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  • Agenda items

    1. Welcome and introductions

    The Chairpersons opened the meeting and welcomed members.

    Professional associations were asked to nominate suitable tax practitioners to join this group via the TPSG@ato.gov.au mailbox.

    Action item update

    Reference

    TPSG 1111/01

    Agenda topic

    Proposed meeting schedule

    Action item

    Professional associations are asked to nominate tax practitioner candidates to be considered for membership on this stewardship group.

    If potential candidates or professional association representatives would like to discuss the commitments and expectations of tax practitioner members, they can contact the TPSG secretariat directly.

    Responsibility

    Secretariat

    Update

    Professional associations received an email reminder about tax practitioner nominations for membership of this group on 16 February 2017. Nominations can be sent to TPSG@ato.gov.au at any time.

    Status

    Closed

    2. Future of ATO technology

    No minutes recorded.

    3. Digital Services

    No minutes recorded.

    4. The Australian Business Register (ABR) and future opportunities

    The ATO provided a brief snapshot of the current Australian Business Register (ABR) and highlighted the current efforts to improve the integrity of the register.

    There are currently 7.1 million Australian Business Numbers (ABNs) on the register with 43% being sole traders. There were 491,000 new ABN registrations in 2015-2016. The community has increased its use of the ‘ABN lookup’ function in the ABR to check to see if an ABN is active and registered for GST or pay as you go withholding. In the 2016-2017 financial year 700 million ABN lookups are projected.

    The ABR is one of many sources of business information. There are 272 registers that run across 96 federal agencies. Over 500 government agencies regularly access data from the ABR. An ongoing irritant for businesses is the need to update information into multiple registers.

    There has been ongoing work to increase the integrity of the ABR including:

    • increasing community awareness in relation to the registration entitlements
    • up front entitlement checks and questions during the application process
    • post issue reviews and cancellations
    • intervention on fraudulent ABN abuse and sham contracting arrangements.

    Members discussed known irritants that result in a poor client experience when using a number of registers. For example, entities must separately update business details with the Australian Securities and Investment Commission, the ATO and in the ABR. The ASIC register and the ABR hold data separately and do not share updates. One of the problems arising from this occurs when associate matching occurs with Australian Company Numbers (ACNs) and ABN’s, and as a result over 3.5 million director records are mismatched between ASIC and the ABR.

    The ATO is looking for strategic opportunities that may arise within the government’s transformation agenda to improve business registers for users and consumers. Members were asked to consider what they would like to see in the future and suggestions discussed included:

    • A personalised business registration experience that also improves integrity and protects entities.
    • Tailored proactive assistance for businesses from all relevant agencies.
    • A single virtualised business register that links business data currently held by government agencies around a core business dataset (the ABR) to form a single view that can be accessed in close to real-time.
    • Streamlined digital access for the 4.8 million individuals with a business role, improving the integrity of business data and reducing the need for businesses to maintain all of their details separately with each agency.
    • Register technology must meet contemporary standards.

    Reference

    TPSG 0303/01

    Agenda topic

    Australian Business Register (ABR) and future opportunities

    Action item

    Further consultation and discussion will be arranged to co-design the future requirements of business registers.

    The ATO will prepare specific questions about potential requirements for the tax profession to consider and an indicative timeline of when opportunities for change may arise.

    Responsibility

    John Dardo

    5. Notifiable data breaches

    The Privacy Amendment (Notifiable Data Breaches) Bill 2016 (the Bill) amends the Privacy Act 1988 (the Privacy Act) to require the reporting of ‘eligible data breaches’ to the Information Commissioner and the individuals affected by the breach. The Bill passed on 13 February 2017 and is awaiting royal assent.

    An eligible data breach is unauthorised access, loss, or disclosure of personal information held by an entity that a reasonable person would conclude would be likely to result in serious harm to any of the individuals to whom the information relates.

    All tax agents will have to report all “eligible data breaches” of an individual’s tax file number (TFN) data to the Information Commissioner and the affected individual.

    Any tax agent with a turnover of more than $3 million will be an ‘Australian Privacy Principles (APP) entity’ under the Privacy Act and will be required to report all ‘eligible data breaches’, that is, of TFN data and of other ‘personal information’ to the Information Commissioner and the affected individual.

    The Information Commissioner’s website has instructions and a comprehensive guide on reporting and handling data breaches.

    The Information Commissioner’s current guide is dated August 2014. At the time of the meeting on 3 March 2017 a commencement date for the legislation hadn’t been proclaimed, subsequently it was announced that the legislation will commence on 22 February 2018. The office of the Information Commissioner, as the regulator, will be conducting comprehensive education campaigns, and updating their website and guides.

    Members discussed the need for tax practices to have good data security plans in relation to keeping information safe and remediation plans if breaches occur. Robust plans and quality checks form part of necessary best practice in an environment increasingly reliant on digital data storage and exchange.

    The Cyber Security Working Group is a consultative forum comprising the ATO and professional associations. The working group has an education and awareness focus designed to promote increased understanding about the risks to practitioners, advisers and their clients. The purpose of the group is to:

    • understand and raise awareness of the increasing threats of operating in a globalised economy and through a contemporary digital service model
    • develop mitigation strategies and standards for holding and using tax and personal identity information
    • develop guidelines to assist tax practitioners, advisers and their clients to respond to cyber security incidents and information breaches early and effectively, to protect information and clients.

    A series of cyber security tips to help businesses and individuals stay safe and avoid becoming victims of cybercrime have been published on the ATO website

    Additional information on protecting your business and clients can be found at StaySmartOnline.gov.auExternal Link, ACORN.gov.auExternal Link and SCAMwatch.gov.auExternal Link

    6. Simpler BAS

    Simpler BAS will go live from 1 July 2017 and all small businesses will be automatically transitioned. Newly registered small businesses from 19 January 2017 now have the option to utilise the Simpler BAS. We are working with software developers to update clients’ software in time for Simpler BAS record and bookkeeping. Australian Business Software Industry Association (ABSIA) product register will reflect all accounting software that supports Simpler BAS bookkeeping.

    The ATO’s compliance approaches and risk models are being updated for Simpler BAS. The ATO expectation is that normal record keeping processes should be maintained. ATO systems and online channels are being tested for Simpler BAS implementation.

    In partnership with the Institute of Certified Bookkeepers, we are developing a Simpler BAS bookkeeping guide that is receiving positive feedback from the user testing group. We have partnered with the BAS Agent Association Group (BASAAG) to further refine our communications. As part of our communication strategy the ATO will be sending transition letters to all small businesses and tax practitioners in May 2017.

    User testing has commenced and will continue throughout 2016 and 2017.

    Simpler BAS will make it quicker and easier whilst reducing overall compliance costs for small business. Tax professionals indicated that they will recommend that their clients adopt the Simpler BAS. Small businesses are producing more accurate classifications due to reduced tax codes. Transitional costs relating to manual reconfiguration have been identified as a concern. Tax professionals advised that the fees associated with bookkeeping will remain unchanged though clients will receive more tailored service.

    Next steps

    • Testing automated solutions from our partnered software developers with up to 2,000 small businesses and tax practitioners.
    • User testing completed in January to March 2017 focused on understanding the Simpler BAS bookkeeping and GST reporting experience for newly registered small businesses.
    • User testing being conducted in April to June 2017 will focus on quantifying the benefits of the new Simpler BAS bookkeeping and reporting solution.
    • Working with tax practitioner associations to further communicate key messages.
    • Continue to work with tax practitioners on understanding the impacts and the transition process.

    Members were concerned that altering the labels on the activity statement may trigger ATO risk models and audit activities. The ATO confirmed that ATO compliance approaches are currently being updated for Simpler BAS.

    Currently normal record keeping practices still apply, from 1 July 2017 small business will only have to substantiate total sales, GST on purchases and GST on sales. Audit and review activities will not be focussed on the GST classification of export sales (G2), other GST-free sales (G3), capital purchases (G10), or non-capital purchases (G11).

    7. Treasury transparency measure

    In the 2016-2017 Mid-Year Economic and Fiscal Outlook, the government announced that from 1 July 2017 the ATO will be able to disclose to credit reporting bureaus the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts.

    The ATO will report tax debt information for taxpayers with an Australian business number (ABN) where the debt balance exceeds $10,000 for at least 90 days and the taxpayer is not effectively engaged. The ATO will have discretion to disclose tax debt information to credit reporting bureaus; the measure does not oblige the ATO to disclose this information.

    While the specific circumstances and exceptions for disclosure will be confirmed through the consultation and design process, tax debts can be reported where the debt balance:

    • is greater than $10,000 for at least 90 days
    • relates to a taxpayer with a ABN (including individuals operating a business)
    • is not under an active payment plan to repay the debt
    • is not subject to a dispute with the ATO.

    Implementation will occur under a phased approach to assess and assure processes, with only a small number of taxpayers being reported to credit reporting bureaus initially.

    Together with the Treasury, the ATO is consulting with the community, including business, industry groups and associations, to ensure this transparency measure is implemented and administered effectively, with appropriate management of identified risks.

    Members agreed that:

    • the measure would reduce unfair advantage for businesses that do not pay their tax on time and may have artificially established greater competitiveness against operators who comply with their obligations
    • the measure will provide an extra incentive for taxpayers to seek advice from a tax professional and engage with the ATO to enter into a payment plan to repay their debts, which will then exclude them from credit reporting
    • the measure will provide support to suppliers in terms of extending the risk of credit or terms of trade to a business
    • the ATO must take a phased approach to the implementation to assess and assure processes
    • the ATO must have confidence in the process and would be looking to the higher more egregious taxpayer behaviour in the earliest phase
    • a memorandum of understanding must protect people that are reported incorrectly
    • the ATO must consult in the development and implementation of the measure
    • tax practitioners have the potential to have positive influence over business cash flow and tax debt.

    8. Taxable Payments Reporting System

    In June each year, the ATO contacts businesses in the building and construction industry to advise them of the due date for lodging their Taxable payments annual report. The report must be lodged by 28 August of that year.

    Each year the ATO follows up on annual reports that are overdue. Since October 2016, businesses have received a blue labelled letter as a gentle reminder to lodge. Annual reports that remained un-lodged are sent an orange labelled reminder.

    In December 2016, tax practitioners were sent a list of their clients with overdue Taxable payments annual reports. Where annual reports still remain outstanding the ATO will commence sending businesses a red labelled letter as a final reminder to lodge. These final reminders will start to issue in the week beginning 13 March 2017.

    The red labelled letters will be sent to the client’s postal address listed on ATO systems. Therefore some letters will be delivered to their tax practitioner.

    Members felt the ATO needs to consider how to report and communicate the results and effectiveness of the taxable payments reporting system. Members felt there are some positive messages that could be used to demonstrate how tax practitioners and the ATO are influencing fairness in the tax system. Payments reported and revenue raised indicates that, in partnership, we can create a level playing field for the community.

    Even though penalties could apply for failing to lodge annual reports, the ATO is optimistic that support strategies will enable tax practitioners to work with their clients in the building and construction industry to voluntarily meet their reporting obligations.

    9. Cash Flow Management Program

    The cash flow management program is an education program designed for accountants and trusted advisors to deliver to their small business clients. To date around 190 accountants, bookkeepers and business advisors across the country have been involved in testing the program with their small business clients. Feedback has been very positive and recognised to be different to current offerings in the market place.

    To support the completion of the Cash Flow Management Program, the ATO Payment Recognition Initiative has been implemented during the pilot period, from 1 February 2017 to 31 March 2017. The initiative provides eligible small businesses who are already experiencing cash flow issues, availability of an 18 month payment plan free of the general interest charge (except on superannuation guarantee charge) and encourages small businesses to use the Cash Flow Management Program and take action to get their cash flow back on track.

    Recently, two industry groups and a franchise group have engaged in the pilot to test the program from an industry perspective.

    The effectiveness of the program is being evaluated with participants and key stakeholders with the final evaluation report due late April 2017.

    One member, who is part of the Pilot, gave a first-hand account of their client’s experience with the program and their experience from the tax practitioner’s perspective. Of particular note was the way the program provided a starting point for the more difficult conversations between business owners and tax practitioners about viability, business growth and sustainability. The member recalled that some of the conversation was quite emotional and confronting, however, was valuable, as the program provides a way for the business owners and advisors to put an action plan in place and commit to that action.

    Other members favoured the program being an essential support tool used by tax practitioners with business owners during the start-up phase of their business. Additionally, members recognise that business owners do not go to government for advice; they would be far more likely to use a tax practitioner.

    The cash flow management program resources used in the pilot are hardcopy paper-based products. Feedback as part of the Pilot has asked the ATO to consider providing a digital product option as part of the future of the program.

    10. ATO Community Forum

    The ATO Community is an initiative to deliver on the ATO’s reinvention commitments to contemporary services that make it easy for people to understand their obligations and make it easy to comply. The ATO Community will contribute to a contemporary digital environment by facilitating tax and super discussions online. The Organisation for Economic Co-operation and Development (OECD) has rated the ATO at stage 3 maturity in developing and maintaining digital and social media platforms to support the community.

    The next stage is to make use of collective knowledge; involve users in crowdsourcing and co-creation of information and advice through blogs and forums. Younger people have an appetite to find information in online communities. The ATO online community forum will enable peer-to-peer support in a moderated and trusted environment:

    • Clients will be able to clarify and confirm their understanding of ato.gov.au content through self-service.
    • Clients will be able to talk to people like them and professionals rather than a government body.
    • Clients will be able to access information about tax and super and talk to other community members at any time.

    Members raised concerns about the accuracy of the information discussed in the community based on external examples such as Whirlpool There were concerns about community members relying on inaccurate information.

    The ATO will moderate posts, correct inaccuracies and direct community members to the existing public advice and guidance on ato.gov.au.

    Members also raised concerns about the allocation of resources following the system outage.

    Reference

    TPSG 0303/2

    Agenda topic

    ATO Community Forum

    Action item

    The ATO would like help from tax practitioners who already participate in online communities or forums to be involved in testing beta versions of the ATO Community Forum. The testing will also explore the benefits of an online community for tax practitioners.

    Nominations can be sent to digitalcommunities@ato.gov.au

    Responsibility

    Jonathon Thorpe

    11. Other business

    The ATO will continue consulting with tax practitioners on changes to the Division 293 notice of assessment. Professional associations will be asked to nominate participants for one of two focus groups to be held in April 2017.

    12. Forward agenda items and meeting close

    Topics for the agenda can be sent to the TPSG secretariat mailbox at any time.

    Proposed meeting schedule for 2017  

    Friday 19 May – Sydney

    Friday 18 August – Moonee Ponds

    Friday 17 November – Sydney

      Last modified: 18 Jul 2017QC 52921