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  • Small Business Stewardship Group minutes 29 August 2018

    Meeting details

    Venue: ATO offices, Sydney and Canberra

    Date: 29 August 2018

    Chair: Deborah Jenkins

    Contact: email Small Business Stewardship Group secretariat.

    1. Welcome and introduction

    Members were welcomed and apologies noted.

    2. Agency update since last meeting

    Treasury:

    A number of tax measures were announced in the 2018-19 Budget.

    Treasury has been progressing work on these measures since their announcement, including the extension of the instant asset write-off for small businesses and changes to the R&D tax incentive.

    ASBFEO:

    ASBFEO has assisted with 1,300 disputes in the last quarter with around two thirds relating to business to business disputes and the other third business to government disputes. Themes include banking issues, phoenixing (including in government procurement) and franchising disputes.

    ASBFEO recently released its report from the Affordable Capital for SME Growth Inquiry which highlighted the inability to access loans and payment times. ASBFEO are continuing work on their inquiry into Access to Justice.

    Department of Jobs and Small Business:

    ASBAS (Australian Small Business Advisory Service) Digital Solutions was launched in July and offers small businesses low cost and easy to understand advice on a range of digital solutions to meet their needs. Three major providers have been announced who are working with partner organisations to deliver ASBAS.

    Department of Jobs and Small business continue to take a strong interest in franchising issues. The Parliamentary Joint Committee on Corporations and Financial Services is conducting an inquiry into the operation and effectiveness of the Franchising Code of Conduct for report.

    Australian Taxation Office:

    On 1 July, the ATO commenced the Independent Review (IR) for Small Business pilot. The IR is designed to give small businesses an opportunity to have their audit reviewed before any assessments or amended assessments are issued. The review is done independently from the original decision maker, is carried out by the Review and Dispute Resolution area in the ATO, and is modelled on a similar service already in place for the large business market. The initial rollout is being offered to certain small businesses in Victoria and South Australia who have an income tax audit in progress.

    The Small Business Digital Taskforce Working Group, a cross agency working group has been established to provide advice to government on the recommendations in the Small Business Digital Taskforce report released in May 2018. The Department of Industry Innovation and Science is currently undertaking targeted consultation with the small business sector on the recommendations.

    3. Strategic discussion of business

    Tax gap program:

    An update on the ATO’s tax gap program of work was provided. Estimating tax gaps form part of the ATO’s broader accountability and transparency as a leading administrator.

    Tax gaps are an indication of the system in operation. The insights gained from this analysis guide us in determining priority risks and development of strategies, including administrative design, help and education, and audit strategies. There are some significant challenges to measuring tax gaps. Tax gaps are, in effect, about measuring what is not visible – what people have not told us about their compliance.

    The program will cover 20 tax gaps and the most recently released was the Individuals Not in Business Income Tax Gap.

    Work on the small business income tax gap is progressing. Issues that have been identified in our analysis include the black economy, basic errors and complexity in the law.

    We will publish the tax gap for small business when we are confident that we have a reliable, credible and meaningful estimate of the tax gap.

    Messaging around the small business income tax gap will be important when it is released.

    2024 vision for small business:

    The ATO’s emerging vision for small business was discussed.

    There will be regular updates on this piece of work at future meetings.

    4. Member discussion

    External members provided insights into topical issues affecting small business including:

    • Incorrect tax advice provided by tax agents and remedies for small businesses relying on that advice. Members noted that similar issues also occur in relation to other areas including application of awards and legal advice. The ATO noted the appointment of Michael O’Neill as the new Secretary/ Chief Executive Officer of the Tax Practitioners Board.
    • Concerns in the small business community about the proposed extension of Single Touch Payroll to micro employers (particularly those with 1–3 staff) and the potential costs to these employers. There is uncertainty as the legislation has not passed and some misinformation in the small business community. Anecdotes were shared about sharp practices being adopted in the market to sell new computers and software to businesses to comply with the proposed law.

    5. Small Business reset update

    The ATO has undertaken work to discover administrative irritants that small business experience when interacting with the ATO. We reviewed feedback from a range of existing sources such as complaints and also undertook consultations with the small businesses community. We will use this information to address our current processes and procedures.

    The top 5 irritants identified through this work are: can’t search ATO website; the tax system is too complex; new to business needs more support; perception of long wait times when calling ATO, and problems with installing AUSKEY. We are validating all of the issues identified with internal stakeholders and will work through the list of irritants to determine a short term, medium term and longer term program of basics that we can address.

    6. Indirect Tax update

    An update was provided on topics including:

    • Online BAS Check - intent is to identify and prevent inadvertent errors, by identifying them prior to (electronic) lodgement of the BAS by small businesses and their advisers. The ATO has consulted with various consultative forums and undertaken user research testing of the concept. Work is progressing toward the Online BAS Check being implemented during 2019/20.
    • Simpler BAS - commenced on 1 July 2017 and reduces the number of BAS labels from seven to three. It is estimated this has reduced the administrative time taken to complete BAS by   hours per annum per business.
    • GST on low value imported goods - from 1 July 2018, GST now applies to most sales of low value goods from overseas businesses to consumers into Australia. All major international suppliers have registered through the simplified or the normal GST process with a number of smaller businesses continuing to register. We are monitoring how overseas registered suppliers have implemented this change and the impact on Australian GST-registered business and we will act to support them as appropriate.

    7. Single Touch Payroll update

    We have seen a positive start to STP reporting with a large number of employers with 20 or more employees already reporting each pay day, including a considerable number of smaller employers that have opted in as their payroll software is STP enabled. Employees can now see their information updated each pay day in myGov and this is also visible to their agent through the portal.

    In relation to STP and micro employers, the ATO is working closely with industry stakeholders as small employers are a diverse group. We have conducted a series of design workshops with tax agents, accountants, bookkeepers and small businesses to better understand this segment’s needs and develop a set of requirements which would best facilitate more tailored solutions for these businesses.

    At a recent workshop, participants interacted with a range of solution providers who have been informally working to develop reporting or other solutions for this market. From this, a deep dive group was formed with four members from the focus group to better understand the closely held businesses.

    Discussion papers have been developed on:

    • Tailored pathways for micro employers
    • Closely Held: Reporting under STP where an entity is using a loan account.

    8. Superannuation update

    An update was provided on a number of superannuation measures including:

    • The Superannuation Guarantee Amnesty Law has not passed. While the ATO has received applications we are considering these applications. Under the current law they will be treated as a voluntary disclosure. Should the law be changed we will then apply the options under the new legislative arrangements.
    • Transfer of early release of superannuation on compassionate grounds - on 1 July 2018, the ATO commenced administration of the program after it was transferred from Department of Human Services.

    9. Debt update

    An update was provided on Debt topics including:

    • The ANAO and Inspector-General of Taxation reviews which are currently underway. These reviews are focussed on aspects of (small business) debt collection activities, processes and procedures. The ATO has also been undertaking an internal review of its debt processes and procedures.
    • Payment thinking initiative – designing processes, systems and approaches that make payment an easy and natural part of the tax and super system. Examples being trialled include: bringing payment conversations closer to the liability being raised; making it simple to pay and hard not to; improving our digital and online connection to natural systems; leveraging our data to tailor the client experience and take action to prevent debts occurring.
    • Drought assistance – we have been out visiting drought affected communities in recent weeks. The ATO is always willing to work with taxpayers who are facing challenging economic conditions or unexpected events. We offer a range of tools and services to support those taxpayers who are willing to work with us. Help available for drought-affected clients includes:
      • more time to pay
      • waiving penalties or interest
      • payment plans with interest free periods
      • adjusting pay as you go (PAYG) instalments to better suit individual circumstances.

    10. Other business

    Members were encouraged to put forward topics for inclusion as agenda items for future meetings.

    11. Meeting close

    Chair Deborah Jenkins thanked members for their contributions to meetings throughout the year.

    The next SBSG meeting will be on Thursday 22 November in Canberra.

    Attendees

    Deborah Jenkins

    Deputy Commissioner Small Business

    James O’Halloran

    Deputy Commissioner Superannuation

    Fran Southward

    Deputy Commissioner Service Delivery

    Mathew Umina

    Assistant Commissioner Small Business Experience

    Bede Fraser

    Treasury

    Rose Verspaandonk

    Dept. of Jobs and Small Business

    Craig Latham

    Australian Small Business and Family Enterprise

    Magdalena Kaczmarska

    Australian Chamber of Commerce & Industry Ombudsman (ASBFEO)

    Jock Kreitals

    Real Estate Institute of Australia (REIA)

    James Coward

    Restaurant & Catering Australia (RCA)

    Susan Franks

    Chartered Accountants Australia and New Zealand (CAANZ)

    Wally Tallis

    Indigenous Business Australia (IBA)

    Paul Mather

    Employer Obligations Association

    Graham Baxter

    Business Enterprise Centres Australia (BECA)

    Adele Sutton

    Direct Sellers Association of Australia (DSA)

    Richard Dudley

    Motor Traders Association of Australia (MTAA)

    Michael Renshaw

    Australian Lottery & Newsagents’ Association (ALNA)

    Deborah Cook

    Small business operator

    Tony Sama

    Small business operator

    Apologies

    Tim Dyce

    Deputy Commissioner Indirect Tax

    Robert Ravanello

    Deputy Commissioner Service Delivery

    Kate Carnell

    Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

    Peter Strong

    Council of Small Business Australia (COSBOA)

    Gillian Stapleton

    Direct Sellers Association of Australia (DSA)

    Maree Petersen

    Small business operator

    Michelle Size

    Small business operator

    Heath Michael

    Australian Retailers Association (ARA)

      Last modified: 21 Nov 2018QC 57415