Individuals Stewardship Group key messages 17 November 2020

Corporate Plan

Since the last time the Individuals Stewardship Group (the Group) met in July, ATO released its corporate plan which highlights eight key areas of focus for 2020–21. Of particular interest to this group are the following initiatives:

• delivery of the governments stimulus measures
• optimising interactions through self-service channels
• improving the way we collect, manage, use and share data
• strengthening cyber security.

Annual Report and tax gap estimates.

The ATO 2019–20 annual report and the tax gap estimates were released in October, providing a holistic picture of the gap across the income tax system. Tax gaps measure the difference between what revenue is collected to what would have been collected if all taxpayers were compliant with the tax law in a perfect world.

There has been a decline in the individuals not in business tax gap from 2016–17, which was around 6%, to 5.4% ($8.3 billion) in 2017–18. It is a lag indicator which is compared to historical data to track the progress of some of the initiatives. The work we do with clients and taxpayers on compliance and engagement is about making sustainable inroads in terms of reducing that tax gap.

The majority of errors in tax returns that we see is because individuals do not understand their obligations or are making mistakes. A lot of the education programs are based on what you are entitled to deduct.

Tax Help extended

Tax Help has been extended until 30 November. Volunteers are assisting individuals with simple tax affairs below $60,000 threshold through the program which is being delivered successfully – virtually or over the phone.

Work from home guidance

The 'work from home short cut rate', which provided a capped rate of 80 cents per hour that can be claimed for work from home expenses has been extended until 31 December 2020. We will consider whether the shortcut method will apply into the next calendar year as the COVID-19 situation progresses. ATO has subsequently extended this treatment to 30 June 2021.

JobKeeper extension

The JobKeeper payment extension arrangement started in September and will end 28 March 2021.

Digital ID update

John Dardo provided an update on the transition from AUSkey to myGovID. AUSkey was used as a credential for business – it was 10 years old, at end of life and needed a replacement.

myGovID is a credential that can be downloaded via an app on a mobile device, which can be used as a key to authenticate yourselves for a range of services.

The ATO provided an update on the next stages of release for myGovID, including enabling it to be used to access myGov for individuals and facial verification as part of the process to strengthen the security in relation to the digital credential.

Setting up a myGovID is a point in time process and the credential will not need to be updated when official documents such as passports or driver's licences expire, except in the case where an individual gets a new device. Then they will be required to set up the access to re-prove that they and their new phone are connected and will need to use their most recent licence or passport.

Updates will be provided at future meetings as work on myGovID progresses.

Budget update

Alister Boyes provided an update on the federal budget measures that would be of interest to the Group.

Tax cuts originally scheduled for 2022–23 have been brought forward to this financial year. Tax rate schedules were updated on ato.gov.au on 13 October. The low and middle income tax offset was also retained for 2020–21 and will phase out in 2021–22. Main changes:

• increase the upper threshold for the 19% bracket from $37,000 to $45,000
• increase the upper limit for the 32.5% bracket from $90,000 to $120,000
• low income tax offset increased by $255 – now $700 instead of $445.
• threshold changes have been reflected in schedules for withholding – published 13 October 2020.

All software developers have deployed software to reflect those changes. Employees, as of 16 October 2020, should see the tax cuts reflected in their pays. For pay as you go instalment taxpayers, the rates will be applied in the December quarter.

Withholding schedules are updated for prospective pays. Amounts withheld prior to 16 October will be reflected in assessments when returns are lodged in the 2020–21 income year.

Granny flats – the government announced in the budget that it will introduce a capital gains tax exemption for granny flat arrangements that are subject to a written agreement.

Private health insurance – changes to the age limit of dependants, uplifting the age from 24 to 31 years and removing the age limit for dependants with a disability. Department of Health have responsibility for this measure.

The Your Future Your Super package, when implemented, will improve structural flaws and help individuals build and manage their retirement savings. The government has announced that the scheme is expected to commence on 1 July 2021.

Reflections on 2020

Members provided feedback on the effectiveness and contribution of the Group for 2020. These included:

• Appreciated receiving timely information which has helped provide advice and guidance to their clients and/or members
• Value accessibility of ATO staff to assist with COVID-19 enquiries throughout the year
• There is a lot of interest in ATO products and services – good to understand how these are changing or what is new
  • Noted that it is good to ensure the use of plain English in communication, and where possible, translate into different languages
   
• Would appreciate at least one face to face meeting in 2021 – happy with virtual meetings with there being value in having one face to face meeting at the end of the year
• Valued the feedback received from these meetings and are interested in hearing more about the irritants in the tax and super system and opportunities for improvements
• Would be good to have workshop format discussions on topics at future meetings as well as have members provide topics of interest to shape the agenda for future meetings
• Security and scams are of concern to their members and would be a good topic for discussion in 2021
• Membership – It is difficult to ensure we have the right mix of members across such a diverse population. Individuals are unique and it is beneficial to tap into as many different community groups and associations as we can to obtain different experiences and perspectives.

Attendees

Apologies