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  • Agenda items

    1. Welcome and introductions

    The meeting commenced at 9:30am (AEDT).

    Chairperson Erin Holland opened the meeting and welcomed all members and participants. Tim Dyce, Deputy Commissioner, Indirect Taxes has joined the group and Mark Chapman will be taking over from Frank Brass, representing H&R Block.

    Frank Brass has represented H&R Block on this forum since it was established in 1995. Frank has contributed enormously to the working relationship between the ATO and the tax profession, through challenging times and has added great value to the relationship between the ATO and the tax profession.

    Action items

    Two action items were closed and one remains open.

    Reference

    ATPAG 1505/1

    Agenda topic

    Item 3 – Tax Time – client correspondence list

    Action item

    The ATO will review the guidance material on the ATO website to ensure it is clear and easy to understand.

    Responsibility

    Sally Druhan and Colin Walker

    Update

    Information on outstanding issues and how to use the client correspondence list have been posted on ato.gov.au.

    A detailed step by step guide is available on Tax Agent Portal HelpExternal Link.

    Status

    Closed

     

    Reference

    ATPAG 2108/01

    Agenda topic

    Item 3 – Tax Time

    Action item

    Provide members with the top 10 topics generating phone calls to the ATO from tax agents.

    Responsibility

    Sally Druhan

    Update

    Sample analysis of the phone calls made to the tax practitioner contact centres was shared with members on 2 October 2015.

    At the Tax Time 2015 meeting held on 6 October, members were reminded that any feedback on how to reduce call volumes and increase self-serve options could be sent to ATPAGsecretariat@ato.gov.au.

    Status

    Closed

     

    Reference

    ATPAG 2108/02

    Agenda topic

    Item 7 – Aggressive Tax Planning

    Action item

    The ATO to investigate whether the shareholder tax position in relation to the franking credit benefit scheme outlined in the Taxpayer Alert 2015/2 is ready to be shared externally.

    Responsibility

    Michael Cranston

    Update

    The ATO is still determining its position with respect to the arrangements outlined in Taxpayer Alert 2015/2. However, generally in similar situations it has been the ATO’s practice to make a determination in respect of the corporate entity’s franking account rather than have any determination made at the shareholder level.

    Currently, it is likely that determinations would only be made at the shareholder level for the most egregious of arrangements or those that involve significant streaming where the attributes of the shareholder are one of the reasons for the streaming.

    Specifically, for those transactions undertaken prior to issuing the Taxpayer Alert 2015/2, we do not envisage that any determinations will be made for those transactions to deny franking credits at the shareholder level.

    The ATO will be issuing additional market guidance for payer companies, for example those entities paying franked distributions funded by linked capital raisings (as a follow-on from Taxpayer Alert 2015/2) in early 2016 to provide further certainty regarding those transactions we consider to be low compliance risk, and those we consider to be high compliance risk.

    Status

    In progress

    2. Digital services

    The ATO provided an update on the digital services already in place, an overview of some of the elements of the digital services strategy and the key components of the digital transformation agenda.

    Voice authentication is now available via the ATO app. This allows individuals and sole traders to access online services in the app using their voice instead of using a myGov username and password.

    Setting up voice authentication on a smart device is easy. Clients simply need to download the latest version of the ATO app, access ATO Online services using their myGov details and follow the prompts to either enrol or link their previously enrolled voiceprint to their device.

    Around 1.4 million people have already enrolled their voiceprints with the ATO. The ATO will be working towards making voice authentication available as a whole of government service.

    Currently, agents are unable to call and use voice authentication to identify themselves as the representative of a client. In delivering the government’s digital transformation agenda, the ATO will take the lead role in delivering a relationship and authentication solution across government agencies and intermediary types. The ATO will form a working group to co-design the first stages of a framework for tax practitioners. The future solutions will explore voice biometrics and authentication for tax practitioners, and make it much easier for intermediaries to prove identity and authority to access client records.

    Reference

    ATPAG 2711/01

    Agenda topic

    Item 2 – Digital services

    Action item

    Form a limited life working group with tax practitioners and professional association representatives to conduct some preliminary co-design work for the whole of government relationship and authentication framework and solution.

    Responsibility

    Venetia Blackman

    The ATO is also taking the lead in a project referred to as ‘Manage ABN connections’. This digital service will give individuals in business, or anyone authorised to act on behalf of a business, the option to use their myGov credential (i.e, their myGov username and password) to access a number of government online business related services that currently require an AUSkey.

    Clients will be able to link one or multiple ABNs to their myGov account and clients will have the choice to use their myGov credential or an AUSkey to login. The project does not offer any additional services to businesses, nor will it change the way business correspondence is delivered, it just offers business clients a choice in the way they access services that already exist. Accesses can still be managed through Access Manager/ABR.

    Tax practitioners will have the ability to use their own myGov credential to log into AUSkey facing services.  For example, where an individual tax practitioner has authority for a firm’s ABN, that individual could link the ABN to their myGov credential and use myGov username and password to access the Tax Agent Portal.   The intent of this project is to improve the client experience by addressing existing usability issues with AUSkey, such as browsers compatibility and smart device compatibility. As well as this, having a single log-on is easier to manage and remember.

    Reference

    ATPAG 2711/02

    Agenda topic

    Item 2 – Digital services

    Action item

    Test a prototype of the ‘Manage ABN connections’ service with tax practitioner members.

    Responsibility

    Venetia Blackman

    In the 2015-2016 Federal BudgetExternal Link the Government announced its commitment to reduce red tape and progressively require most people to use digital services, provided they have the ability or means to do so.

    In preparation for this initiative, the ATO would like tax practitioners to provide feedback on a discussion paper focused on the transition to digital services. You can provide feedback onlineExternal Link at or by email to DigitalbyDefault@ato.gov.au. The closing date for response is 15 January 2016.

    The ATO continues to encourage people to access and use digital services where available. The Australian community continues to expect more services to be easy to use and made available online.

    Reference

    ATPAG 2711/03

    Agenda topic

    Item 2 – Digital services

    Action item

    Advise members when Treasury release the digital by default consultation paper.

    Responsibility

    Renee Bruce

    In late 2015, the ATO will deliver more online service for individuals and sole traders. This will include the ability to make payment plans for activity statements and give individuals in business the ability to update their business address in ATO Online. Currently, address updates need to be done via the Australian Business Register.

    Payment plan functionality for income tax and activity statements for individuals and sole traders will be made available for software developers by the end of this year. Developers will then need time to build this into practice management software, giving tax practitioners the ability to manage payment plans via their software.

    The ATO is currently working with practitioners to understand the irritants in the Tax Agent Portal. ATO staff have been visiting tax practices to observe how practitioners use the portal and the technical platforms and operating systems that are used. This will help prioritise technical and other solutions. So far we have heard about availability and stability, error messaging, browser compatibility and for some tasks, a reliance on workarounds.

    Overall members supported the move to a digital future and confirmed the importance of working with the profession and understanding the impacts on practitioners and their clients when changes are made. One area of particular interest is the opportunity for software developers to build more services into their software so practitioners and clients can use that software to comply with their tax and superannuation obligations.

    One member asked if there were any issues that would prevent the ATO from releasing the account list, transaction list and lodgment list services to software developers. This will allow software developers to build this functionality into their practice management software. Although there is still some work to be done before the services can be made available to software developers, the ATO is on schedule.

    3. GST Voluntary Compliance Program community perceptions research

    The ATO commissioned TNS Social Research to conduct a six year program of research to understand the attitudes and behaviours that drive compliance (or non-compliance) with GST obligations and to inform, support and monitor the effectiveness of the GST voluntary compliance program. The research involved 100 tax agents, 100 BAS agents and 100 small businesses.

    The attitudes and beliefs towards the whole GST system have become more positive since the research program began. An increasing percentage of respondents believe that the GST is a fair tax and meeting GST requirements actually helps keep track of their business performance.

    There has been an increase in the belief that penalties for failing to meet GST requirements are too harsh. More than half of the respondents still believe that the GST is an extra burden on their business and by collecting GST they are doing the ATO’s job.

    There has been a spike in the percentage of respondents who believe that getting their BAS in on time is important, even if they may make some mistakes on it. Members confirmed this is consistent with what they see when reconciling the activity statement with the income tax return at the end of the year. The number of people that think it is OK to pay their GST debt late, as long as it gets paid, has remained consistent over the five years of research.

    There was a reversal of the trend in the belief that businesses use the cash economy to avoid meeting their GST obligations in 2015. More of this year’s respondents than a year ago believe that it is normal for trades to offer discount for cash payment (36%), for businesses to use GST funds to manage their cash flow (48%), and that businesses are unlikely to record all cash transactions on their BAS (33%). Responses to these statements had previously been trending in a positive direction.

    Reference

    ATPAG 2711/04

    Agenda topic

    Item 3 – GST research

    Action item

    Further analyse research results showing more believe that it is normal to use the cash economy to avoid meeting GST obligations to identify if the increases are occurring in the tax agent, BAS agent or small business respondent groups.

    Responsibility

    Paul Southwell

    Members suggested a label on the income tax return showing GST amounts. This has been suggested in the consultative groups considering simplified and tailored business returns. This will be a candidate to consider when the transition to digital transactions and software that links small business, accounting intermediaries and the ATO is more advanced. This would build on acknowledged improvements in red tape reduction.

    Members observed the question about fairness of the system could be about the tax (government) system (government policy) or how it is administered (ATO), and wondered whether there was value in further thinking on this point. An example was provided that if a BAS agent was asked if the system is fair, if the portal is not working they will likely say no; and that reflects on administration, not the law.

    Members agreed with the survey findings;

    • When business performance is strong, GST compliance is too.
    • There remains a tension to minimise tax liability for the client, and getting it right.
    • All of the 100 agents in the survey regarded themselves as a trusted advisor. Almost all of the BAS agents survey regarded themselves as a trusted advisor.
    • Observations about cash economy remains an issue
    • There are sustained behavioural improvements. Business say they are more compliant and don’t use GST for cash and members agreed they’ve seen improvement
    • GST on property remains an endemic risk and the ATO should maintain focus on this segment

    4. Improving the business experience

    In early 2015, the Small Business limited life working group was formed to consult on specific proposals to improve the small business income tax return experience.

    The working group made 5 key recommendations:

    • More help for small business
    • Online depreciation tool
    • Interactive business software
    • Visibility of taxpayer data
    • Access to benchmarks

    The reinvention research, consultation and community conversations were also giving the ATO an understanding of what the community thought important. The experience priorities emerging from this were validated with members of the limited life working group.

    The small business experience priorities are to:

    • Understand small business and their needs. For ATO staff to know what it is like to be in business including commercial realities. Treat each interaction as an opportunity to build a relationship. For ATO staff to see a complete picture of each small business; their history, risk rating, issues, and where there may be opportunities to influence.
    • For businesses to be shown ‘what and how’. To build awareness of what can help business and see practical demonstrations. Such assistance may delivered by others in the business ecosystem. Have ATO staff see what the business sees.
    • Fix the basics. Get rid of key irritants, untangle processes and procedures, smooth out and streamline necessary interactions. Design process as if the cost of compliance were ATO costs.
    • Minimal touch and simple reporting systems for uncomplicated business. Maximise the use of prepopulated data. Smooth out interactions over the year, combine all reporting obligations and provide certainty.
    • Visibility of ATO data and information. Small business and their intermediaries can see a view of their tax and super affairs including transaction history, risk rating, third party data, digital options, business viability and comparison to benchmarks.

    Members were particularly interested in making more data and information available and visible to the practitioner and client in real time. Data that has historically been used by the ATO for matching and compliance can be used by business in considering a range of factors such as viability, trends and patterns against industry benchmarks.

    Reference

    ATPAG 2711/05

    Agenda topic

    Item 4 – Improving the business experience

    Action item

    The list of initiatives to ‘Fix the basics’ will be shared with members.

    Responsibility

    Judy O’Connell

    5. Fix it squads

    A small business ‘Fix-it Squad’ is a multi-level, cross-government agency team that includes all key stakeholders related to a specific small business life-cycle event, including small business owners and their representatives. Problems are examined from the perspective of the small business owner and the squad works together to find quick, tangible ways to fix problems and improve the client experience for small business.

    Community feedback indicated that the business activity statement requirements place a disproportionate regulatory burden on small business record keeping. A fix-it squad was bought together to find ways to improve the reporting requirement.

    The fix-it squad recommendations were to:

    • Simplify GST record keeping and reporting. Make it easier to report GST on the activity statement by piloting a reduction in the reporting labels. Make it easier for small business to decide which GST code to use in software.
    • Have contemporary help and reminder services. SMS lodgment reminders and call confirmation options will be piloted.
    • A client dashboard to support small business in managing lodgment and debt. Show a snapshot overview of what is currently due or overdue and what is coming up.
    • Provide and promote options to pay tax in advance to assist in managing cash flow.
    • Have information to support small business owners in making key decisions when setting up their small business.

    Another fix it squad explored problems faced varied when starting a business. Participants for this group included six small business representatives around the young age demographic (18-25) and a number of government agency representatives. The recommendations from this group are to:

    • Redesign the How to start a business | business.gov.auExternal Link page and related content to make it more personalised for small business owners.
    • Develop an engagement pack that uses information collected from business.gov.au and the Australian Business Register to push customised information to potential and new small businesses at the right time over the course of their first year in business.
    • Develop a catalogue of free advice and support available to small business owners that is searchable by location and industry.

    6. Governance and promoter penalties

    The current version of the Guide for Tax Intermediaries: Good governance and promoter penalty laws was published in 2012. Its purpose is to:

    • help advisers better understand promoter penalty risks and how to manage them through good governance processes
    • provide information on how the ATO assesses risk posed by the behaviour of tax intermediaries
    • outline current schemes and behaviours of concern

    The booklet poses key internal control questions for tax practices and suggests processes to help mitigate the risk of becoming involved in tax avoidance schemes and potentially breaching promoter penalty laws.

    Members briefly discussed issues concerning the role that some advisers play in influencing the tax compliance risks for their clients. Some of these involve potential contraventions of the promoter penalty laws, while others relate to wider involvement in schemes of concern, or clients taking ‘aggressive’ positions on the operation of taxation laws.

    The ATO would like tax professionals to contribute to the review of this publication and will shortly put arrangements in place to consult with the profession.

    Reference

    ATPAG 2711/06

    Agenda topic

    Item 6 – Governance and promoter penalties

    Action item

    Erin Holland and Michael Cranston to discuss the approach to design a new product covering what is now the governance and promotor penalties guide, and report back to the group.

    Responsibility

    Michael Cranston

    7. Service commitments

    Members were asked to consider whether any of the current service commitments are causing pressure points and/ or administrative irritants.

    Some members thought the ATO could process more refunds in a shorter period of time. The current commitment to processing income tax returns is 94% of individual and non-individual current year electronic tax returns finalised in 12 business days. Where the return is not able to be finalised within 30 calendar days of receipt the ATO will inform the practitioner.

    The ATO confirmed that delivery of white mail is not included in service commitments. However based on community feedback earlier this year, the ATO has adjusted the contract with Australia post so that the majority of mail is delivered via priority service. Close and continued monitoring of the bulk printing and delivery functions has not shown any systemic administrative problems to print and deliver ATO mail.

    Where there are specific instances of mail being delivered allowing insufficient time for a practitioner or client to take action before a specified due date, they should contact the ATO to arrange more time. The ATO will continue to have regard to allowing reasonable timeframes where paper mail has required action by specific due dates. If a client or practitioner has made efforts to negotiate reasonable extended dates and they are dissatisfied with the outcomes, the ATO needs to know about case specifics to be able to investigate and make improvements for the community.

    The best way to let the ATO know about specific times where dealings with the ATO have not been reasonable is via the ATO's feedback and complaint channels. Practitioners can also use the complex issuers resolution service if they are not able to have problems solved using the normal channels.

    Members acknowledged that instances of mail delays would infrequently occur in a system with such a large volume of interactions and transactions. The digital transformation agenda will bring efficiencies and reduce costs associated with paper mail delivery.

    8. Consultation and working group updates

    The Future of the Tax Profession

    The next meeting of the Future of the Tax Profession working group is scheduled for 2 December 2015 and will focus on the transition of Electronic Lodgment Service (ELS) to a standard business enabled lodgment service through Tax Time 2016.

    Open Forums

    Since July 2015, the ATO has hosted 11 open forums in a variety of suburban, regional and city locations. 808 tax practitioners have attended these forums, with 72% being tax agents and the remainder being BAS agents.  Discussion at the forums covers the following topics:

    • Contemporary Digital Services
    • Tax practitioner update – including myGov, the client correspondence List, Portal dashboard, support and services for tax practitioners
    • ATO approach to debt
    • Tax Practitioner Board update
    • Superannuation

    The main concerns/irritants raised about the portal at open forums are:

    • Performance, downtime, maintenance, outages and lack of stability
    • Improved functionality, practitioners want to be able to do more on the portal
    • client correspondence list impacts on agent/client relationship and is not meeting agent business requirements.

    Most members have attended an open forum and consider them to be very useful and valuable to tax and BAS agents. They liked the way that practitioners can access ATO people and information and discuss different matters with their professional peers. Some had been in forums where misunderstandings about administrative matters and technology had been clarified.

    Guidelines for contacting clients of tax practitioners

    The ATO consulted with members of the ATO Tax Practitioner Advisory Group to develop the original ‘guidelines for contacting clients of tax practitioners’. With a digital environment emerging, practitioners acknowledged that the guidelines need to cover contact channels other than white mail (for example email, SMS, Portal and use of the myGov inbox).

    Members also thought that they needed to have a view of where the ATO was moving and when with respect to address preferencing as well as to factor in potential change to practitioners’ current business models and administrative practices to ensure a new protocol covered some distance into the future. They felt that this was particularly relevant when considering the pace of change towards delivering a digital environment and aligning with government policy and the use of the myGov inbox for clients of tax practitioners who had linked to the tax office through myGov

    In that environment, updating the guidelines has been temporarily placed on hold until there is a clear picture of the proposed future environment and what that requires the protocol to cover and ensure it has a level of future proofing.

    9. Membership review

    The ATO Tax Practitioner Advisory Group charter provides guidance on the composition and tenure for members of this group. Tax practitioner members have three year tenure. Professional association and ITP/H&R Block members have ongoing tenure.

    The ATO will commence a process of a rolling refresh, that is, inviting new practitioners to join as current members conclude their tenure. The first rotation would likely occur in May 2016.

    Professional associations will consider nominating members to join the group. The ATO will develop a description of the types of professional attributes and personal time commitments required to contribute to the advisory group.

    10. Forward agenda items, other business and meeting close

    The key messages from this meeting are sent to all members shortly following the meeting for the professional associations to cascade to their members and publish in newsletters and on websites.

    Forward agenda items include building confidence website, claiming GST credits (four year rule) and common reporting standards.

    Members are invited to propose topics for future meeting agendas or out of session discussions by sending to ATPAGsecretariat@ato.gov.au at any time.

    The proposed meeting schedule for 2016 is:

    • Friday 26 February 2016
    • Friday 20 May 2016
    • Friday 19 August 2016
    • Friday 18 November 2016.
      Last modified: 07 Jan 2016QC 47712