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  • Commissioner's speech to the COSBOA small business summit

    Our regulators – can their job be easier?

    Commissioner Chris Jordan, AO

    Address to the COSBOA National Small Business Summit 2017


    Thursday, 24 August 2017

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    Good afternoon,

    Thank you for the opportunity to speak at COSBOA’s annual summit; an important get-together of people who can make a difference to the lives of people in small business.

    I have answers to the session’s questions ‘Our Regulators – Can their job be easier and will that make our job easier?’ The answers have to be ‘yes’ and ‘yes’.

    We can choose to make things easier. We can choose to declutter, to remove unnecessary processes that do not produce a useful outcome. We can take a more reasonable approach to risk management, and we can focus on what matters most rather than getting caught on insignificant or trivial detail.

    We can choose the mindset with which we approach our jobs and choose to work together more effectively as regulators and influencers of small business.

    We can help viable small businesses; not to just survive, but to thrive.

    And with that as my starting position, I will give you an update about what is happening at the ATO and I will cover that territory under two broad themes or headings:

    • The opportunity and power in this room to improve the experience of small business in Australia – to support them, not to scare them or worry them with untruths, sensational headlines and unfounded stories; and
    • Making things quicker, less frequent and painless – the ATO’s approach to transforming the tax and superannuation experience

    I want to talk to you about all of us having a common goal – one of making the experience of small businesses better in Australia. It doesn’t matter if you are here from the ATO, from the Commonwealth, Victorian or another state government, from an industry association, COSBOA, or a small business; we are all here because we can do our jobs in a way that is helpful or unhelpful to small business. We can make our own jobs easier – and their jobs easier.

    It is often said that small business is the engine of the Australian economy, a significant part of all industries, and you’ve heard the stats around the number of Australians employed by small business. So it follows that if we make a positive difference to the way we work with small businesses, we will do much to help the social and economic wellbeing of Australia and of Australians – which is the mission of the ATO.

    We all have our own roles and purposes, our aims or objectives, but the common thing all of us in this room have, is a responsibility to Australian small businesses – to help them get things right so they can get on with their business.

    We must also join up across government and with key influencers in the community to help people through the combined complexity of our laws, regulations and systems.

    At the ATO we have refreshed our approach over the last few years – decluttered, removed mindless process, focused on serving the majority who try to do the right thing, changed our priorities and our goals, changed our services, changed our culture, and, importantly, consulted extensively with small businesses (and other client segments) to understand what they want from us.

    We know that small business people are generally time-poor, they did not go into business to do paperwork; that they are good at what they do and have not set out to do the wrong thing. We also know that many leave business management or paperwork until later and can find themselves in a bad situation because they have not had the time or energy to sort things out. We are also aware that many small businesses seek advice from others – in their family or social circles or from an agent (when it comes to tax).

    We understand this and are focused on support, particularly at the most crucial times in the lifecycle of a business – at set up, at times of changing structures, taking on employees, and expanding their operations and so on.

    Despite what some ill-informed commentators might say, I can assure you that I am driving a small business-friendly ATO. Our intent is to:

    • support viable and honest small businesses to thrive; and to
    • tackle the behaviour of those who do not do the right thing, who gain unfair advantage through short-cuts and non-compliance.

    I want to dispel myths that we are the enemy of small business or that we are attacking vulnerable small businesses, and mum and dad partnerships. Headlines like these are shameful misrepresentations of our efforts, but more concerning, they erode trust and confidence in the system and ATO and they deter people from taking necessary action.

    Just think about it – a headline saying the ATO is out to get small businesses is going to create more tension and needless worry – and it stops people from coming to us to get things sorted. That’s the worst outcome for everyone.

    I know that the majority of feedback we are now getting says that things are better for people when dealing with the ATO. People need to know they can come to us; that they can be confident that they will get a get a fair and empathetic hearing from us and all regulators.

    I acknowledge that not everyone in the past may have felt we were approachable or reasonable, but I am doing everything I can to make sure those days are behind us. I will continue to drive cultural change in the ATO, and ensure people experience a friendlier, more streamlined ATO.

    Let me counter some of the negative headlines I’ve seen about the ATO with some facts that show how we’ve changed in the past few years:

    • For those wanting to register and obtain an ABN, our online system now allows around 92% of online applications to be granted instantly – that’s compared with around 68% about three years ago.
    • For those who were having difficulty making payments last year; we entered into around 950,000 payment arrangements – over 650,000 or nearly 70%, were for small business.
    • Issuing SMS payment reminders for those taxpayers likely to pay late or not at all – with very positive results to this less formal prompting.
    • Increasing the amount for payment plans that can be entered into over the phone from $25,000 to $100,000 and enabling sole traders to set up plans for debts up to $100,000 via ATO online for both income tax and activity statement debts.
    • Through early engagement and alternative dispute resolution, we have reduced objection handling time by 30% in just a year and more than a 60% reduction in cases going to courts since 2013–14. Think of the reduction in time, costs and angst – all round.
    • For every successful in-house facilitation (one of our ADR methods), taxpayers have saved on average $50,000 that would have otherwise been incurred in litigation.
    • 50% of all of the ATO’s settlements are with small business clients – the highest representation of any of our client segments.
    • We are now offering a new service ‘Dispute Assist’ to small businesses who may be in dispute with the ATO and who are going through other stressful issues in their lives, such as family, physical or mental health issues.
    • And the other services in place to help small businesses:
      • Our Small Business Newsroom – with 77% of users satisfied or very satisfied with the service, and 83% of surveyed tax practitioners likely to discuss newsroom articles with their clients.
      • Fix it squads with the Australian Competition & Consumer Commission, Australian Securities & Investments Commission, Fair Work Ombudsman and Department of Industry Innovation and Science that have yielded red tape reductions of over $140 million.
      • Our after-hours call back service, webchat and Alex the virtual assistant on our website. And by the way, we have stripped 5.3 million words (45% of content) from our website so that people can more easily find up-to-date information.
      • A business performance check tool as part of the ATO app for business operators to quickly check the financial health of their business.
      • The cash flow management tool for use by small businesses with their agents is getting a good rap from those who have used it.
      • The ATO app with online services for sole traders, including the handy myDeductions tool and of course myTax for sole traders.
      • Regular visits in the community in metro and regional locations to show people tools and tips that help their business.
      • Targeted support for local communities (individuals and small businesses) – for example for farmers in western Victoria wanting to establish shelterbelts, and for those communities affected by closure of industry – in South Australia and other locations.

    We have a dedicated and skilled team assembled in the ATO to support Small Business and to work in collaboration with people here:

    • Deborah Jenkins, our new Deputy Commissioner
    • Mat Umina, now responsible for the Small Business experience
    • Tom Wheeler, Susan Baranski, Karen Anstis, and George Holton who are the senior executives driving other services and initiatives for small business.

    This team will continue to drive improvements in the small business experience and ensure meaningful consultation. They will reinforce a more service oriented approach with:

    • early engagement, greater transparency and cooperation
    • prevention and early warning, rather than correction and ‘gotcha’
    • more sophisticated use of data for both service and compliance purposes
    • streamlined interactions
    • better appreciation of, and empathy for taxpayers, and
    • a sensible risk management framework.

    Small businesses have told us they want us to take action with those who don’t do the right thing. In the coming year, we will be very publicly targeting:

    • lack of or inconsistent, record keeping
    • personal expenses described as business expenses - such as the family car, family holidays or school fees
    • incorrect use of ‘loan accounts’, constantly borrowing from the business but never paying back, so effectively living off the business
    • structuring beyond the business capabilities – very complex trust structures for simple businesses, with no concept of how the structures interact with the business, or the real tax implications
    • a mismatch between BAS information and the Income Tax return
    • those businesses who continue to trade although insolvent
    • and of course those involved in the black economy such as businesses who deal in ‘cash only’.

    The government’s Black Economy Taskforce led by Michael Andrew is an opportunity for us to better leverage data, increase use of community referral information (or dob-ins), and continue to follow through on prosecutions for those who are blatantly doing the wrong thing.

    I want to stress that we will be supportive to those trying to do the right thing. We will only escalate to ‘enforcement’ action when other approaches don’t work or there is an established pattern of non-compliance.

    I acknowledge that we are starting from a position of disadvantage – we take money off people, never a great starting point for any relationship, and some people just don’t like it. But given that, I want people in small business to think that their dealings with us are about as good as you could ever expect from a tax authority.

    I do not want to compare the ATO’s performance with other tax authorities or government agencies. I want to compare the ATO with the best of any large organisation interacting with a large and diverse client base anywhere in the world; and for people to think that whilst they didn’t want to necessarily deal with us, their interactions were as good as they could ever expect.

    Go check out our booth. We have friendly helpful tax officers there to take your questions or show you some of the services I have mentioned.

    Thank you.

    Last modified: 24 Aug 2017QC 53152