Small Business Stewardship Group key messages 29 November 2019

Welcome and introduction

Members were welcomed and apologies noted. No conflicts were declared.

Changes in ATO representation:

• Vivek Chaudhary, Deputy Commissioner for Debt and Lodgment

New members:

• Dr Moss Siddle – Australian Veterinary Association
• Dr Ross Lambie – Australian Chamber of Commerce and Industry

Agency updates

Agency representatives provided written updates which were included in the meeting papers circulated to members. At the meeting the following matters were discussed:

Treasury

The Treasury noted that the Budget 2020–21 Pre-Budget submissions process was now open.

The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019, received Royal Assent on 28 October 2019. Schedule 7 to this Bill amends the Superannuation Guarantee (Administration) Act 1992 to improve the integrity of the superannuation system by ensuring that an individual’s salary sacrifice contributions cannot be used to reduce an employer’s minimum superannuation guarantee (SG) contributions. The measure will take effect from 1 January 2020.

Department of Employment, Skills, Small and Family Business

The Small Business Digital Champions project is an Australian Government initiative that aims to inspire and equip small businesses across the country to engage with digital technology and unlock their potential. One hundred small businesses have been selected to undergo a comprehensive digital transformation and 15 of those businesses were selected to become Digital Champions. Real-life stories from Digital Champions about their digital transformation will be promoted to share their insights into the practicalities and benefits of adopting digital technology, with other small businesses. The project also provides industry associations with funds to develop digital advisory services for their members.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

There have been 20 contacts to the Small Business Concierge Service since 1 March 2019. Matters raised in the concierge context included the capital gains tax small business concessions and the calculation of interest and penalties.

Australian Taxation Office

During the Christmas closedown period, 24 December 2019 – 1 January 2020, the ATO is planning to undertake the Activity Statement Financial Processing (ASFP) system change. This will move all activity statements into the same modern accounting system the ATO currently uses for income tax processing. This change will improve the ATO’s digital services and assist the ATO to deliver an improved and reliable client experience.

Clients can still lodge their forms during the closedown period, but the system will not process the information until 2 January 2020.

Member discussion

Feedback from small employers about the Single Touch Payroll (STP) transition has been largely positive but there are still some barriers for small employers, particularly those with limited digital capability. The terminology used in STP is still a barrier – for example, ‘what is a payroll code?’

Some banks are removing basic banking services from industries deemed ‘high risk’. Similar issues are arising in the insurance industry, which will not insure some businesses they see as ‘high risk’. Both have an impact on small business and potentially the black economy.

The Victorian Government is looking into wage underpayment and has a new Wage Inspectorate. The ATO noted it had not been approached for involvement or to share data.

The impact of the drought and recent bushfires are far reaching in a number of industries and surrounding regions. Examples include: pharmacists who supply critical medicines to people in drought affected areas on credit, or accommodation providers near bushfire areas that are losing future bookings. The ATO noted that, in relation to the drought, our approach is to encourage those affected to contact us to discuss the assistance we can provide. In relation to the bushfires in NSW and Queensland, in November we announced automatic deferrals of lodgment and payment to local government areas impacted by the bushfires. Where taxpayers are affected but are outside these postcodes people should contact us or their tax or BAS agent.

Superannuation and Employer Obligations update

Single Touch Payroll (STP)

As at 15 November 2019 over 540,000 employers are reporting year-to-date salary and wages, pay as you go (PAYG) withholding and superannuation information through STP. This includes approximately:

• 80,000 or 98% of substantial employers (20 or more employees)
• 460,000 or 62% small employers (1–19 employees).

The ATO is providing assistance to industries that have low numbers of employers engaged in STP. For the top 20 sub-industries, the ATO is working to create relationships with industry representatives to support them with the transition process.

The STP advertising campaign will run until 30 November. The ATO has continued to update a comprehensive suite of support material including checklists, fact sheets, videos and webinars to assist employers with the transition to STP.

Proposed Superannuation Guarantee (SG) Amnesty

The bill to implement the announcement is before Parliament. Under the existing law, employers are required to lodge a super guarantee charge (SGC) statement and pay the SGC on any shortfall amounts if they have not paid an employee’s super on time. Until the proposed amnesty law is enacted by Parliament, the ATO will continue to apply the existing law to the SGC statements lodged.

It is recommended that taxpayers anticipating the law, should move to comply with the current law which requires them to lodge the SGC. If they hold off and they are notified we are examining their affairs, they will not be eligible for the amnesty. In addition, if they lodge now and the law is passed, the ATO will apply the benefits of the amnesty to disclosures that meet the eligibility criteria.

The ATO notes that the draft law also includes restrictions on the Commissioner’s discretion to waive penalties and interest after the due date.

AUSkey Transition update and discussion

AUSkey will be retired at the end of March 2020. It will be replaced by the following new Digital Identity solution for accessing online government services:

• myGovID – used to authenticate and access online services
• Relationship Authorisation Manager (RAM) – whole of government relationship and authorisation manager to manage who can act on behalf of a business across eligible government services.

The myGovID app is available for Apple and Android smart devices via the Apple App and Google Play stores. myGovID together with RAM can now be used to access the: ATO Business Portal, ATO Online Services for Agents, ATO Access Manager, Australian Business Register (ABR) and the Unique Student Identifier organisational portal (Department of Employment, Skills, Small and Family Business).

A new machine to machine credential has just been made public in RAM to replace device AUSkey, and birth certificates can be used for myGovID as a verifiable document for establishing Identity.

Support materials are available on the myGovID and RAM website.

Members were asked for feedback on a draft factsheet and raised the importance of:

• ensuring the communications are targeted, clarifying the difference between myGov and myGovID
• clarifying the transition to myGovID is required for those businesses that use the Small Business Superannuation Clearing House.

E-invoicing update and discussion

E-invoicing is the automated direct exchange transmission of invoices between software systems of the buyer and supplier.

E-invoices can be sent directly to a customer’s software if both systems are using the same standards, even if the buyer and supplier are using different software. In Australia, we are working with the software industry to use the Pan-European Public Procurement On-Line (PEPPOL) standard which is internationally established.

The ATO has been working in partnership with the New Zealand Ministry of Business, Innovation and Employment (NZ MBIE), industry stakeholders and government, to establish a framework for e-invoicing.

The ATO recently consulted with 17 small businesses in the Melbourne area to: explain the new approach to e-invoicing, better understand their current invoicing processes, and to identify barriers and incentives to taking up e-invoicing. The results showed e-invoicing is seen to be simple to use and cheap, and it is expected that 5 day payment terms from all customers and customers (buyers) will drive demand.

Barriers to take up included the need for a shift in large buyers’ accounts payable processes before small businesses can exchange e-invoices with them and that all levels of government and large businesses (including Not-for-profits) need to go first.

Members were asked for their perspectives on the incentives and barriers for taking up e-invoicing.

Transparency of Business Tax Debt measure

The legislation allowing the ATO to disclose tax debt information to registered credit reporting bureaus (CRBs) of businesses, in certain circumstances, that have not effectively engaged with the ATO to manage their debts, received Royal Assent on 28 October 2019. Until the supporting Legislative Instrument is registered, which is currently expected to be early to mid-2020, the ATO cannot provide this tax debt information to CRBs.

The policy aims to:

• reduce unfair advantage for businesses that do not pay their tax on time
• influence client behaviour to engage with the ATO proactively
• enable businesses to make informed decisions when determining the risk of extending credit.

The Commissioner may report tax debt information to CRBs if the business meets all of the eligibility criteria included in the Legislative Instrument.

The ATO provided assurances that it will apply additional safeguards to exclude businesses in circumstances where it would not be reasonable to report their tax debt information or align with community expectations on our administration of the measure.

The ATO is continuing to work with stakeholders to continue developing the administrative design, processes and implementation plan.

Other business

Potential agenda topics for 2020 are: Black Economy Program Update, Cash Flow Coaching Kit and Independent Review for Small Business. Members were encouraged to submit ideas, issues and topics for discussion at future meetings.

The Small Business Stewardship Group membership is refreshed every two years. Expressions of interest for 2020–2021 membership will commence in early 2020 as the current SBSG membership was put in place in 2018.

Meeting close

Co-chair Deborah Jenkins thanked members for their contribution to the meeting and for their support in 2019. The next meeting is scheduled for Tuesday 10 March 2020 in Canberra.

Apologies