Small Business Stewardship Group key messages 10 November 2020

myGovID and Relationship Authorisation Manager (RAM)

Deputy Commissioners John Dardo and Hoa Wood provided an update on the implementation of myGovID and RAM, acknowledging that the transition would not have been as successful without the feedback provided by this group.

Adoption and usage of myGovID and RAM has far exceeded forecasts, which were based on unique users of AUSkey. These results were largely driven by there being more multiple users of AUSkey than expected and more people requiring credentials to use the ATO’s online services to access stimulus measures.

The list of documents that can be used to prove your identity continues to grow and this has assisted reduction of some of the initial system irritants. Name-matching to a Medicare card is still a known issue.

Improvements to the system to address some other remaining irritants will be delivered in December 2020, including the ability to update an email address without having to prove your identity again.

New services are scheduled for 2021. We are running a private beta using myGovID to access services for individuals in myGov.

We are seeking a facial verification vendor, with production expected by mid-2021. The facial verification technology will work on a one-to-one basis, matching a user’s face to their licence or passport photo in the originating repository. The technology will have inbuilt ‘liveness’ checks to ensure the person is physically present, preventing the fraudulent use of photos or video to impersonate an individual.

Member discussion

A member asked about the inter-operability of the ATO’s Digital Identity Program and how it could be used to streamline the verification process when accessing services from other government agencies, including assistance packages. John Dardo confirmed that the ATO’s identity proofing could be used if the relevant agency is onboarded. It should be noted, the first focus of the identity program is business clients and their representatives accessing services.

A member asked about where myGovID will be positioned to the business community compared to other trusted digital identity frameworks, such as those to be used by Australia Post and in other jurisdictions. The ATO explained the overarching principal from Government is that there will be an identity ecosystem, which should be interoperable. MyGovID is the Government’s identity verification system.

A member provided feedback based on their experience setting up a myGovID. The system would not allow him to link his identity to multiple companies. The ATO suggested this might be due to the ABR not being updated with the right director details, even if the Australian Securities and Investments Commission (ASIC) has been updated. There has been a large increase in requests to associate details in the ABR recently. Further, even if the ABR has the correct details, they were not perfectly matched because there is a legal restriction where we are not allowed to ask for an individual’s TFN when establishing a myGovID.

The ATO confirmed ASIC was not onboarded onto myGovID because the myGovID credential will be implemented for business registers through the Modernising Business Registers program.

Online services for business

Assistant Commissioner Andrew Watson provided a demonstration of the ATO’s beta version of Online services for business platform. Online services for business will replace the Business Portal and the electronic superannuation audit tool (eSAT), delivering:

• features already available to existing Business Portal users and new functionality like switching between ABNs with a single login, payment plans, maintaining credit card details and lodgment history
• a reliable digital lodgment channel for approved SMSF auditors to lodge Auditor Contravention Reports and Audit Complete Advices.

The platform has a diverse range of users. Small business is the largest user group as well as larger corporations, government agencies and superannuation funds.

A live private beta commenced on 6 October 2020, with 75% of the final functionality available. More than half of the users have been exclusively using Online services for business and have not reverted to using the Business Portal. This is an encouraging sign.

We will continue to have people test the platform while we continue to build the remaining functionality, which is on track to be delivered by end of December 2020. Our intent is to move into a public beta early next year, moving existing Business Portal users to Online services for business.

Member discussion

The ATO clarified that the same criteria apply for entering a payment plan as they do in Online services for agents. There is a limit of up to $100,000, a maximum of two years and not more than two previously defaulted payment plans within a period. Most small businesses would meet the current criteria and should be able to use Online services for business to create a payment plan.

A member suggested Online services for business will be a very valuable source of information for small business operators without having to incur a cost to go through their agent.

There is an education opportunity to help small businesses understand the information that is available. Online services for business has been designed for use alongside Online services for agents.

Another member commented it would be beneficial for Online services for business to form a one-stop-shop with appropriate links to access the stimulus measures, other government services and business.gov.auExternal Link

The ATO clarified that it is designed as a self-service for a small business and to make things a lot quicker than making phone calls. Our priority is to assist those who currently use the Business Portal to move to the new service.

A member complimented the clean design as a big improvement over the current Business Portal.

A member suggested there is a balancing act with Online services where the benefits of increased visibility should be weighed against a business’s capacity to act on their own behalf. Issues may arise if a business lodges forms or enters a payment plan on their own and correspondence is not sent to their tax agent.

Successful implementation will require appropriate communications to ensure businesses use Online services for business in a way best suited to their circumstances.

Small business tax performance

Peter Holt provided an overview on the Small Business income tax performance findings for three years (2015–16, 2016–17 and 2017–18). This work helps measure the effectiveness of the tax system.

The tax gap is an estimate of the difference between the amount of tax the ATO collects and what would have been collected if every taxpayer was fully compliant with the tax law. Tax gaps are about measuring what is not visible – what people have not told us.

The methodology used to estimate the tax gap is assured by three independent representatives on our expert panel. There is a fourth independent assurer that reviews our audit activity. The ATO’s tax gap methodology is shared across other jurisdictions to ensure best practice.

There is a variation to the 2015–16 estimate figures that were released last year. The net tax gap was initially estimated as 12.5% or $11.1 billion. The revised net tax gap is 12.2% or $10.8 billion. The reason for the variation is due to late lodgments and adjustments made through amendments.

In 2017–18, we saw an increase in population and an increase of tax paid voluntarily. It was an economically strong year that lead to an increase in tax performance.

Due to the large and diverse population, small business makes up a large portion of the overall $31 billion tax gap for 2017–18 ($11.1 billion). We continue to improve and simplify systems and processes to support businesses to get things right, while also dealing with those that are intentionally doing the wrong thing.

From the random enquiry program, we are seeing small businesses that report correctly are usually: keeping good records, conducting regular reconciliations, seeking advice from a tax professional when they need it, and using technology to help them run their business. When small businesses get it wrong it is usually because they are not declaring all income, not accounting for the private use of business assets/funds, and not understanding their tax obligations.

We are now preparing an industry trend analysis based on this work.

The group discussed the circulation of cash which, while it has reduced during COVID, remains a prevalent means of transacting. The ATO is aware a lot of businesses have moved to digital due to COVID, but we are also identifying some avoidance through digital systems emerging. We are aware of an issue in the agricultural industry where workers are demanding cash payments due to the labour shortage. We are seeing businesses asking for cash to reduce disclosed turnover to improperly access stimulus measures.

Taxable Payments Reporting System

The Taxable Payments Reporting System (TPRS) is a third-party reporting regime that provides enhanced visibility of payments made to contractors in certain high-risk industries.

Our TPRS campaigns for 2020–21 are aimed at on-boarding businesses into the TPRS system and reviewing contractor income discrepancies with the intent of helping to create a level playing field and increasing confidence that taxation obligations are met.

The three tranches of work planned for 2020–21 are:

• Tranche 1: Help and Educate campaign to empower small businesses to self-assess their TPRS obligations
• Tranche 2: Income Discrepancy campaign encourages self-amendments
• Tranche 3: Non-lodgment advice campaign confirming the legitimacy of submitted Non-lodgment advices.

A report is being produced to measure the impact of the TPRS program, however, we are currently revising the methodology used for the building and construction industry to make it more reliable. We are waiting for the next lodgment cycle for further data.

Agency updates

In addition to the written updates, the agencies noted the following specific matters.

ATO

The Reach Out Indigenous business support program resumed operation in July. The program has shifted from face-to-face assistance in remote communities to an online delivery model through local chambers and indigenous business associations. The use of digital services is going well, and we have not forgotten about businesses in remote communities with technology issues.

Treasury

Public consultation for JobMaker hiring credit rules closed on 27 November 2020. Treasury appreciated the feedback provided by Small Business Stewardship Group (SBSG) members who attended the consultation session held on 9 November.

The Minister for Housing and Assistant Treasurer released a press releaseExternal Link calling for pre-Budget submissions. Submissions are due by close of business on 29 January 2021.

Department of Industry, Science, Energy and Resources (DISER)

Exposure draft amendments to the Franchising Code of Conduct were released on 9 November and are available on the DISER websiteExternal Link. Submissions closed on 4 December 2020.

Payment times reporting scheme will start on 1 January 2021. Businesses in scope to report have been approached with information and encouraged to register. Scheme information is on industry.gov.auExternal Link

The Small Business Identification tool scheme will be released in December 2020. The tool will identify companies that make more than $10 million and everyone else will be identified as a small business. There is a mechanism for small businesses to ask to be taken off the list if they do not wish to be identified as a small business.

Member discussion

Stakeholders discussed the JobMaker Hiring Credit measure. Stakeholders flagged concerns over complexity and the need for clear communication on the rules around age requirements.

Members provided feedback as follow-up to Treasury’s consultation on the Consumer Data RightExternal Link regime, noting that the proposed legislative amendments may involve a significant red tape and regulatory burden.

Tax advisers would like to be involved in helping small businesses recover. It was suggested that a small business support package is required to assist businesses obtain appropriate tax advice.

Reflections on the performance of the group

2020 has been a challenging year and the group has been both responsive and agile in adjusting to the move to more frequent online meetings.

Feedback received from members

The members agreed that the COVID updates have been extremely valuable. The accessibility and responsiveness of the ATO during the COVID period was commended. The regular and timely key messages and other updates were very useful in keeping group members and their stakeholders fully informed. Knowing the information was sent directly from the ATO provides comfort to recipients.

There is value in the frequent ad-hoc meetings and workshops operating in conjunction with the regular meeting schedule. Outcomes from SBSG meetings could feed into the Small Business Newsroom.

Deborah Jenkins thanked all members for the engagement this year – especially the small business operators who took time away from their business to actively participate in meetings and additional consultation sessions.

Communications issued since meeting

• 10 November – Planned systems maintenance and JobKeeper monthly declarations
• 30 November – JobKeeper Payment extension 2 – key dates

Attendees

Apologies