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  • Small Business Stewardship Group key messages 21 June 2019

    Welcome and introduction

    Members were welcomed and apologies noted.

    Changes in ATO representation:

    • Deputy Commissioner Tim Dyce is no longer a member
    • Michelle Crosby, Deputy Commissioner and Deputy Registrar, Commonwealth Business Registry Service has joined

    New members:

    • Anne McCotter - Australian Veterinary Association
    • Yale Stephens - Australian Retailers Association
    • Matthew Addison - Institute of Certified Bookkeepers
    • Julian Harniman - Restaurant and Catering Industry Association

    As of 1 July 2018, GST now applies to most sales of low-value goods from overseas businesses to consumers into Australia. In response to a member’s question about the amount of GST collected by the ATO on low-value imported goods, the ATO reported that $180 million had been raised after six months.

    Questions on agency updates

    Agency representatives on the Small Business Stewardship Group provided written updates to members prior to the meeting. At the meeting they highlighted the following key issues.

    Australian Small Business and Family Enterprise Ombudsman

    On 4 June 2019, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) participated in a roundtable with attendees from the Fair Work Ombudsman and the ATO to discuss contractor versus employee definitions. Since that meeting, the Fair Work Ombudsman has released the outcomes of its two year investigationExternal Link relating to Uber Australia’s engagement of drivers. This investigation held Uber drivers are contractors.

    Another roundtable will be held soon for agencies to determine a mutually acceptable way to manage the employee or contractor issue given differing government agencies’ interpretations. ASBFEO recognises this is a critical issue where small businesses require more certainty, particularly amongst start-up businesses and those operating online platforms.

    Australian Taxation Office

    Commencing 1 July 2019:

    Members discussed the expansion of the Taxable Payment Reporting System (TPRS) most recently into the freight industry. Discussion centred on ATO guidance material and the practicalities in determining ten percent of a business’s annual turnover. Treasury and the ATO agreed to consider members’ concerns out-of-session.

    Department of Employment, Skills, Small and Family Business

    The Department’s response to the Fairness in Franchising ReportExternal Link is ongoing. The report’s first recommendation established an inter-agency Franchising Taskforce to examine the feasibility and implementation of a number of the committee's recommendations. The first meeting of the Taskforce will be held during the last week of June and will consult with relevant stakeholders to ensure the response is the right one.

    Industry members raised the issue of Government agencies not providing sufficient time for them to undertake effective consultation with their members and suggested as much time as possible be given to make submissions to the Franchising Taskforce and other future Government consultation processes.

    Treasury

    The Prime Minister has announced his new Ministry. In the Treasury portfolio, there is a new Assistant Treasurer and a new Assistant Minister. Ministerial responsibilities are currently being settled.

    Following up from questions raised by members in the last Small Business Stewardship Group meeting about the Instant Asset Write-off, public data from the 2016-17 Tax Stats shows that take up of this measure is spread across industries, with the largest users in agriculture, manufacturing and construction.

    The Government is funding a 12-month pilot program to fund up to ten university tax clinics to provide free assistance to small businesses and individuals to help them get their tax affairs in order. Members noted that services delivered by universities during the pilot may be different to those envisioned when the pilot was first announced. The Treasury is heavily involved in the pilot and noted that an evaluation will be undertaken to help inform a Government decision on the future of the program.

    Treasury and the ATO will follow-up on a forum member’s question regarding determining ten percent of a business’s turnover as part of the TPRS extension to the road freight industry.

    Member discussion

    Members from industry associations and small business owners provided insights into topical issues affecting small business including emerging issues in their industry, irritants when dealing with the ATO and areas where small business need additional support from the ATO.

    Emerging issues:

    • Ongoing challenges for some agents and businesses preparing for Single Touch Payroll
    • ATO consultation about e-Invoicing has been well-received but uncertainty remains regarding implementation
    • Non-web-based support is required for the retail licencing sector
    • Uncertainty about un-enacted legislation
    • Uncertainty about potential changes in the penalty rates/award variations
    • The increasing range of low-cost options for processing merchant transactions is making it difficult to compare products
    • Levels of digital capability/access vary significantly in this market.

    Irritants when dealing with the ATO and other government departments:

    • Insufficient support to help members understand and get ready for Single Touch Payroll
    • Some confusion managing the range of lodgment due dates faced by small businesses
    • The ATO’s automated system for payment plan applications is not flexible enough to accommodate individual needs
    • Unclear guidance on the ATO website for refund processing
    • Inconsistent approach to processing refunds – lack of clarity about why refunds take longer than others
    • Unclear guidance in communications to small businesses about what to expect in a pre-audit review and how to prepare
    • Long timelines for ATO audits and reviews of research and development spend impacts on the viability of small businesses under audit
    • Lack of digital options for responding to information requests when under ATO review/audit
    • ATO practice of requesting proof of identity when it calls taxpayers
    • Paper-driven requirements for employers to administer child support payments
    • The requirement for childcare centres to recoup the childcare subsidy from parents when their income changes, thereby making them debt collectors.

    Areas where small business need additional support and assistance from the ATO:

    • Better education and awareness about the transition options associated with Single Touch Payroll, for example, targeting trade magazines was suggested as an important communication channel
    • Need ongoing support for digital readiness particularly for those who don’t use accounting software
    • Suggestion for ATO to assign outreach/key client officers for Industry Associations representing small businesses.

    The ATO will keep members informed of developments which address these issues.

    AUSkey replacement

    With identity crime on the rise, the ATO and other government agencies are committed to making access to government services more secure.

    To improve the security of taxpayer information, AUSkey will be retired in March 2020 and replaced with myGovID and Relationship Authorisation Manager (RAM). The ATO released myGovID into the Apple app store and made RAM publically available in public beta in early June. myGovID will be released on the Android platform soon.

    myGovID is an identity proofing solution that compares evidence of trusted document details with the government database that holds them to establish a digital credential. For example, the user will scan their drivers licence details, and this will be cross-referenced with the relevant authority for a match. Facial recognition, similar to Smartgate (for passports), is being developed for future releases.

    RAM is a whole of government authorisation solution that provides a new way for people to manage who is authorised to act on behalf of a business online.

    Currently the myGovID and RAM solutions are available for users to access the ATO’s Business portal only. In the future, the myGovID will enable access to other government online services (of which they are authorised to do so).

    Members discussed privacy issues and the need for a robust process to identify attempts at false registration, separate to basic mistakes. Members also suggested how the ATO can best communicate the changes to small business. This included case studies to educate small businesses about preventing identify fraud and key messages encouraging them to update their records on the Australian Business Registration portal before registering a myGovID and setting up their relationships and authorisations in RAM.

    Debt payment thinking

    Most taxpayers willingly pay their debts on time and many others do so with a reminder. Payment thinking involves designing processes, systems and approaches that make payment an easy and natural part of activities across all stages of taxation and superannuation. It is about having an evolving conversation with the client about payment and shifting the focus from ‘debt’ to ‘payment’, with the aim being to prevent the debt in the first place.

    Focus points of payment thinking include:

    • Scheduling/settling payment at time of lodgment
    • Improving the online payment plan service and monitoring
    • Using a single accounting and debt management platform
    • Improving online access and services
    • Opening and closing balances on Activity Statement lodgments.

    The ATO is considering a ‘decision to pay’ prompt in the system to encourage payment at the time of lodgment to avoid the risk of non-payment.

    Members discussed challenges relating to making payments to the ATO. One member raised the issue of not being able to access payment arrangements to manage future debts before they are formally booked by the ATO. Another member requested that communications be drafted to avoid ostracising clients with a good payment history, particularly clients who have made an uncharacteristic lapse.

    Members also suggested initiatives for the ATO to shift the focus from ‘debt’ to ‘payment’ and make it easier for taxpayers to do the right thing. These included promoting key messages about most people being willing payers and flexibility in payment plans to reflect peaks and troughs in cash flow.

    Single Touch Payroll

    Approximately 85 percent of substantial employers (20 or more employees) are currently compliant with Single Touch Payroll (STP) requirements as they are either reporting or have an active deferral in place. As at 21 June 2019, this equates to 144,643 employers reporting for seven million employees. Of this overall figure:

    • 55,858 are substantial employers required to report
    • 88,785 are small employers (fewer than 20 employees) who are voluntarily reporting.

    The ATO has approximately five million employee records with visibility of both employer-reported and paid superannuation amounts. Two thousand small employers are coming onto the system every day.

    There has been an extensive communications campaign with 500,000 e-mails being sent in early March 2019. Another 597,000 emails and letters were sent in late May to small employers to advise them that STP is now law and to make them aware of their options. In addition there have been a variety of other activities to help communicate the change including updates to the Small Business Newsroom and Tax and BAS Agent News Room, updates through our social media channels and updates to our web content.

    A recent webcast had a live audience of 1,000 and the Get ready video has been viewed more than 9,500 times. The ATO is developing a decision support tool to help taxpayers decide whether to ask for an extension. Ongoing communication will take into account which taxpayers have adequate systems, how easily they can adopt STP and whether they have appropriate digital skills.

    Members raised some concerns that small business needed additional support to make the transition to STP. They discussed the need for businesses with more than four employees to be able to access low cost software options and requested clearer information about closely-held employees and the timeline for extensions to comply on the ATO website.

    Members acknowledged that this year is a transition year for small businesses and supported the need for a decision support tool and accompanying user guide which will be available in coming weeks.

    Other business

    No other business was raised.

    Meeting close

    Co-chair Deborah Jenkins thanked members for their contribution to the meeting. The next meeting is scheduled for 28 August 2019 in Canberra.

    Attendees

    Attendees are listed below.

    Organisation

    Members

    ATO

    Deborah Jenkins (Co-chair), Small Business

    Australian Small Business and Family Enterprise Ombudsman

    Kate Carnell (Co-chair)

    ATO

    Jason Lucchese, Superannuation and Employer Obligations

    ATO

    John Dardo, Enterprise Solutions and Technology

    ATO

    Justine Williams, Small Business Experience

    ATO

    Michelle Crosby, Commonwealth Business Registry Service

    ATO

    Ramez Katf, Enterprise Solutions and Technology

    ATO

    Robert Ravanello, Debt

    Treasury

    Bede Fraser

    Australian Chamber of Commerce and Industry

    Jenny Lambert

    Australian Lottery and Newsagents Association

    Michael Renshaw

    Australian Retailers Association

    Yale Stephens

    Australian Veterinary Association

    Anne McCotter

    Chartered Accountants Australia and New Zealand

    Susan Franks

    Council of Small Business Australia

    Peter Strong

    Department of Employment, Skills, Small and Family Business

    Peter Cully

    Indigenous Business Australia

    Greg Ellis (delegate)

    Institute of Certified Bookkeepers

    Matthew Addison

    Motor Traders Association of Australia

    Richard Dudley

    Small Business Operator

    Michelle Size

    Small Business Operator

    Tony Sama

    Apologies

    Apologies are listed below.

    Organisation

    Members

    ATO

    James O’Halloran, Superannuation and Employer Obligations

    Business Enterprise Centres Australia

    Graham Baxter

    Direct Sellers Association of Australia Inc

    Gillian Stapleton

    Employer Obligations Association

    Paul Mather

    Indigenous Business Australia

    Wally Tallis

    Real Estate Institute of Australia

    Jock Kreitals

    Restaurant and Catering Industry Association

    Julian Harniman

    Small Business Operator

    Deborah Cook

    Small Business Operator

    Maree Petersen

      Last modified: 15 Aug 2019QC 59913