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  • Small Business Stewardship Group key messages 31 August 2021

    Agency updates

    ATO

    Tax Time is progressing smoothly with service standards being met and no significant technology problems. Encouragingly, small business Single Touch Payroll (STP) Income Statement finalisation rates are strong.

    The Business Portal has been retired with the number of small businesses transitioning to Online services for business strong.

    We are continuously adjusting how we interact with small businesses in the current COVID-19 environment. We are adopting differentiated and tailored approaches based on many factors, not just a business’ location.

    Ongoing effort is being applied to inform small businesses about the tax status and associated reporting requirements of different state and territory business support grants and payments.

    Members want a whole-of-government approach to encouraging small business digitisation. Many agencies have resources, programs and tools but finding the right solution at the right time is not easy.

    A member expressed interest in the Queensland University of Technology Small Business Viability Study.

    Action item

    20210831-1

    Due date

    November 2021

    Responsibility

    Small Business Stewardship Group (SBSG) Secretariat

    Action item details

    Small Business Viability Project.

    Secretariat to circulate the project’s final report to members out-of-session.

     

    Action item

    20210831-2

    Due date

    November 2021

    Responsibility

    Bruce Billson Australian Small Business and Family Enterprise Ombudsman and SBSG Secretariat

    Action item details

    E-invoicing agenda item

    Table this topic for discussion at the November SBSG meeting.

    Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

    ASBFEO is currently examining the cumulative regulatory burden for small business.

    The Ombudsman’s Tax Concierge ServiceExternal Link has been busy and is working effectively.

    The independent reviewExternal Link of ASBFEO was published on 31 August 2021. One of its key recommendations may result in a rebranding to better reflect the agency’s advocacy role.

    ASBFEO is monitoring small businesses experiencing distress and helping them access government support. My Business HealthExternal Link has a range of resources to support the mental health of small business people.

    Treasury

    The COVID-19 Disaster Payment has been made tax free following recent legislative changesExternal Link.

    The draft Consumer Data RightExternal Link (CDR) rules that were released in July 2021 include a proposal for consumers to give tax agents, BAS agents and tax financial advisers access to the consumer’s CDR data.

    The employee share scheme consultationExternal Link closed in August, including in relation to changes announced in the May Budget.

    The Australian Small Business Advisory ServicesExternal Link has had increased funding to assist with improving digital capabilities of small businesses.

    A member explained the ability of industry associations and their members to consult with Treasury has been impacted by the cumulative fatigue of successive lockdowns.

    An updated Treasury organisation chart (PDF 96KB)This link will download a file is available.

    Post-meeting update – the updated organisation chart was issued to members out-of-session on 5 October 2021.

    COVID-19 round table

    Deborah Jenkins reminded members of her temporary COVID-19 support role. She noted that it differs from the position held by Deputy Commissioner James O’Halloran last year. Deborah is currently focusing on:

    • offering support to the states and territories who are delivering their various business support programs
    • providing governance over the ATO’s administrative support levers and ensuring their application is co-ordinated
    • ensuring the ATO is prepared if a new Commonwealth ATO-administered business support measure is announced (refer to Prime Minister’s announcements on 15 July 2021External Link and 13 August 2021External Link).

    Member discussion

    Members noted that there is a deep fatigue afflicting small businesses. Mental health is a continuing concern, along with the compounding impacts of successive lockdowns. Members suggested the actual level of crisis in small business is not known, and the notion that businesses will simply ‘bounce back’ when things re-open is incorrect.

    There are difficulties and confusion when navigating state and territory-administered small business support packages (for example, inconsistent terminology). Inconsistencies are especially apparent to small businesses operating in border communities.

    State/territory border closures and associated permit processes are still hindering commerce. This is especially acute in the ACT which is encircled by NSW. Some industries are seeing impacts to professional standards as operators modify their processes in observance of restrictions.

    Cash flow, supply chain and rental issues are ongoing. Without a clear plan or targeted end-date for lockdowns, businesses cannot plan. One member anticipates the supply issues currently affecting their industry will continue until 2023.

    Small businesses cannot cope with new obligations at this time (for example, STP Phase 2 and Your Future, Your Super). These measures may have merit; however, the timing is wrong.

    A member suggested the ATO share more data within the group, so they are better positioned to understand lockdown impacts (for example, include aggregated activity statement data).

    ATO debt and lodgment approach

    Debt and lodgment approach

    The ATO’s strategic approach recognises the importance of enhancing certainty for clients and the community. Our aim is to ensure that clients:

    • have certainty of their net tax position
    • understand what they need to do
    • know how to seek help if needed
    • know what to expect from us in terms of the actions we may take to engage with them.

    In July 2020 we resumed outbound engagement for clients with outstanding obligations to offer help getting back on track. This was expanded to include formal warnings in early 2021 to provide certainty of what actions we may need to take if a client remains disengaged.

    In April 2021 we commenced strengthening our engagements with clients. Enhanced governance, principles and thresholds are being applied to any decision to take firmer action. Where enforcement action is appropriate, we are engaging with the client to achieve the best outcome for their circumstances.

    Our key message remains it is never too late for a small business to engage with us or to seek help.

    Members were invited to provide feedback on our debt and lodgment approach.

    Disclosure of business tax debt

    The Disclosure of Business Tax Debts measureExternal Link took effect 21 February 2020. This enables the ATO to report the tax debt information of businesses who meet certain criteria to credit reporting bureaus (CRB).

    We will send a written notice if we plan to disclose a business’ tax debt. Notices will outline what action can be taken to avoid tax debt information being reported and must be actioned within 28 days.

    Clients who believe we have made a mistake with their debt balance or disagree with our decision to disclose their debt balance to CRBs are encouraged to contact us immediately to discuss their situation. We will not disclose a business’ tax debt if the client has engaged with us to manage their obligations or the debt is disputed and under review.

    Support options are available for businesses that cannot pay on time, or who have missed a due date.

    New insolvency measures

    The Government has made changes to the insolvency framework. Since 1 January 2021, two new processes have been available for small businesses:

    • A new formal debt restructuring process for incorporated businesses with liabilities of less than $1 million. This provides a faster and less complex mechanism for financially viable entities to restructure their debts and maximise their chances of recovery.
    • A new, simplified liquidation pathway for small businesses to allow faster and lower-cost liquidation, increasing returns for creditors and employees.

    Our approach to insolvency is helping clients get back on track or exit with dignity. Bankruptcy/wind-up action is a last resort – we are working closely with clients who are contemplating insolvency to tailor our approach for their needs.

    Member feedback

    Is there scope for ATO to change its approach to the small business restructuring process?

    • The ATO advised more cases are required to speak constructively about process adjustments.
    • The use of the provision is hampered by the evolving landscape. Clients are taking a pragmatic approach, as they may also be a debtor themselves.

    In terms of preserving value and entrepreneurship, the ATO needs to be moderate in its dealings with businesses at the first signs of trouble.

    Deferral discussions provide a great opportunity to see how small business are handling their debt. Members requested the ATO share information about the effect of lockdowns on debt. The ATO advised:

    • Lodgment data is holding up strongly, particularly in the small business market.
    • When people are reminded about their obligations, they are paying.
    • The ATO has been working with the QLD Small Business Commissioner on whether ATO debt affects access to finance. Case studies show an ATO payment plan is not a barrier to accessing finance.

    The ATO needs to be cognisant of potential mental health issues when pursuing debt.

    Your Super, Your Future

    On 22 June 2021, the Your Future, Your Super measureExternal Link became law. The measure commenced on 1 July 2021, except for Schedule 1 (the single default account or 'stapled super fund' measure) which commences on 1 November 2021.

    The YourSuper Comparison Tool allows individuals to compare key data on MySuper products to choose a super fund that meets their needs.

    The tool went live on ato.gov.au on 1 July 2021. On 31 August 2021, it was updated to include investment performance data and to add the seven-year return information. This information is supplied by the Australian Prudential Regulation AuthorityExternal Link.

    Individuals seeking to view and compare their existing MySuper products can log in to ATO online services through myGovExternal Link, to access an authenticated ‘personalised’ version of the tool. An unauthenticated ‘non-personalised’ version is available at ato.gov.au/yoursuper.

    From 1 November 2021, if a new employee is eligible to choose a super fund and does not, employers must use ATO online services to request the details of an existing ‘stapled super fund’ for superannuation guarantee (SG) payments.

    Failure to request a stapled super fund when required could mean an employer will be subject to the SG charge for failing to meet choice of fund rules.

    The stapled super fund service will be implemented in two phases:

    • Phase 1 – From 1 November 2021, the stapled super fund request service (retail solution) will be available via ATO online services.
    • Phase 2 – From 1 July 2022, the stapled super fund request service will be integrated into the employer’s payroll software. This phase is voluntary and dependent on uptake by digital service providers.

    The super choice form will be updated to be consistent with the measure’s deployment on 1 November 2021.

    For the first 12 months, we will employ a ‘help and educate’ transitional compliance approach. Two legislative instruments detailing our compliance approach were previously circulated to the group for comment. Comments have now closed and the final version, SPR 2021/D1 Superannuation Industry (Supervision) Act 1993 can be accessed.

    Member feedback

    The Fair Work Ombudsman (FWO) and the ATO should work together to provide more information about employer super obligations.

    An issue was raised about different effective dates on FWO’s website, for new remuneration rates which took effect on 1 July 2021. The ATO has passed this feedback to FWO.

    The ATO should be mindful of its messaging to employers about the penalties regime.

    A member flagged they are struggling to get feedback about the way late super is reported and how complex this is for a small business owner. Post-meeting update – the ATO followed this up out-of-session on 13 October 2021.

    Modernising business registers and Director ID

    All directors of companies and corporate bodies will soon be required by lawExternal Link to apply for a Director Identification Number (director ID).

    A director ID is a unique, permanent identifier given to a person who has verified their identity with the Registrar. It is being introduced to help combat illegal phoenix activity by ensuring directors can be traced across companies and preventing the use of fictitious identities on the new registry service.

    Transitional arrangements (PDF 92KB)This link will download a file will be in place to allow directors to become familiar with the new requirements (subject to the Minister’s decision). Obligations under these arrangements commence from 1 November 2021. This requires newly appointed directors to apply for their director ID within 28 days of appointment. Existing directors will have until 30 November 2022 to apply.

    The director ID application process is currently being tested and will be publicly available later this year.

    Director ID application process – private beta testing

    Users will be able to apply for a director ID through digital, phone and paper application processes. The digital component is being supported by myGovID.

    We commenced private beta testing of the director ID application process in June 2021. On average, applications take 15 to 18 minutes to complete, including proof of record ownership and authentication.

    Feedback from participants has been positive and we are proceeding to public beta.

    Encouraging take-up of director ID

    We will use a mix of engagement and communication strategies to educate people about director ID and to encourage them to apply within required timeframes. This includes:

    • enlisting the support of company secretaries and agents to use natural touch points in the business cycle to encourage directors to apply
    • enlisting the support of professional and industry associations to encourage early adopters
    • providing third parties with the information required to educate and encourage directors to apply
    • including information on director ID in natural touchpoints with government, including Australian Securities and Investments Commission, Australian Charities and Not-for-profits Commission, business.gov.au and state-based government business assistance websites.

    Member feedback

    Did the private beta include non-digital participants and what additional support will be available for those who require help to get set up?

    • The ATO confirmed not all private beta participants had a myGovID and we will support users unable to apply online. A direct phone line will be established for the Australian Business Registry Services and director ID. Operatives supporting director ID will have training in myGovID and be able to support a client through the end-to end application process.

    Many employees have a director title in a functional capacity, not as director of a company. The definition of director must be clear, to ensure only company directors are included.

    International directors of global organisations will not understand local laws and rely on practitioners to ensure they are compliant. The private beta process should include the company secretaries and internal practitioners of these organisations.

    • The ATO confirmed we have recruited non-resident directors to participate in the private beta. We are communicating with non-residents through their local agents and office holders.

    Will there be an annual verification statement for directors?

    • The ATO advised once you have a director ID, no regular authentication process is required. Verification will occur on the company register side when in the future a director ID is associated with a company. You only need to prove your identity once, and the director ID stays with a person forever.

    Other business

    Several members expressed concern about the potential public release of JobKeeper information. The non-government members strongly supported the Commissioner’s stance regarding maintaining client confidentiality.

    Peter Strong recently stepped down as CEO of Council of Small Business Organisations Australia and as a member of the SBSG. Members recognised Peter for his valuable contribution and commitment to the group and to the small business community over many years.

    Attendees

    Attendees list

    Organisation

    Member

    ATO

    Andrew Watson (Co-chair), Small Business

    ATO

    Emma Rosenzweig, Superannuation and Employer Obligations

    ATO

    Michelle Crosby, Australian Business Registry Services

    ATO

    Tony Goding, Small Business

    ATO

    Vivek Chaudhary, Debt and Lodgment

    Australian Lottery and Newsagents Association

    Michael Renshaw

    Australian Small Business and Family Enterprise Ombudsman

    Bruce Billson (Co-chair)

    Australian Veterinary Association

    Moss Siddle

    Business Enterprise Centres Australia

    Graham Baxter

    Chartered Accountants Australia and New Zealand

    Susan Franks

    Council of Small Business Organisations Australia

    Alexi Boyd

    Department of Industry, Science, Energy and Resources

    Peter Cully

    Direct Selling Association of Australia Inc

    Gillian Stapleton

    Institute of Certified Bookkeepers

    Matthew Addison

    Motor Trades Association of Australia

    Richard Dudley

    Real Estate Institute of Australia

    Jock Kreitals

    Small business operator

    Deborah Cook

    Small business operator

    Tony Sama

    Treasury

    Bede Fraser

    Department of Industry, Science, Energy and Resources

    Peter Cully

    Guest attendees

    Guest attendees list

    Organisation

    Attendee

    ATO

    Ashley Lock, Australian Business Registry Services

    ATO

    Deborah Jenkins, Small Business

    ATO

    Katie Constance, Superannuation and Employer Obligations

    ATO

    Larissa Jones-Angel, ATO Corporate

    ATO

    Martin Jacobs, Superannuation and Employer Obligations

    ATO

    Michael Karavas, Superannuation and Employer Obligations

    ATO

    Moe Elrifai, ATO Corporate

    ATO

    Sally Bektas, ATO Corporate

    ATO

    Tracie Crowden, Superannuation and Employer Obligations

    Apologies

    Apologies list

    Organisation

    Member

    Australian Chamber of Commerce and Industry

    Ross Lambie

    Australian Retailers Association

    Jessica Yu

    Indigenous Business Australia

    Greg Ellis

    Restaurant and Catering Industry Association

    Thomas Green

      Last modified: 21 Oct 2021QC 67077