease with the portals being decommissioned on 29 November 2019 and a similar but restricted access will be provided in Online services for agents (OSfA) at the same time as we remove access to the portals.

    The ATO has been consulting with representatives of the tax profession, legal practitioners, public and private trustees and the tax professional associations on a number of options to overcome the barriers, to deliver both short term and long term solutions.

    Assistant Commissioner Colin Walker provided members with the background on why OSfA does not currently provide access to this information and the following processes being taken to mitigate the situation:

    • the preparation of a legislative instrument applying the Commissioner’s Remedial Power to allow access for tax and BAS agents and legal practitioners who are representing a Legal Personal Representative (LPR) of the deceased to pre-death tax information directly
    • modifications to the ATO Online services for agents channel to allow Legal Personal Representatives who are also registered agents, to link deceased individuals to their client list
    • implementation of a manual administration process to assist ATO staff to provide LPRs who are not a registered agent, with the information needed to assist in the administration of the deceased estate.

    Members were provided with the anticipated timelines for the proposed legislative solution but it was emphasised that the ATO cannot pre-empt the change and needs to operate within current legislation.

    The ATO acknowledged that the manual process increases administration but an urgent solution was needed to assist families and agents dealing with them in the interim.

    The ATO will de-link a deceased client upon notification of death. Agents will need to re-link themselves if they are also the LPR. The ‘client update’ function in OSfA will allow the agent to tick a box to acknowledge they are the LPR and will receive a message cautioning what this entails. Members requested a process to advise agents when a ‘deceased client indicator’ is placed on a file so that they are aware that a client is being de-linked.

    This interim process has not been released to software and therefore the OSfA process will differ to practice software in the short term. The ATO asks digital service providers to advise their customers that this issue exists.

    Action item details listed below

    Action item

    Members requested that the ATO provide the same OSfA warning text regarding agents appointing themselves as a LPR to digital service providers to include in their software should they choose to.

    Members are asked to review the hand out “Proposed information pack to be provided by ATO to LPR” and forward any further suggestions of standard information for inclusion to the secretariat.

    Due date

    To be advised

    Responsibility

    ATO

    ATO digital services for agents

    Following the successful implementation of OSfA access to the tax and BAS agent portals ceased at 11.30pm AEDT on 29 November 2019.

    OSfA provides a contemporary range of services with a more streamlined online experience for tax and BAS agents to manage their clients’ tax and superannuation affairs.

    The ATO committed to keep the tax and BAS Agent Portals operational for an interim period as a contingency while agents transitioned to the OSfA services, and offered an extensive range of support and guidance material for those new to the services.

    Assistant Commissioner Colin Walker advised members that the Activity statement financial processing (ASFP) changes being implemented over the ATO Christmas shutdown period would result in taxpayer account information not being updated in the portals. Therefore the Q4 release at the end of November provided the logical time to decommission the portals.

    Members provided feedback that there is some misunderstanding in the community between the decommissioning of the portals and the decommissioning of AUSkey in March 2020. The ATO needs to distinguish between the portals closing and the necessity to create a myGovID prior to the AUSkey decommission.

    The group acknowledged that some tax practitioners pay more attention to communications received from professional associations and therefore associations need to assist the ATO to clearly communicate messages on both of the transitions.

    Communication on the transition from the portals needs to include information on the work-arounds for the few services not yet available in OSfA, and also highlight how to perform the tasks they previously did in the portals. Members are hearing comments from tax practitioners that they cannot locate functions in OSfA despite knowing that they are there somewhere.

    Tax practitioners are encouraged to continue to provide feedback and suggestions for improvements through the OSfA feedback channels. OSfA is a service that the ATO will continue to improve in order to provide a contemporary service into the future. Online services for agents

    myGovID and AUSkey transition

    AUSkey will be decommissioned at the end of March 2020 and the ATO is delivering a new secure digital identity replacement solution. Together myGovID and Relationship Authorisation Manager (RAM) will be used to replace AUSkey, device AUSkey and Manage ABN Connections (MAC).

    The myGovID credential belongs to the individual. It is their personal credential and should never be shared. Tax practitioners should never ask for their client’s myGovID credential.

    The ability to use that credential to access the ABR or business portal or OSfA is dependent on the authority that has been assigned to the individual in RAM and Access Manager.

    Deputy Commissioner John Dardo and Assistant Commissioner Jimmy Tzimopoulos discussed the myGovID credential and captured questions from members to be incorporated into support resources to assist tax practitioners and their clients with the transition from AUSkeys.

    Director Claire Miller provided members with an update on the AUSkey transition including:

    • the current status and what aspects are coming
    • the transition timeline
    • myGovID and RAM take-up figures.

    Members reiterated the need for administrators to be able to review times when employees are accessing ATO online services. The ability to limit staff access hours and locations is also a priority for many practices.

    Members advised that the community continues to raise concerns regarding the lack of a desktop credential for myGovID. The main concerns are regarding workplace policies where phones are not allowed or not provided by the employer, and instances where staff forget, damage or lose their device and therefore are not able to perform their required duties on that day. It was also noted that employees may be uncomfortable loading their personal myGovID on to a work device.

    The group was advised that the ATO’s position remains that a solution is available and it requires a smart device. A desktop solution may be considered when desktop apps are released, but this is not on the current work plan.

    Members pointed out that Fringe benefits tax (FBT) and deductibility rules may need to reviewed and addressed in more detail in the ‘FAQ’ resources.

    The group discussed the three main exemption categories that have been identified and the proposed solutions to mitigate these:

    • individuals who do not have the required documents to verify their identity to a standard (IP2) identity strength
    • organisations and businesses that cannot be linked in RAM
    • individuals with faulty or mismatched document verification service documents.

    Members raised concerns with the timing of communication suggesting that it has commenced too late. Some larger practices will have a considerable amount of preparation to complete and will potentially not know which of their employees cannot meet the IP2 criteria and therefore struggle to prepare prior to March 2020.

    Members provided feedback that agents are frustrated that they cannot assist their clients to obtain a myGovID. Members also want the ATO to note that it may be an agent calling on their client’s behalf to get assistance in setting up the business credentials.

    The ATO acknowledge that there will be some cases where transitioning is easy and some more complex cases for which the ATO will provide support as appropriate.

    A suite of support products being developed to assist the community will be shared with members. Professional association representatives are encouraged to disseminate these resources and promote the need for members to prepare for the transition to myGovID and RAM prior to the decommissioning of AUSkeys.

    Action item details listed below

    Action item

    Members are encouraged to review the support material, use the resources provided and see what gaps there may be, tell us what works and provide feedback via the secretariat.

    Provide members with an anticipated date when the functionality will be available for practice administrators to review an ‘access log’ for their staff.

    Members would like clarification on the deductibility and FBT implications of personal/business mobile phones. Would like this information included in the ‘FAQs’.

    Provide members with a list of what can be accessed using each level of IP1 and IP2 credential, and a copy of the manual IP1 certification process.

    Due date

    To be advised

    Responsibility

    ATO

    Communication preferences

    Communication preferences provide taxpayers with the ability to direct some electronic communications from the ATO to their tax or BAS agent. It allows tax and BAS agents, with their clients expressed written authority, to select whether their clients digital communications are sent to themselves or directly to the client.

    Communication preferences are currently in private beta and available in OSfA. The ATO will work with digital service providers to enable preference functionality and the retrieval of documents to be accessed via practice management software in the future.

    Assistant Commissioner Sarah Vawser and Project Manager Mark Ayers provided the group with an update on the private beta for communication preferences.

    The ATO’s retail solution is currently being tested through a private beta that commenced on 2 September 2019 and is progressively on-boarding new participants. The focus of the private beta is to understand how the communication preferences solution works in practices.

    As at mid-November:

    • over 5,700 agents have been invited to participate in the private beta
    • approximately 800 agents have set preferences for their practices or clients
    • approximately 12,000 clients have had a preference set for them
    • over 7,000 pieces of communication have issued using preferences.

    The ATO expects to issue 10,000 invitations to participate in the private beta by the end of 2019. The ATO are conscious of major impacts on agents early in 2020 and will assess the best time to proceed to a public release.

    Using the private beta feedback and testing how the solution can work in practices, the next priority is to make the solution available through practice software.

    Members expressed concern that the communication preferences solution has been developed as a retail service without first being released to the wholesale market. The retail service has been developed in consultation with agents but this may not be suitable in the wholesale environment, constraining digital service providers and forcing them to retrofit a retail offering. Digital solutions need to be developed in conjunction with digital service providers as well as agents so that the offering meets both needs.

    Digital service provider members would like a more open approach from the ATO on what is planned to be delivered. Working together will result in cost reductions and potentially improve innovation through the sharing of ideas and new technology.

    The ATO proposed the establishment of a working group to discuss the business readiness approach for the public release of the communication preferences solution and determine how best to support those agents who want to use it.

    Members requested further discussion on ‘express written authority’ at the working group. Many agents are under the impression that their engagement processes cover the client giving the agent authority to deal digitally where needed. It is really important that the client understands what this entails, to protect both the agent and the ATO that they are abiding by the client’s wishes.

    Members commented on the confusion that exists in the community regarding the delivery of ATO communication. The ATO advised that the whole communication experience is being looked at organisation wide to improve the broader experience for agents and clients. The current solution addresses the issue of correspondence being delivered into the myGov accounts of clients but is not a solution for the broader scope of communication delivery.

    Implementation of granular data for tax agents

    As part of the ‘Addressing the Individuals Non-Individuals Tax Gap’ the Government approved the expansion of the collection of granular information for tax agent prepared individual income tax returns. This change will align information provided from returns lodged by agents with the information the ATO receives from self-prepared returns lodged online using myTax.

    Granular information will bring important benefits including:

    • Helping the ATO to reduce unnecessary contact with agents and clients by providing more information about the claims within a label. Where the line item data is sufficient, the ATO will be able to close the case without further contact. Where further contact is needed, the ATO will be able to ask about specific claims rather than the whole label.
    • Assisting the ATO to further refine risk models and to more accurately provide tailored assistance and guidance in relation to specific claims.
    • Enabling the ATO to better identify, monitor and take firm action against those few agents intentionally doing the wrong thing – thus helping to level the playing field for all tax professionals.
    • When taking on new clients' agents will be able to see the details of what was claimed in prior year returns therefore reducing the need to seek working papers from previous agents.

    Agents can assist by ensuring that no privileged advice or data is recorded with this information to avoid it being sent to the ATO. That is, only include information required to describe each deduction entry.

    Assistant Commissioner Kerry O’Loghlin and Director Ross Barns provided members with an update on the implementation of the deductions schedule, and the program of work for the remainder of 2019–20.

    The overall quality of deduction information received in 2019 is very good. The group discussed the three main areas of concern:

    • blank expense descriptions across all deduction labels
    • use of Schedule W expense codes as a replacement for actual expense descriptions
    • incorrect calculations and information relating to claims for self-education.

    The ATO will work with digital service providers and agents to better understand these issues and develop a mitigation strategy for 2020. The ATO is reviewing validation rules for the 2020 design to ensure the correct calculation for the D4 self-education claims.

    If analysis shows that errors are caused by a misunderstanding of how to perform the calculations then the ATO will provide support and education in those areas.

    The group discussed the provision of drop down options to assist with the entry of description information. The ATO are developing capabilities around machine learning and natural language processing to interpret the information provided by the client. This will give a more detailed understanding of the actual claim than would be captured by the use of a drop down option providing only the category of the expenditure.

    The assessment of the provided information through the use of analytics and AI will be integrated into risk management models to assist in determining who the ATO need to request additional information from.

    The ATO acknowledge that the character limitation in the current design is a restricting factor and are working on improvements.

    The implementation dates for the remaining schedules are:

    • Multi-property rental details schedule - 1 July 2019 (transitional) and 1 July 2020 (mandatory)
    • Income details schedule (new schedule) - 1 July 2020 (mandatory)
    • Capital gains tax details schedule -1 July 2020 (mandatory)
    • Non-resident foreign income details schedule -1 July 2020 (mandatory)
    • Copy of return service – deductions schedule only (2019–20) – all granular data (2020–21)

    The group discussed the necessity for Schedule W, which is only required to be used by a small set of agents who are under a program of review. The ATO is considering the removal of Schedule W for 2020 subject to the deductions schedule providing the same required information. A decision will be made early in 2020.

    Members raised concerns regarding the increase in work involved in the preparation of returns as a result of the implementation of the deduction schedule and would like clarification on what level of detail is acceptable. The ATO require that the description of the expense is detailed enough to assess the viability of the expense and the context of the person’s circumstances.

    The ATO reiterated that this information collection is intended to work within the scope of information that agents are already collecting as part of the return preparation process and their interaction with clients. Record keeping rules have not changed under this program of work.

    The ATO are happy to work together to streamline this process, and identify ways to adjust the manner in which various elements are reported to facilitate a better outcome for both the agent and the ATO’s ability to use that information. The majority of income information will come through pre-fill for the new income details schedule.

    Digital service providers highlighted that implementing the proposed delivery of schedules is a considerable amount of work from their perspective.

    The ATO acknowledged the support from digital service providers in the implementation of these schedules and will continue to work closely with digital service providers, tax professional associations and tax professional digital implementation group members in the lead up to future implementations.

    Action item details listed below.

    Action item

    The ATO will provide the top 10 descriptions in both agent and self-preparer returns for labels included in the deductions schedule.

    The ATO will share with members the analysis of the granular deductions information as it evolves.

    Members would like a communication piece from the ATO advising taxpayers that detail contributing to a label total will be disclosed to the ATO.

    Members who are interested in working with the project team out of session as this program of work progresses are invited to forward nominations to the secretariat.

    Due date

    To be advised

    Responsibility

    ATO

    Tax Time 2019 debrief

    The group discussed their experiences of Tax Time 2019 and what the ATO could do better next year to assist the community. Aspects discussed included:

    • Some members would rather not see un-finalised data and income statements. Other members like seeing the information as long as it is clear which data is un-finalised.
    • Pre-release R&D schedule changes caused additional workload for digital service providers. Members suggested that un-legislated changes not be requested from providers until the legislation is passed and then decide how to act upon it.
    • The implementation of the granular deduction schedule raised concerns – inconsistencies between the schedule and the main form caused additional work for digital service providers. Digital service providers would like a more collaborative approach to future implementations.
    • The ‘EVT’ process in developing software can prove difficult for digital service providers to find agents with transactions that match the criteria to be tested in the required timeframe.

    Members discussed the tax time stats provided in the agenda papers. It was noted that the lodgment period for tax agent lodged returns continues until June 2020 and therefore the statistics are not a reflection on a move from tax agent lodged returns to myTax. The potential trend being seen is the move between agents, and the move upwards from the micro and small segments to higher tier agents.

    Members would like to know what percentages of the amendment requests received to date were from agents. The ATO noted that an increase in amendments was anticipated this year due to the implementation of single touch payroll and the low and middle income tax offset.

    Members discussed the ATO policy of testing new implementations in live environments with beta testing. They suggested more closed alpha testing prior to releasing to a wider audience.

    Other business

    An update on e-Invoicing was included in the agenda papers. This topic will be added to the 2020 forward agenda item calendar.

    The ATO’s reasonable use policy, previously discussed at the October 2018 meeting, is continuing to be developed. This topic will be added to the 2020 forward agenda item calendar.

    Tax practitioners can obtain more information on these topics from the professional association representatives. Tax practitioners should contact their representative to contribute items for future discussions.

    Attendees

    Attendees details listed below.

    Organisation

    Members

    ATO

    Alison Lendon

    ATO

    Audra Paskevicius (Secretariat)

    ATO

    Ben Lurje

    ATO

    Bronwen Arthur

    ATO

    Claire Miller

    ATO

    Colin Walker(Chair)

    ATO

    Helen Thomas

    ATO

    Jimmy Tzimopolous

    ATO

    Kerry O’Loghlin

    ATO

    Mark Ayers

    ATO

    Michael Rowell

    ATO

    Renee Bruce (Secretariat)

    ATO

    Ross Barns

    ATO

    Sarah Vawser

    ATO

    Sylvia Gallagher

    Tax Practitioners Board

    Michael O’Neill

    Anderson Tax & Consulting

    Debra Anderson

    BNR Partners

    Mark Morris

    Catsoft

    Jack Wee

    Chartered Accountants Australia and New Zealand

    Michael Croker

    Clarity Professional Group

    Warren Seeto

    CPA Australia

    Gavan Ord

    Griffin Group Accountants, Etax Accountants

    Don Griffin

    H&R Block

    Joseph Abouzaid

    HandiSoft, Sage Software Australia

    Michael Wright

    Institute of Certified Bookkeepers

    Matthew Addison

    Institute of Public Accountants

    Tony Greco

    KPMG

    Dale McKay

    McCann Financial Group Services

    Phil McCann

    Metropolitan Taxation Services

    Keith Clissold

    MYOB / ABSIA

    Mike Behling

    National Tax and Accountants Association

    Rodney Wilson

    Pitcher Partners

    Scott Laing

    PricewaterhouseCoopers

    Tully Holleley

    Reckon

    Kevin Johnson

    Tax and Super Australia

    John Jeffreys

    Tax Practitioners Board

    Michael O’Neill

    The Tax Institute

    Elizabeth Wong

    Wolters Kluwer, CCH

    Grant Whytcross

    Xero

    Anthony Migliardi

    Apologies

    Attendees apologies listed below.

    ATO

    Briony Campbell

    ATO

    Kath Anderson

    ATO

    Martin Mane

    ATO

    Tracey Rens

      Last modified: 20 Mar 2020QC 61866