Small Business Stewardship Group special briefing 1 December 2020

Differentiated payment plans

From 5 December 2020, changes to our self-serve payment plan functionality will enable clients to create more tailored and manageable payment plans.

Analytic modelling will use the information we hold about clients to better tailor payment plans. It will advise clients of the up-front payment amount required and provide an estimate of the general interest charge (GIC) payable over the life of the plan. The service will not exclude clients with outstanding lodgments but will prompt them to lodge.

The improved payment plan service will deploy into Online services for business, which is scheduled to replace the Business Portal during 2021.

Clients can opt-in to receive SMS and email alerts to remind them ahead of instalment due dates.

We are planning changes to payment plan monitoring in mid-2021. Where a client misses a scheduled payment, built-in tolerances will enable some payment plans to enter a new arrears status. This will give clients an opportunity to catch-up on missed payments before the plan defaults.

Small business clients whose situations fall outside the self-service eligibility criteria are encouraged to call the ATO to discuss their payment options.

Since June 2020, we have been reaching out to clients with outstanding obligations who have not made contact with the ATO. The response has been very positive, and we are looking at launching this program in Victoria shortly.

Small businesses want clarity about what steps the ATO will take before we commence firmer action.

• From March next year, the ATO will start advising clients that firmer action may commence if obligations are not met or if the client remains disengaged.
• Prior to March, the ATO may initiate firmer action against clients where we have identified a significant risk to revenue or employee entitlements.
• In all cases the ATO encourages small businesses with outstanding obligations to reach out for assistance or to enter a payment plan. In some cases, we may pause firmer action commencement while the client catches up.

Member discussion

Feedback from members was positive, saying this is a great step to support small business. The changes will be particularly beneficial to businesses coming off JobKeeper where turnover is still significantly down. The visibility of GIC payable was noted as a particular improvement.

A member asked if instalment amounts can be customised to account for a business’s seasonal cash flow fluctuations. The ATO responded a default payment plan evenly distributes across the period, but this can be customised by the client.

There are differing levels of understanding in the community about taxpayer obligations. The terminology can be confusing. Communications should clearly state what types of debt, such as pay as you go instalments and pay as you go withholding, are categorised as activity statement debt. The ATO will develop a landing page with information for clients looking to enter a payment plan.

The ATO clarified that we do not issue Director Penalty Notices to clients in active payment plans. This would be counter to having a ‘help and support’ mechanism in place.

The Help with lodging and paying link is currently front and centre on the ATO website homepage. The messaging is empathetic and focuses on supporting clients.

Recommencing compliance activity

In late March 2020, we paused much of our compliance work, except for pre-issue refund integrity cases and our internal reviews for the Small Business Income Tax Gap Random Enquiry Program.

All new compliance cases were put on hold, except for pre-issue refund integrity cases.

Clients or their agents with in-progress audits were pro-actively contacted and offered assistance. Where clients advised COVID-19 impacts, engagements were deferred, initially until the end of May 2020 and then until 31 August 2020. However, initially we only had over 50% of clients with cases on hand requesting that it be placed on hold.

Since 1 September 2020, we have dealt with extensions on a case-by-case basis.

We did not agree to pause cases where there was evidence of fraud or evasion or in circumstances where there was a period of review issue and the client would not allow us to extend the period of review during the period the case was on hold.

General approach to recommencement (excluding Victoria)

In November, we recommenced our engagement and assurance program of work for 2020–21, including cases that have been on hold, the Black Economy program, GST, Small Business Income Tax Gap Random Enquiry audits and Excise.

We are also undertaking a program of assurance and nudge campaigns including:

• lodgment and assurance of Taxable Payment Annual Reports
• income discrepancy based on third-party data matching
• transparency of sub-contractor Taxable Payment Reporting System information for head contractors.

We are balancing our need to address risks against our continued aim to support small businesses affected by COVID-19.

Further COVID-19 extensions will be considered on a case-by-case basis.

Approach for Victoria

For Victorian small businesses, we will not commence client contact on any cases until 18 January 2021 – unless it is a pre-issue case, there are Period of Review issues or there is evidence of fraud and evasion. However, we will undertake some internal review of Victorian cases.

Member discussion

A member mentioned the frustrations experienced by clients calling the ATO about the progress of their refund inside the 14-day service standard and being told that it is being held for pre-refund integrity checks. It would helpful to understand why refunds are subject to pre-refund integrity checks.

Other business

The Digital Cash Flow Coaching KitExternal Link had a ‘soft launch’ on 26 November 2020.

The Minister for Trade, Tourism and Investment made an announcementExternal Link regarding COVID-19 payments to travel agents.

The key dates for the JobKeeper extension 2 are available on ato.gov.au.

Communications issued since meeting

• 7 December – JobMaker Hiring Credit: registrations now open
• 10 December – For information: Single Touch Payroll Phase 2