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  • Tax Practitioner Stewardship Group key messages 13 August 2021

    Welcome and introduction

    Co-chair Deputy Commissioner Hoa Wood welcomed attendees and asked that any conflicts of interest be declared. Members were reminded that discussions are confidential and that the ATO will be clear as to what can be shared more broadly.

    It was noted that the meeting agenda would be adjusted to incorporate a discussion on how the ATO can assist the tax profession with the current pressures being experienced during the COVID-19 lockdowns.

    Superannuation and Employer Obligations

    Deputy Commissioner Emma Rosenzweig provided an overview on recent superannuation and employer obligation updates:

    • Law Companion Ruling LCR 2021/2 Non-arm's length income - expenditure incurred under a non-arm's length arrangement, focussed on self-managed superannuation funds (SMSFs), was recently released.
    • Draft Law Administration Practice Statement PS LA 2021/D1 Remission of additional superannuation guarantee charge, outlining the proposed guidelines in relation to the remission of additional super guarantee charges imposed under Part 7 of the Superannuation Guarantee (Administration) Act 1992, was released on 29 July 2021. Feedback is open until 27 August 2021.
    • No further update is available, at this time, on the recent motion in the Senate to make the ATO comply to disclose JobKeeper recipients’ details. The Commissioner has made a public interest immunity claim against the Senate Order for the production of documents in relation to JobKeeper grants paid to companies with an annual turnover of more than $10 million. The Senate is due to sit again on 23 August.
    • Single Touch Payroll Phase 2 – Members noted concerns with the 1 January 2022 start date. The ATO is currently working with digital service providers to understand their readiness. The ATO is working on community messaging, including the deferrals process which will provide employers that are unable to meet the deadline with a process to submit a deferral application to the Commissioner.

    Member comments

    • Members observed that the ATO should not provide information which discloses taxpayer information as this breaches trust and taxpayer confidentiality. They understand, from a transparency aspect, that there is interest from the community on where public money is being spent.
    • Members were concerned that some employers trying to support their employees by claiming JobKeeper would be perceived as improperly accessing the payments.

    Your Future, Your Super

    Director Katie Constance and Project Manager Caryn Kaluzinski from the Your Future, Your Super program outlined the four key components released in the October 2020 Federal Budget for 2020-21.

    1. Best financial interest duty for trustees

    Best financials interest duty for trustees, managed by Australian Prudential Regulation Authority (APRA) began from the 1 July 2021. The intent of this measure is to ensure trustees of SMSF perform their duties in the best financial interest of SMSF beneficiaries.

    2. My Super products performance assessment

    A performance assessment on mySuper products will initially be completed by 30 August 2021 by APRA. The performance assessment will then be expanded to all trustee directed products by July 2022.

    3. YourSuper comparison tool

    The YourSuper comparison tool launched 1 July 2021, allowing individuals to compare MySuper products through two ways, the personalised authenticated version in myGov or using the non-personalised version available on ato.gov.au

    Benefits of using the authenticated version in myGov include:

    • personal information will be prefilled
    • current superfund account balance is displayed
    • results are tailored specifically to the individual, providing a more tailored experience including ‘like for like’ products based on their age and products specific to the client’s current information.

    Using the non-personalised online version does not provide access to an individual user’s own superfund information, such as balance, but it does allow the user to make informed decisions about their super. The client can:

    • manually adjust details such as amount
    • personalise and access information through the YourSuper comparison tool, providing a comparison of how the 80 funds are competing against each other using the key criteria of net return and annual fee
    • see performance data, from APRA, from 1 September 2021.

    4. Stapled superfund reform measure

    The Stapled superfund reform measure regulations, introduced to reduce the amount of super accounts opened by individuals, generally as a result of changing employers, were finalised on 5 August 2021.

    A high-level demonstration was provided to members to show the process that will be effective from 1 November 2021, where new employees do not provide a valid super fund choice. Employers must check with the ATO if the employee has an existing super account. This is known as a stapled super fund.

    Employers will not be able to use a default fund without first checking for a stapled super fund.

    To request a stapled super fund:

    • an employer/employee link must exist in the system in order to confirm the employee is employed by that employer and a Tax File Number declaration must be processed or a Single Touch Payroll event must have been undertaken prior to making a request
    • employers will need a myGovID to access the authenticated channel, where they can then access the request tool via the employee menu through Online services for agents, Online services for business, or a bulk request for larger employers (temporary solution available from 1 November 2021).

    Once requested, a response should usually be returned instantly on-screen.

    If using an exemption code, the query takes longer to match the employee record.

    More than one stapled super fund enquiry can run in the background and results provide the fund ABN, member account number and Unique Superannuation Identifier. Results can include SMSF although members will likely provide their SMSF details to employers.

    Phase 2 service will integrate this service into the employer payroll software systems. Voluntary co-design is taking place with some digital service providers and is expected to be available in software by July 2022.

    Only one stapled fund is attached to an individual and is determined through a hierarchy of attributes during the relevant period:

    • the most recent fund identified by the Commissioner
    • the fund that received the most recent contribution for the employee
    • the fund that holds the largest account balance at the end of the previous financial year.

    Use of the service will be monitored by the ATO for compliance and fraud control.

    Member comments

    • Members were concerned with the additional process employers will need to go through to access an employee’s stapled fund if the employee does not volunteer the information.
    • It is not clear how the process will work with existing employer and super guarantee obligations, as payments need to be made within 28 days of the end of the quarter the employee commences employment.
    • There is a lack of guidance for intermediaries when providing superannuation advice.
    • Members queried what compliance measures will be put in place and raised the risk of potentially fraudulent activity.

    Tax Practitioner Board

    The Tax Practitioner Board (TPB) representative, Debra Anderson advised the TPB is holding workshops on security and Proof of Identity requirements to meet Code 1 of the Code of Professional Conduct. This code requires registered tax practitioners to act honestly and with integrity.

    Taxable payments reporting system and Black Economy

    Assistant Commissioner Peter Holt and Director Samantha Francis provided a reminder of the Taxable Payment Annual Report (TPAR) due date of 28 August and emphasised that the TPAR non-lodgment advice should not be used as a mechanism to gain additional time to lodge.

    Members were updated on enhancements to information prefill since the Taxable payments reporting system (TPRS) was introduced as part of the response to the Black Economy program. With the increase of industries reporting using TPAR the ATO is able to match income against the reports.

    The ATO prefills government grant information, intended as a prompt to agents and their clients, to ensure they consider the Non-assessable Non-exempt (NANE) elements of grants on an individual basis for each client’s eligibility, reducing the risk of clients potentially reporting these grants as assessable income.

    2020 COVID-19 government grants have been further extended into the 2021 financial year. A list of government grants and the elements that should be considered when self-assessing client eligibility is available in the 'my calc' screen of prefill and links through to NANE government grants for grant recipients.

    Members advised they have received numerous requests asking for a list of TPAR lodgment status. They recommended including a report on Online services for agents, for agents to access a list of clients who have TPAR obligations and their TPAR lodgment status, adding that the integrity of the TPRS data would increase if these reports were readily available to agents.

    The ATO investigated the possibility of making these lists available, but this is not possible, at this time, as a large system change would need to be undertaken to make on-demand reporting possible.

    The ATO acknowledged there is room for improvement with the integrity of reporting and advised there are several challenges faced in terms of TPAR lodgment:

    • There is no registration requirement for TPRS. The ATO identifies the requirement to lodge TPAR from income reported on previous tax returns where contractor work has taken place.
    • The TPAR contact person is unknown or it is unclear who is responsible for lodgment.

    An outbound campaign, focused on help, education and support for clients entering TPRS and assisting clients with their reporting obligations, was run between November 2020 and June 2021.

    • 16,000 clients were contacted directly.
      • Over 50% of clients contacted were required to lodge a TPAR for the 2020 year.
      • Over 25% of clients contacted needed to lodge a TPAR non lodgment advice as their circumstances did not warrant them to report in the TPAR system.
       
    • The client demographic engaged was within the five industries now included in the expansion of TPAR – couriers, cleaners, road freight, information technology (IT) and security.
    • In addition to the educate and support work, the team reviewed 'nil reports' lodged by the clients contacted, and found the majority of clients had lodged TPAR nil reports correctly.
    • A small proportion of those contacted required the education which steered them into lodging the TPAR.

    The Black economy (or shadow economy) program focuses on making sure the ATO is working to identify people that are not operating correctly within the system.

    Grant Leef, project lead, advised that due to discrepancies being observed during the pandemic, the ATO was prompted to reach out to 2,000 clients through a letter campaign. This resulted in approximately 20% of lodgments being amended based on the correspondence received. Of these, 80% amended their income to what was disclosed on the TPAR or more.

    Other insights gained included:

    • business structures had changed and had not updated the payer – income was reported but under the incorrect ABN
    • the reporting of income and simultaneous offsetting of expenses dollar for dollar.

    Work planned for the 2021–22 financial year will focus on all industries in the TPRS and includes:

    • looking at GST obligations – payments being made for GST with no corresponding GST registration in place
    • an email campaign to agents with correspondence being sent to clients from November 2021, and follow up calls being made in February to March 2022
    • development of the future compliance program.

    Member comments

    • Members advised agents would like to receive nudge reminders to assist them to have educational discussions with clients around TPAR lodgment requirements.
    • Concerns were raised with the timing of planned upcoming communication given the additional pressures agents are experiencing in the current environment.
    • One member commented that the timing of TPAR correspondence is good, as agents can plan the lodgment of TPAR at the time of lodging income tax returns, rather than getting reminders 6 months down the track. It can be seen as an opportunity to build checking TPAR lodgment into natural process within practices to be more efficient and not have to re-work.

    Expansion of prefill data

    Assistant Commissioner Adam O’Grady advised that the Data Acquisition and Optimisation program is about exploring what new data sets the ATO could acquire and how this could be used to influence return preparation at the time of lodgment.

    The focus is on expanding the amount of prefill data and providing a better experience while also lowering the cost of compliance for both agents and clients alike; improving the reliability and accuracy of the data used in prefill to improve compliance.

    The individuals data acquisition plan includes:

    • property management reports
    • short term rental – under the ‘special purpose acquisition process’ this information is now under a share economy reporting regime. The government has announced its intention for these platforms to report to the ATO. Consultation ended in early August.
    • novated leases – claims are being made at D1 for novated lease vehicles when this is not allowed. Real time analytics are able to provide nudges to clients for consideration before making the claim.
    • gifts and donations
    • income protection
    • landlord data – exploration is under way to capture insurance and deduction payments
    • strata management accounts – data on monthly fees paid
    • bank loan data – data acquisition in this space can be complex due to the different types of loan structures with re-draws.

    Where prefill information may be available, but is not of the highest the quality, it may be used as a prompt to agents to have a conversation with their client.

    The ATO have recently published some of the data matching protocols under this program including:

    Member comments

    • Members support the program and agree more prefill data helps minimise risk but would like more information on the nature of the issues with claims driving the gap. They supported expanded prefill for non-individuals.
    • The ATO website does not provide enough guidance on why the ATO is collecting the data when it publishes its data collection protocols.
    • Members suggested they would ideally like an ‘in channel’ option to flag with the ATO where data is incorrect for a client.
    • Members queried what concerns the ATO has around novated leases? Understanding the reason will assist practitioners to have the conversations with clients.
    • Members agreed that obtaining prefilled data is a quick and efficient way to detect anomalies, assists with reverse workflow and is a trigger point for a practitioner to engage with and educate clients.

    Issues faced by the tax profession

    Deputy Commissioner Hoa Wood facilitated a discussion on support for the tax profession in the current environment, whilst maintaining compliance with obligations to the tax and superannuation system.

    The main points raised during the discussion included:

    • Nature of crisis is different to 12 months ago and there are many challenges in providing services to clients.
    • Members noted that state agencies have not been as helpful in assisting tax practitioners and do not understand the role of the tax profession in assisting clients to access stimulus measures.

    Concerns of the profession include:

    • Assistance such as JobMaker hiring credits, rely on applicants being up to date with business activity statement (BAS) lodgments but agents are unable to submit these as their clients have no funds to pay the BAS and anticipate that the BAS may create further debts that they cannot pay.
    • State government support measures are often tied to federal laws and many businesses are struggling to understand and meet these guidelines as they are continually changing.
    • Tax practitioners need to know the details of all the state-based grants available as they often have clients who are impacted across different states and clients want this advice.
    • Agents are increasingly working from home and are unable to have face-to-face consultations with clients which means the work takes longer to complete.
    • While tax agent workloads have increased this is mainly in providing advice for which clients are not willing to pay – many agents are working 15 hours a day, 7 days a week.
    • The ATO’s approach to no blanket extension for tax time or BAS lodgment is not practical when significant portions of the country are in lockdown and working in challenging circumstances.
    • Small businesses owners still have business and living expenses even in lockdown, and most have depleted their reserves and working capital. Cash flow is a major pain point even in good times, and these are not good times. Many have not paid their agents even where they are assisting them to access stimulus measures meaning that the agents themselves are dipping into their reserves.
    • The scale of clients going under is significant and the situation is urgent. This has led to many clients disengaging with their agents and when the ATO contacts the agent to follow up for those clients, often the agent themselves cannot get the client to engage.

    The ATO acknowledged the current environment and undertook to look at what further could be done to alleviate the pressures outlined. It was noted that 'no blanket extension' does not mean the ATO is not ready to help and provide deferrals where needed. The preference for a tailored approach is to ensure that we are able to find a solution that helps the practitioner to address the pressures in the longer term, as a blanket extension provides very brief relief but there is still an issue that needs to be confronted not that far down the track.

    • The importance for clients to keep up to date with lodgment obligations so the client and the ATO has visibility of a client’s situation and can assist with payment plans and support.

    In response to the ATO’s question of what other action it could take to help relieve pressures, it was suggested

    • avoiding or delaying the introduction of new initiatives that might create additional workloads should be considered – these could be generated from the ATO, such as new tax determinations or tax rulings
    • reducing notifications and messaging for clients of agents – interactions that might have been seen to be useful in ‘pre-COVID-19 normal times’ are now generating additional interactions with agents which is taking their time away from helping clients access stimulus support and causing unnecessary angst
    • ATO Support messages require suitable communication channels as not all small businesses or tax and BAS agents look at LinkedIn on a daily basis – most use Facebook or Instagram, as well as hidden industry networks, and these channels are better for reaching out to the small business and tax practitioner audience
    • providing tax practitioners with reassurance, support and practical suggestions, and ensuring offers of help are genuine.

    ATO

    The standing agenda items on Supporting the tax profession, Lodgment program and Single Touch Payroll were tabled in the agenda papers but not discussed due to a late request from members to discuss the current issues being faced by the tax profession in the COVID-19 environment.

    Other business and meeting close

    No other business was raised for discussion.

    Co-chair Deputy Commissioner Hoa Wood thanked members for their attendance and for their frank, open conversation.

    Attendees

    Attendees list

    Organisation

    Member

    ATO

    Hoa Wood (Co-chair), Individuals and Intermediaries

    ATO

    Andrew Watson, Small Business

    ATO

    Audra Paskevicius (Secretariat), Individuals and Intermediaries

    ATO

    Emma Rosenzweig, Superannuation and Employer Obligations

    ATO

    Grant Brodie, Client Account Services

    ATO

    Sylvia Gallagher, Individuals and Intermediaries

    ATO

    Vivek Chaudhary, Debt and Lodgment

    Australian Bookkeepers Association

    Peter Thorp

    Chartered Accountants Australia and New Zealand

    Michael Croker

    CPA Australia

    Elinor Kasapidis

    H&R Block

    Mark Chapman

    Income Tax Professionals

    Scott Bailey

    Institute of Certified Bookkeepers

    Matthew Addison

    Institute of Public Accountants

    Tony Greco

    National Tax and Accountants Association

    Rodney Wilson

    Tax & Super Australia

    Neville Birthisel

    Tax practitioner

    Gavin Swan (Co-chair)

    Tax practitioner

    Keith Clissold

    Tax practitioner

    Ken Thomas

    Tax practitioner

    Mark Morris

    Tax practitioner

    Phil McCann

    Tax practitioner

    Shanna Hunter

    Tax practitioner

    Steven Inglis

    Tax practitioner

    Warren Seeto

    Tax Practitioners Board

    Debra Anderson

    The Tax Institute

    Robyn Jacobson

    Guest attendees

    Guest list

    Organisation

    Attendee

    ATO

    Adam Kendrick, Individuals and Intermediaries

    ATO

    Adam O'Grady, Individuals and Intermediaries

    ATO

    Belinda Gibson, Individuals and Intermediaries

    ATO

    Blair Davidson, Small Business

    ATO

    Caryn Kaluzinski, Superannuation and Employer Obligations

    ATO

    Grant Leef, Small Business

    ATO

    Jo Dance, Small Business

    ATO

    Katie Constance, Superannuation and Employer Obligations

    ATO

    Michael Karavas, Superannuation and Employer Obligations

    ATO

    Peter Holt, Small Business

    ATO

    Reveka Kotsiaris, Enterprise Strategy and Design

    ATO

    Samantha Francis, Small Business

    ATO

    Siobhan Spencer-Arnell (Secretariat), Individuals and Intermediaries

    ATO

    Tina Ford-Doe, Individuals and Intermediaries

    ATO

    Wendy Perdrisat, Individuals and Intermediaries

    Apologies

    Apologies list

    Organisation

    Member

    ATO

    Alex Adams, Enterprise Solutions and Technology

    ATO

    Michelle Crosby, Australian Business Registry Services

      Last modified: 08 Oct 2021QC 66982