Welcome and introduction
Co-chair Deputy Commissioner Hoa Wood welcomed attendees and asked that any conflicts of interest be declared. Members were reminded that discussions are confidential and that the ATO will be clear as to what can be shared more broadly.
Members were advised that Assistant Commissioner Sylvia Gallagher is moving to the Service Delivery business line within the ATO. Sylvia was thanked for her leadership and for advocating for the ATO and tax practitioners as stakeholders during her tenure in the role. Kath Anderson will return to the role of Assistant Commissioner, Individuals and Intermediaries.
ATO digital updates
Director David Baker updated members on two upcoming changes.
Technical Help Desk (THD) service window – cessation of weekend service
Due to a decline in calls and demand for the THD service over the last three years, a decision has been made to cease offering a weekend service from 1 December 2021.
Agents who call outside of the weekday service window will be directed to the THD website to self-serve. The self-service content has been constructed based on the types of enquiries received in the past.
Member comments
Members acknowledged that a small number of agents will always struggle with navigating the systems however agreed ongoing provision of the service no longer made sense.
Decommissioning of the Electronic Lodgment Service (ELS)
The ELS prior year form service will be decommissioned from 31 January 2022. A new version of the prior year service will be available from 5 December 2021.
The ATO have engaged with digital service providers (DSPs) regarding the change, enabling them to make appropriate changes to their software and inform their clients.
Further communication outlining how to confirm lodgment under the new service will issue to DSPs and tax professionals from mid-November as ELS validation reports (of lodgment) will no longer be available.
Future ato.gov project
Assistant Commissioner Moe Elrifai and Director Ross Edwards advised members the current ato.gov.au website technology requires replacement in the next financial year, and this provides the opportunity to make design improvements.
The future website has been designed based on extensive community consultation with over 5,000 users across all key audience groups and is focussed on improving the user experience.
Testing with tax professionals indicates the need for easy-to-access information with more technical information that helps them in their role as advisers. The ATO will continue to seek input from tax professionals and clients on the new website design.
The ATO is exploring how to better support all users to understand what changes have been made to content across the website and the design team continue to take on feedback to ensure all user needs are met.
Member comments
Members were pleased to hear about the improvements and are excited to see what changes take place in the next 12 months.
Members acknowledged the challenges the ATO faces given the diversity of users who access the website for information. They reiterated previous suggestions from the Supporting the Tax Profession Working Group including:
- making the site user friendly for all
- alerting readers when changes are made and what the changes are, that is, legislative changes, updating typing error
- the use of hyperlinks for more technical information; such as linking to legislative references.
Director identification update
Deputy Commissioner Michelle Crosby and Assistant Commissioner Martin Jacobs advised that the director identification (ID) application system is now in public beta with over 60,000 applications in the first 10 days. The ATO is tracking and analysing the application data to gain insight at the different attributes such as the number director positions held, tenure, and location.
The requirement for new directors to apply for a director ID will enable the ATO to start matching director IDs and tackling phoenix activities.
Member comments
Members noted that some of the proof of record ownership options are not useful for directors of corporate trustees of self-managed super funds (SMSFs). Bank accounts and dividend statements held in SMSFs and trusts can make it difficult to meet the proof of record ownership requirements for a director ID.
The ATO advised that strong authentication and identification requirements are important and there is a need to balance the challenges identified with satisfying the requirements versus the integrity of the register.
Evolution of the client register
Assistant Commissioner Nicole Dykstra and Director Gavin Siebert provided an update on the evolution of the Client Register.
The ATO wants to address challenges with the collection of tax agent and client contact details within the enterprise client register and is working with tax agents and digital service providers to design solutions that address client concerns and irritants while delivering a more holistic approach to communication preferencing.
The changes to the client register require technology and process changes for the ATO and the agent community. Key considerations for the program of work include:
- what are the types of data held and who owns the data, and ensuring information held is as accurate as possible
- knowing who owns the record, particularly for clients who have agent contact details and ensuring that we contact the right people at the right time in the right context
- the system constraints for storing information
- creating visibility and awareness of where the information has come from, which can be difficult as registers do not allow the ATO to distinguish the source
- the segmentation rather than separation of data and determining appropriate categories
- what happens when a client and an intermediary relationship ends.
Member comments
Members noted that this change has connections to the Modernising Business Registers project and that agents often have better, more up-to-date client data than the ATO.
Members recognised that this work will be conducted over time and emphasised their interest in supporting and contributing towards the project and outcomes.
Insights from the Individuals not in business Random Enquiry Program
Assistant Commissioner Adam O’Grady provided insights from the Random Enquiry Program (REP) for individuals not in business, as published in the 2021 Annual Report.
The individuals not in business tax gap made up 25% of the total tax gap, with an estimated net gap of 5.6% or $8.4 billion. The REP also identified errors requiring adjustments but the amount of adjustments is getting smaller.
Investigation was conducted into the drivers of the errors being identified in tax practitioner lodged returns. Findings showed that errors were being made due to a lack of practitioner capability, with some practitioners not keeping up to date with changes in legislation. Practitioners were also not using prefill data and not substantiating deduction claims, with often no controls in place to check information being provided by clients.
The ATO is looking at what can be done to reduce the tax gap, acknowledging there will always be a gap, but by implementing the most efficient compliance activities and including current audit activities, an impact on tax performance will be visible.
Another future program linked with increasing tax performance in the individuals not in business sector is the Data Acquisition and Optimisation program. Data obtained through this program will be useful information to help drive the ATO’s engagement strategies.
Member comments
Members were interested in the analysis on adjustments from the profession versus self-preparers.
Members expressed concern on the lack of assistance practitioners have when engaging their clients in conversations on substantiating claims. The ATO responded by advising a communication or guide would be developed to assist practitioners in their conversations on substantiating claims and why it is important for practitioners to use prefill data.
Superannuation and Employer Obligations
Deputy Commissioner Emma Rosenzweig advised Single Touch Payroll (STP) Phase 2 reporting commences from 1 January 2022 and is primarily designed to support the social security system and to assist in related reforms to income reporting by Services Australia customers.
The ATO recognises the changes have not been front of mind for many employers, given COVID-19 impacts, so we are taking a pragmatic and reasonable approach to support employers to transition to STP Phase 2.
If an employer’s solution is ready for 1 January 2022 and they can start reporting, we will help and support them to start. For additional flexibility, if an employer can start reporting by 1 March 2022, they will be considered to have started on time; there will not be a need for them to request a deferral.
DSPs who despite their best efforts may not be ready by 1 January 2022, now have deferral dates throughout 2022. Employers will need to speak to their DSP to obtain their deferred start date.
For employers who still need more time to transition to STP Phase 2, an online deferral application process will be available from December 2021.
The Super stapling program is working well with delays noted when there is incomplete information or a missing tax file number.
Member comments
Members advised employers are still reporting issues with Super Clearing House delays and there is a difference between intent to wilfully disregard obligations and delays caused by third parties.
The ATO noted that current legislation does not provide flexibility in accounting for clearing house delays and associated penalties for not meeting Super guarantee payment due dates.
Members reported fund contributions being truncated during electronic lodgment and as a result there is a mismatch which triggers the concessional contribution cap provisions.
Client engagement group Second Commissioner update
Second Commissioner Jeremy Hirschhorn acknowledged everyone has worked hard to get through these extraordinary times.
The tax system is in very good health and the ATO tax performance program shows a very strong performing system. The ATO is focussed on increasing early intervention and the use of data in that engagement is important.
The role and expertise of the ATO was highly valued as a principal provider of business support and as an administration of JobKeeper. Lessons taken from the implementation of JobKeeper include:
- an understanding by government that the ATO has expertise in interacting with business and is the natural place to deliver support, with the right interfaces, data flows and systems in place
- JobKeeper was a highly compliant program, received by those who were entitled
- the program was delivered within existing resources and systems.
The ATO will need to rethink debt and recovery action, noting increased business debt. The ATO’s approach to debt compliance work has been cautious since the pandemic commenced.
Member comments
The ATO’s support for agents and the service that was provided to the community was appreciated over the last two years. Businesses will continue to need post pandemic support.
Intermediaries have had to carry on throughout the lockdowns, are tired and exhausted and are hoping for a reprieve but are unsure what to expect from Treasury and an election.
The ATO’s digitisation journey and the better use of data should also consider how to build tax agents into the system.
Lodge and Pay
Deputy Commissioner Vivek Chaudhary and Assistant Commissioner Les De Wind advised the Debt and Lodgment business line name has recently been renamed to ‘Lodge and Pay’.
The re-engagement strategy focuses on being contemporary and is in line with the ATO’s 2024 vision of making it easier and simpler to interact with the system to lodge and pay.
Initial discussions with clients aim to understand their individual situation and their ability to address their outstanding obligations. Firmer action will be taken for those clients who have significant liabilities or actively avoid efforts to engage with them.
Member comments
Members raised that it can be confronting for taxpayers to hear from the ATO after no contact for a significant amount of time and suggested there is a range of different situations to consider:
- Many businesses are assessing where they are at and seeking advice from their advisers on the way forward.
- Business owners have been focussing on survival and are not in the right place psychologically to willingly comply.
- When insolvencies and liquidations are obvious, clients remain emotionally connected and are struggling to move forward.
- There is reluctance from clients to make payment as they have not recently heard from the ATO and they are unaware of the re-engagement strategy. It is important to make the communication very clear about re-engagement because the willingness to comply does exist in the community.
- Some clients have the money to pay but will not do this until the ATO engages with them.
- Tax professionals require time to understand a client’s situation before they can action requests from the ATO.
- Some practices are receiving multiple calls daily about debt for multiple clients and their staff are finding it overwhelming with the increase in workload.
- Garnishee notices are being issued without tax practitioners having any awareness of prior action; a clearer pathway of action should be communicated.
The ATO committed to further discussion on communication regarding the different approaches for debt and payment in the current environment.
The ATO reminded members of the importance for tax practitioners to remind clients to check myGov accounts for any notification of debt action.
In response to members requesting further information on debt levels, the ATO referred members to Appendix 6 of the Commissioner of Taxation Annual Report 2020–21 (PDF 3.21MB)This link will download a file.
Intermediaries engagement strategy
Assistant Commissioner Darryl Richardson along with Directors Ben Spargo and Tracy Littlewood provided an update to members on the Intermediaries Engagement Strategy.
The ATO emphasised the focus was on tailoring, differentiating, and testing the theory of the tear drop model, to have a better understanding of the context in which tax professionals work and how we might effectively engage tax practitioners with the cultural change within the profession.
The next steps of this strategy include:
- updating tax practitioner risk assessment and practice summary web content before the end of the year, after feedback received from the consultation held with the Communication Content Working Group
- explaining how the strategy will be used to differentiate engagement with tax professionals
- testing strategy key messages with Tax Practitioner Stewardship Group (TPSG) members; and incorporating key messages into communication products
- further consultation with a new communication focus group
- engagement with the Tax Practitioners Board (TPB) to ensure the independent messages to the profession are aligned and to clarify the roles between the ATO and TPB.
Member comments
Members noted that this work has taken a hiatus over the past 12 months due to COVID-19 and there is a need to balance perceptions in the community regarding engagement, compliance, and best practice.
Tax agents want to know how they stand in terms of engagement.
Members expressed an interest in participating in further consultation on the approach of this work. They are also wanting to provide insights on language and best practices.
Members commented that they have not heard a lot about action taken on the egregious or corrupt behaviour of some tax practitioners, and requested further information on work conducted in this space.
Small Business
Assistant Commissioner Andrew Watson and Director Kelly Norwood provided an update on the Improve small business tax performance strategic initiative and co-creation workshops to improve small business tax performance.
The focus of the initiative is on improving small business tax performance and improving the client experience by integrating tax reporting mechanisms into the systems practitioners and clients are currently using, as well as providing verifiable data to assist with reporting.
Consultation undertaken highlighted the pain points affecting small businesses that need transformational solutions. Another objective was to work with small business employers to understand different industry behaviours to better enable the leveraging of data and digital frameworks. Three key matters were ascertained:
- the need to identify a key point in the ecosystem that brings together the financial and performance data required for business reporting
- understanding how data can help to run project-based businesses, in terms of determining liabilities, cash flow and ATO benchmarks to manage financials
- having one place for businesses to obtain details of all required tax regulations and obligations they need to meet.
Consultation findings are being finalised for the ATO to determine what the next steps for the initiative will be.
Member comments
Members advised the need for more information on activity statements and how rules work, and also having a function to run integrity checks on the data to make sure the data is accurate.
Members questioned the viability of small practices and the future of ATO compliance work. Professional associations are cognisant of significant compliance burdens on businesses and the tax profession.
Tax Practitioners Board
Debra Anderson provided an update from the TPB.
The TPB is extending COVID-19 concessions to 30 June 2022 for:
- annual declarations
- continuing professional education (CPE) requirements.
The TPB’s Education Working Group is currently looking at:
- the regulatory and accreditation framework for tax and BAS agents, including the broader policy setting for this framework and whether there are any barriers to entry
- emerging trends and relevant reviews impacting tax practitioners and the TPB.
Compliance activities
- As at 18 October the TPB had 612 active compliance cases.
- The Board Conduct Committee (BCC) considered a total of 25 submissions between July and September 2021, resulting in 9 termination decisions.
- There are 103 TPB compliance cases relating to COVID-19 including instances of practitioner error, reckless or fraudulent claims.
- To date, 24 of the most serious cases have been presented to the BCC and various sanctions have been imposed including suspensions and terminations.
- The TPB currently has 41 litigation cases on hand.
Annual CPE requirements are changing from 1 July 2022.
- Tax agents' CPE will increase from 90 to 120 hours and BAS agents from 45 to 90 hours.
- The TPB is currently working through the implementation plan and will provide clearer examples and guidance regarding structured and unstructured CPE.
Member comments
Members requested clarification on the transitional arrangements for Tax Financial Advisers (TFA).
Members were advised that a conditional registration will be created for those who are not financial advisers such as stockbrokers, so that when the TFA status ends they will be able to register with the TPB. All current TFA will be contacted and advised if they should maintain their TPB registration until they are transitioned to the new registration category.
Other business and meeting close
The ATO noted media attention on a ‘taxpayer bill of rights’ and confirmed the ATO is currently undertaking the regular biannual review of the taxpayers charter. Opportunities for feedback will be presented in 2022.
It was acknowledged that 2021 was the 25th anniversary of the TPSG and this will be observed in the first face-to-face meeting during 2022.
TPSG Co-chair, Hoa Wood thanked all members of the TPSG for their valuable contribution and willingness to work collaboratively on key issues during another challenging year.
Attendees
Organisation |
Member |
|---|---|
ATO |
Hoa Wood (Co-chair), Individuals and Intermediaries |
ATO |
Audra Paskevicius (Secretariat), Individuals and Intermediaries |
ATO |
Deborah Jenkins, Small Business |
ATO |
Audra Paskevicius (Secretariat), Individuals and Intermediaries |
ATO |
Emma Rosenzweig, Superannuation and Employer Obligations |
ATO |
Grant Brodie, Client Account Services |
ATO |
Michelle Crosby, Australian Business Registry Services |
ATO |
Sylvia Gallagher, Individuals and Intermediaries |
ATO |
Vivek Chaudhary, Debt and Lodgment |
Australian Bookkeepers Association |
Peter Thorp |
Chartered Accountants Australia and New Zealand |
Michael Croker |
CPA Australia |
Elinor Kasapidis |
H&R Block |
Mark Chapman |
Income Tax Professionals |
Scott Bailey |
Institute of Certified Bookkeepers |
Matthew Addison |
Institute of Public Accountants |
Tony Greco |
National Tax and Accountants Association |
Michael Gilmour |
Tax & Super Australia |
Neville Birthisel |
Tax practitioner |
Gavin Swan (Co-chair) |
Tax practitioner |
Keith Clissold |
Tax practitioner |
Ken Thomas |
Tax practitioner |
Phil McCann |
Tax practitioner |
Shanna Hunter |
Tax practitioner |
Steven Inglis |
Tax practitioner |
Warren Seeto |
Tax Practitioners Board |
Debra Anderson |
The Tax Institute |
Robyn Jacobson |
Guest attendees
Organisation |
Attendee |
|---|---|
ATO |
Adam O'Grady, Individuals and Intermediaries |
ATO |
Andrew Watson, Small Business |
ATO |
Ben Spargo, Individuals and Intermediaries |
ATO |
Darryl Richardson, Individuals and Intermediaries |
ATO |
David Baker, Individuals and Intermediaries |
ATO |
Gavin Siebert, Client Account Services |
ATO |
Jeremy Hirschhorn, Client Engagement Group |
ATO |
Kelly Norwood, Small Business |
ATO |
Les De Wind, Lodge and Pay |
ATO |
Martin Jacobs, Australian Business Registry Services |
ATO |
Moe Elrifai, ATO Corporate |
ATO |
Nicole Dykstra, Client Account Services |
ATO |
Ross Edwards, ATO Corporate |
ATO |
Reveka Kotsiaris, Enterprise Strategy and Design |
ATO |
Siobhan Spencer-Arnell (Secretariat), Individuals and Intermediaries |
ATO |
Tina Ford-Doe, Individuals and Intermediaries |
ATO |
Tracy Littlewood, Individuals and Intermediaries |
ATO |
Wendy Perdrisat, Individuals and Intermediaries |
Apologies
Organisation |
Member |
|---|---|
ATO |
Alex Adams, Enterprise Solutions and Technology |
ATO |
Kath Anderson, Individuals and Intermediaries |
National Tax and Accountants Association |
Rodney Wilson |
Tax practitioner |
Mark Morris |