Tax Practitioner Stewardship Group key messages 22 May 2020
Preparing for Tax Time 2020
Our tax time approach this year acknowledges it will be a challenging time for many Australians.
We know taxpayers will be eager to receive their refunds, and many will have questions about how the Government stimulus measures may impact their tax obligations.
Behind the scenes we have worked hard to ensure we can give the community the information they need to understand and meet their tax obligations for Tax Time 2020.
What is new this year?
End of year income statement
Individuals who have a myGov account linked to the ATO will receive a message (email or SMS) from the ATO advising they can access their end of year income statement through ATO online services in myGov.
New occupation guides
There are nine new occupation guides for Tax Time 2020 covering adult industry workers, agricultural workers, bus drivers, call centre operators, fire fighters, paramedics, performing artists, pilots and train drivers.
This year pre-fill data will include JobSeeker information. If taxpayers have cryptocurrency or foreign financial investments, they will be prompted to include this data on their returns.
We have engaged with third party data providers who expect to have their pre-fill information to the ATO in a similar timeframe as last year; this is generally late July.
Working from home deductions
With so many people working from home, we have provided a shortcut method of calculating working from home expenses which can be applied from 1 March 2020 until at least 30 June 2020. We may extend this period, depending on when work patterns return to normal.
The shortcut method means taxpayers can claim a deduction of 80 cents for each hour they work from home due to COVID-19.
Our home office expense calculator will be updated with the new shortcut rate.
Comprehensive information about each of the possible methods for claiming expenses and access to the calculator is available on ato.gov.au
Digital services update
Assistant Commissioner Kerry O’Loghlin provided an update on the upcoming program of work for digital services.
The ATO is focused on making this tax time as smooth as possible for our clients and our partners and a key component of that is our readiness for electronic interactions.
The ATO is working closely with digital service providers (DSPs) to ensure practice software is updated in readiness for Tax Time 2020.
Despite the considerable impact on DSPs to support the implementation of stimulus measures in the last few months, software preparation for this tax time is tracking consistently with previous years. Testing for the individual income tax return and the non-individual income tax return is expected to be completed by early June.
Changes to Online services for agents
Tax time updates in Online services for agents are progressing well. There are no new features being delivered in Online services for agents specifically for Tax Time 2020.
The Commissioner of Taxation has exercised his remedial power to enable tax and BAS agents to access a deceased person’s information if they are nominated to represent a legal personal representative (LPR) for the deceased estate.
When you use Online services for agents, to add a deceased person to your client list, you are required to declare that you are either the LPR, or you have been appointed by the LPR to act on their behalf.
Availability of pre-fill data
We are working closely with third party data providers to ensure high quality data is available in pre-fill to support the preparation of tax returns, and we are confident that major reporters will be able to supply information in very similar timeframes to last year.
Last year we had 80% of data available for clients and their representatives by the third week of July.
We are expecting a substantial increase of records from Services Australia due to the number of Australians that are now receiving JobSeeker payment. The delivery timeframe is consistent with last year’s timeframe; early July.
The JobKeeper payments form part of the wages of employees, those amounts will be included in the employee’s income statement and therefore incorporated in pre-fill information. There are limitations as to what we can include in pre-fill in relation to JobKeeper which means that the pre-fill information will not include data for self-employed.
Information on the availability of pre-fill information by third party data reporters is on the ATO website. This may help inform agent discussions with their clients about the best time to lodge.
Upgrades and changes
Tools and calculators
- Updated calculators will be available on the Calculators and tools page from 1 July.
- The depreciation and capital allowances tool has been updated with the stimulus initiatives:
- increasing the instant asset write off threshold, available until 30 June 2020
- backing business investment – 50% depreciation deduction for eligible assets, available until 30 June 2021
- capital gains tax tool – to include law changes impacting foreign residents claiming main resident exemption on Australian real property which comes into effect from 1 July 2020. The tool has been updated to reflect the 2020–21 income year and the transition period.
- the home office expense calculator will be updated to include the new shortcut rate of 80 cents for each hour worked from home from 1 March to 30 June 2020 due to COVID-19. On 26 May 2020, information was updated on ato.gov.au under the ‘Home office expenses’ page to include an option for the shortcut method.
Access manager history report for myGovID
This report has been developed in response to tax professional concerns about their staff having access to Online services for agents outside the office environment and outside normal business hours.
An access manager history report will be available in Access Manager for authorised representatives of the business who have a Principal Authority or Authorisation Administration role in Relationship Access Manager (RAM) to access.
Tax professionals will be able to apply date filters and select history report for all users or a single user.
The report will be available through both Online services for agents and the Business Portal and is on track to be deployed late June. A user guide is under development that we share once it is ready.
We have also developed an accompanying myGovID factsheet outlining the responsibilities of tax practices and their employees when accessing ATO digital services. This factsheet will be published to our website in the coming weeks.
Additions to document suite for myGovID
From late June, all Australian visa types can be verified as an approved Australian identity document for myGovID purposes, including electronic visas automatically issued to New Zealand citizens on entry to Australia. The important part to note is the visa is activated when someone’s passport is scanned on entry to Australia – so they need to be in Australia for the visa to successfully verify within the myGovID app.
There are some other rules which are the same that apply today for visas through the Document Verification System, for example:
- some visas issued before 1 July 1990 may not verify online, as the person will not have an electronic record
- visa holders who subsequently had a new passport issued and did not update Department of Home Affairs will not verify
- dual nationals must verify the passport details used on entry to Australia to verify the visa.
As users upgrade, they will override their basic authorisation. The authorisation administrator will need to issue a new authorisation in RAM. This will be covered as part of web content and direct email communications.
All tax professionals now have access to communication preferences via Online services for agents. You can choose to apply preferences to as many or as few clients as you wish.
Currently around 20% of agents have set their communications preferences, representing approximately 100,000 clients with preferences applied.
Our focus has now turned to developing an Application Processing Interface which will enable DSPs to build this functionality in their commercial software.
Granular data update
Tax Time 2020 sees the delivery of the final components of the granular data program for practitioner lodgment service (PLS) lodged individual tax returns. Last year we introduced the deduction schedule as the first component, and this tax time the granular data program expands to also include:
- income details schedule – line-item information will be collected for all income labels. Pre-fill data will provide most of what is required where available.
- multi-property rental schedule for individuals – replaces multiple instances of the single rental schedule with minimal changes for tax agents.
The way a tax professional experiences these changes will depend on the software they use.
These changes will align the level of detailed information we receive from PLS lodged individual tax returns with self-prepared returns lodged using myTax.
End-of-year income statement
Individuals who have a myGov account linked to the ATO will receive a message via email or SMS from the ATO advising they can access their end of year income statement through ATO online services in myGov. Last year this took clients to the landing page and some moved on to lodge their own return from this point.
This year’s message advises clients of an agent that ‘your registered tax agent will be able to view your income statement to lodge, vary or revise your tax return. There is no need to provide your personal myGov login details to your tax agent.’
When individuals click the link in the message, they bypass the ATO online home screen and are taken directly to their income statement.
Deputy Commissioner Grant Brodie provided an update on tax time readiness for 2020.
What trends do we expect to see this year?
In preparation for Tax Time 2020, external research has been conducted to predict volumes so we are ready.
Last year 33% of lodgment in July resulted in refunds. We are expecting lodgment to occur earlier this year for those individuals expecting refunds, particularly due to loss of income meaning more pressure to get refunds issued quickly.
We expect up to 3 million lodgments to be made earlier this year when compared to last tax time; the majority of these being in July.
In 2019, 38% of lodgments, a total of 4.6 million occurred in July. This gives an indication on the expected increase in workload from a process and call perspective.
With the expected early lodgment, the risk of early amendments has been identified. Individuals will not wait for the pre-fill data and may not understand the implications of not having the correct data. A greater level of amendments will follow due to lodging early without the correct pre-filled data information.
Sole traders will also want to finalise the financial year earlier to get a handle on their finances.
This year we are expecting fewer calls on Single Touch Payroll queries, with the expected types of calls including:
- work related expenses queries
- the impact for JobKeeper and JobSeeker on my tax return
- the next stage of early release of super
- where’s my refund?
Due to the anticipated increase in lodgment, the call load is also expecting significant increases greater than we have seen in the last few weeks with potentially double the number of calls from July last year.
To ensure we are ready for Tax Time 2020 we are preparing by:
- increasing recruitment for both casual and permanent staff and outsourcing where possible
- increasing and modifying training underway for contact centre officers
- continuing the service window introduced in response to the COVID-19 situation – hours of operation will be Monday to Friday 8.00am–8.00pm and Saturday to Sunday 10.00am–4.00pm.
Assistant Commissioner Sally Bektas provided an update on key communication activities planned for Tax Time 2020.
Tax Time 2020 managing the peak
We have worked with the Behavioural Insights team on developing a tagline or key message which captures our overarching approach to tax time communication in 2020 and will filter through all our communication products – “2020 has been difficult but your tax return doesn’t need to be. Check out our tax time essentials to make it easier.”
A revised 2020 advertising campaign promoting our guidance around working from home expenses during COVID-19 is on schedule to start in June 2020. When the new guidance was released in April there was significant community interest in this topic, and we believe this advertising campaign will help further clarify the position for taxpayers who have been working from home due to COVID-19.
We are working closely with the Outbound Correspondence area on our bulk communication for Tax Time 2020 to provide information prior to lodgment and nudges to ensure correct claims are made. This includes our emails to approximately 4 million self-preparers across a range of topics including work related expenses, rental properties and cryptocurrency, in addition to myGov messages related to income statements.
Our June myGov message will advise taxpayers how to access their income statement and the importance of waiting until their income statement is finalised before lodging. In July, when an employee’s income statement is finalised by their employer, that employee will receive a myGov message letting them know this information is ready to use in their tax return.
Our tax professionals’ strategic communications approach
Our official Tax Time 2020 communication strategy for tax professional kicks off in the first week of June. We are working across the organisation to ensure we are covering critical and priority topics for the tax profession.
General update and overview
Our messaging will promote the support and help available to tax professionals, DSPs, and their clients, which are designed to reduce the complexities, particularly as a result of COVID-19.
Some of the topics we will cover in June include:
- COVID-19 and the various stimulus measures
- work related expenses
- employment termination payments
- changes to payment summaries
- single touch payroll
- deductions and toolkits
- gifts and donations.
Another important communication strategy currently being developed for tax time involves supporting agents to self-service online. This is to help ease the pressure on our contact centres, where a request can be actioned easily in Online services for agents.
ATO website content
- By 1 June publish 22 Tax Time 2020 web pages tailored to tax professionals.
- Promote the content through various channels, as the single source of truth for tax agents of up-to-date tax time information.
- Address and highlight key changes for agents.
Tax professionals newsletter
- Promote a series of tax time related articles through the newsletter - both the tax agent and BAS agent editions.
- Work with key stakeholders to ensure all tax time related articles are integrated, aligned and timely.
Tax Time 2020 video series for tax professionals
- Short videos of 45 seconds, less formal style to match social channels, issued weekly in June and July targeted to the tax profession, presented by Assistant Commissioners Sylvia Gallagher and Trent Jakubowski.
- We are hoping to reach those who are not engaged by our more traditional channels
- Promote as a feature at the top of the Tax professionals newsletter, through social media and through external influencers.
Other communication channels to be used throughout Tax Time 2020 include social media, the Tax professionals conversations webcast and Tax inVoice podcasts.
Deputy Commissioner Deborah Jenkins provided an update on the small business environment.
We expect this year will be different for small business. We are trying to assess whether small businesses are likely to bring forward lodgment of 2019–20 returns, while asking for extensions for 18–19 returns. We note many may be in a loss position in 2019–20 for various reasons.
In the lead up to tax time we will have a focus on the instant asset write off extension, including clear guidance that this is a deduction against income and not a separate refund or a rebate. We have been working with organisations such as the Motor Trades Association to provide correct guidance to motor vehicle dealers.
We will utilise the small business toolkits and similar guidance material that was well received by agents and clients last year.
Debt and Lodgment
Deputy Commissioner Vivek Chaudhary provided and update on support for agents and clients in preparation for tax time.
The current trend is showing that clients are proactive and are engaging due to the general sense of the unknown. Clients are initiating contact, requesting deferrals and engaging in conversations to discuss payment plans.
The ATO have been working on processes for the deferral of lodgments and setting up of payment plans to assist clients with payment obligations.
From 1 April 2020 we started transitioning to a new business model, focussing on the right outcome for the client with both lodgment and debt in one interaction, rather than requiring two separate contacts.
With debt and lodgment staff and functions being integrated, the key focus will be on the client experience and outcome as a priority. We recognise the important role practitioners play in this and welcome feedback from tax professionals.
The re-engagement of clients with outstanding debt and lodgment obligations will soon recommence. We are currently planning this approach and will ensure the focus is on being empathetic to client needs whilst addressing egregious behaviour.
Enterprise Solutions Technology
Deputy Commissioner Alex Adams provided an update on system readiness.
To manage the increased demand from the community in response to the stimulus measures and in preparation for Tax Time 2020, we have significantly increased capacity across ATO systems:
- expanding the ATO website capacity to cater for 1.4 million concurrent users
- up-lifting Online services for agents by an additional 50%, meaning we are able to support approximately 50,000 concurrent users
- increasing our ATO mainframe capacity.
The increase in user traffic and system changes required means we must undertake additional maintenance. We recommend agents regularly review the system maintenance pages published on our website or on the Online services for agents dashboard.
We will publish key dates as we progressively move through tax time, for example advising when the processing safety net is removed, and we commence full processing.
Summary of key topics discussed at the Tax Practitioner Stewardship Group meeting 22 May 2020