TaxVibe Podcast

Robyn Jacobson

Hello and welcome to TaxVibe, a podcast by The Tax Institute. I'm Robyn Jacobson, the senior advocate at The Tax Institute and your host of today's podcast. We love the vibe of tax here at The Tax Institute. We do tax differently. I'll be chatting with some of the tax profession's great thought leaders who will share valuable and practical insights you might not hear every day. We hope you enjoy this episode of TaxVibe. I'm joined by Karen Payne, Inspector General of Taxation, the Taxation Ombudsman. Karen was appointed the Inspector-General of Taxation and Taxation Ombudsman and commenced a five year tenure on the 6th of May 2019. She leads the Taxation Ombudsman Complaints Management Service for Taxpayers and Adviser’s and the Inspector General of Taxation is review and public reporting function, both of which are directed at improving the tax administration system for all taxpayers. Karen was previously a member of the Board of Taxation, as well as the inaugural CEO of the Board of Taxation. She was formerly a partner with Minter Ellison, specializing in corporate and international tax mergers and acquisitions and capital raising for various sectors. She brings a wealth of experience and extensive networks to the role of Inspector general, having worked with a range of government and private stakeholders, as well as the legal profession and many industry bodies. Karen is a solicitor admitted in New South Wales. A chartered tax advisor with the Tax Institute. A chartered accountant and a member of the Australian Institute of Company Directors. Karen, welcome to TaxVibe

Karen Payne

Thank you. 

Robyn Jacobson

Karen, can you explain the role of the Office of the Inspector General of Taxation and Taxation Ombudsman? Because there are two different roles here. What's the purpose of each?

Karen Payne

Well, the Inspector General of Taxation was set up in 2003 and it's fundamental to address the secrecy and confidentiality provisions in the tax rules. So we were set up with powers to, if you like, lift the secrecy veil to go and take a look and provide independent assurance back on back to Parliament and all the community and all the minister on what should be improved. In 2015 we inherited the Taxation Ombudsman role and that is a very different role where we're now investigating on behalf of individual complainants. And by individuals I mean not just people with heartbeats but entities as well, but anyone who's a taxpayer who wants to complain about the way in which their affairs are being administered. So that is a role we've been providing since 2015. And we can also sorry, I should mention, even though more than 90% of our complaints are about the Tax Office, we do investigate complaints by practitioners about the way in which the Tax Practitioner Board has dealt with them as a practitioner.

Robyn Jacobson

Essentially, the role of the Taxation Ombudsman is to deal with an individual taxpayer complaint. When I say individual, it could be any type of taxpayer that initially made a human being taxpayer create a complaint of an individual taxpayer who has a situation. Whereas the role of the Inspector General of taxation is more about understanding the processes. And if there are systemic problems within the way the system is being administered. But might there be occasions where in looking at a taxpayer's matter, you realize that they're not alone, they're not Robinson Crusoe, if you like. There in fact repeated instances of that occurring, and somehow this has morphed into a systemic issue which might indeed lead to an investigation.

Karen Payne

I think that's exactly right. And I think the key thing is that these two roles are very complementary. So we see stuff happening in our review space in death and taxes, for example, and that then leads to people acknowledging or recognizing they can lodge complaints with us about the way the ATO is administering deceased estates. But the the genesis for the Death and Taxes review was the complaints we were in fact receiving on deceased estates. Similarly, we saw through the job keeper, job maker processes a number of complainants coming to us and we had investigated those individual complaints, but collectively we thought actually this is something we should report on publicly So people are aware of and this has been the improvement we've identified in administration for the Tax Office to take on without needing to come and lodge complaints with us. So the two processes, the two investigation models absolutely are complementary and one informs the other.

Robyn Jacobson

Could you briefly explain, Karen, the scope of the powers? So what are you able to do? What can you ask for? What do you have the right to demand of the ATO and what do they have to comply with?

Karen Payne

I'm going to start with the very extreme view. Right. We have powers of compulsion. We can go and conduct a Citibank raid on the Tax Office if we need to. So we have very, you know, compelling powers to access information if we choose to exercise those powers. Now, I would say that it would be ridiculous for us to exercise those types of powers of compulsion on every occasion. So the more frequent way in which we get access to information is through our ordinary investigation rules. Now, once upon a time when we were the Inspector General of Taxation, we had access to information as a right. When we inherited the Commonwealth Ombudsman, Legislative framework. We now have access according to the rules of the Ombudsman Act, and those rules say we have access to information. If the Commissioner chooses to give us access to that information now whilst practically I'm not suggesting the Commissioner is preventing us from accessing information, if I were to stand back and say what what is independent access? What does an independent investigation look like? Well, for me, it doesn't look like the head of the agency that you're investigating gets to choose whether you do or don't get access to the information. So if I you know, if I could have a wish for Christmas, it would be that we got actually unfettered access to information. Because even though I'm not suggesting we don't get the information that we request, sometimes it's a challenge. I think the fact of having an unfettered statutory right to access information changes the way people see that they should engage with you. And you can see some of those recommendations in the robodebt Roll Commission report, where the commissioner has suggested that there should be an obligation to assist the agency through an investigation. The recommendation is not that it's just imposed on the head of the agency, but on all officials that work in that agency. So that's one of the recommendations in the Royal Commission that we keenly watching.

Robyn Jacobson

You've been delivering sessions for the duration of your tenure to date. And one of the questions you ask in your sessions is about the importance of integrity and the awareness of your office, both that of the inspector general and that of the ombudsman. What are you finding in terms of awareness and is there more that your office and more generally the profession can do to understand what it is you do?

Karen Payne

I think absolutely there is a need for greater awareness of our office. We did a review into how effective is the ATO in advising taxpayers of their rights to appeal, complain and dispute challenged decisions. And one of the recommendations out of that review investigation was that actually the Tax Office should proactively tell people how to lodge a complaint with them with the tax Office and with us as the Taxation Ombudsman. You'll see in our charter on page three, the Tax Office have now put that into our charter, but that's only recently come out. It came out in June and they've made clear in our charter that your position, your rights as a taxpayer are not affected, just because you choose to lodge a complaint either with the Tax office or with ourselves. That's very important because fear of reprisal action, I think, is what sometimes holds people back from lodging complaints. Anyway, it is now formally in our charter that you can lodge a complaint with us as the Ombudsman, but ideally in the first instance you try and resolve your complaint with the tax office. It's also the case that the Tax Office should be putting that information on decision correspondence going to taxpayers. They should be reminding everybody that if you disagree with the decision or you wish to challenge the decision, here are your avenues and one of those avenues at the at the very least should be recognizing the tax ombudsman. But I absolutely acknowledge there's more for us to do. I am always surprised at how many people, when I put up my polling questions at conferences will say either they don't know that we existed or if they're aware of our existence, they don't know what we do know. I'm should also add the Senate Economics Legislation Committee did a review three months into my term. They did a review of the performance of the Inspector General of Taxation and one of their recommendations. They make 16 recommendations. All good, in my opinion. But one of their recommendations was that the government should fund a program to promote the fact that there is in fact a taxation ombudsman and service.

Robyn Jacobson

To the community.

Karen Payne

Correct, yeah, I didn’t advocate for that, the committee came up with that idea themselves, which would be.

Robyn Jacobson

But you're perfectly happy

Karen Payne

Happy, but I'd be very happy to read that to receive additional promotion because as I said, I'm speaking to sophisticated tax literate audiences and they don't know that we exist. Well, how is the rest of the community going to be identifying that we exist?

Robyn Jacobson

Karen, do you have any observations on the evolution of your role from its genesis to now and from now into the future?

Karen Payne

Yeah, I think we are evolving as an agency in terms of where our core focus is on. I think it's always still the case and I think it always will be that we need to make sure we're engaging with stakeholders to understand what are their concerns. That's kind of fundamental and core to what we do. So I don't see that changing. And whether that's to inform our review investigations or to just help, you know, promoting the fact that there's a tax ombudsman in the system. But on the Taxation Ombudsman side, I can see that that will evolve materially and significantly. And in particular, because we're now seeing ourselves investigating more complex and highly complex disputes where, you know, we are looking to see if we can get outcomes for people where they've been recognizing they've been through three or four decision processes internally at the Tax Office as well as a complaint process sometimes as well as, you know, objection and or appeal processes. And then they come to us. So you know, we're at the end of the complaint chain. And so by the time they come to us, they're very frustrated, They're sometimes angry, they're very confused. You know, they just looking for answers. They think something's unfair. We're finding that we are more and more engaging in investigations of very complex dispute issues. And that's a big drain on our resources and our time. But the rewards, even though we can't compel the Tax Office to do anything, I think the community does respect the fact of our independence when we've gone through the process, even if we sometimes come back to them and say, look, we've taken a look at what the tax officer have done here, we would have done this differently, but we can't compel them to do anything. And, you know, here is our report. So more and more complex investigations and trying to find better ways to interact with the community so they understand where their investigation process is at. That's where I kind of see the next stage in our evolution.

Robyn Jacobson

And I think it's fair to say that your office is not about that. I use the word in a non-criminal sense prosecuting a government agency or otherwise acting in the interests of the taxpayer. It's about what's good for the system, particularly with your inspector General Hatchell, and trying to improve the efficiency and the way the tax system is administered. Now, there are times the taxpayers, of course, can play a greater role in the responsibilities, particularly we look in the fraud space of making sure that everything is done properly according to their obligations under the law, but equally, the administrator has enormous responsibilities to administer the law properly. So in terms of your role, I always see you as a bit of a guardian or a custodian of the system. You're always trying to improve the way that works.

Karen Payne

That's right. So we're not a taxpayer advocate service like they have in the US. We're there to investigate independently, and that means we're not taking the taxpayer's side or the tax office's side. We're there to report or mediate, if you like, exactly what we find and what we think is the fair outcome as an independent observer. So I don't think that's always understood. And sometimes the complaints that we get back after we finish an investigation is, you know, oh, well, you weren't able to change the tax officer's view. You couldn't get me a different outcome. What got your decision Override the Tax Office decision? It's an ombudsman model. We we don't.

Robyn Jacobson

You don't? The Federal Court That's right.

Karen Payne

We don't pretend to be substituting for the Tax Office's decision. It's their decision. It's their administration. We like an independent commentator on whether or not that administration is fair and consistent with law and the Tax Office's own guidance.

Robyn Jacobson

Hey, Karen, I'd like to look now at some of your previous investigations. There are many of them, and anyone who wants to look at those can jump onto the website, which is i g t decaf dot aew. So some of the key investigations have undertaken. You've looked at the way the ATO administers and manages objections and there's an interim report available for that. You've looked at how the ATO deals with deceased estates. You've examined the future of the tax profession. You've looked at how the ATO handles and manages the use of garnishee notices. And even in 2014 there was a report that circled back to some of the previous investigations to say, Well, how have these reports gone and the recommendations that we put forward? Is that still the case? And if not, what is the process now for looking at whether prior recommendations are implemented?

Karen Payne

So we did actually change the way we're going to go back and if you like, do a post implementation review, recognizing we have limited resources, we thought another approach that might have suitable integrity was to rely upon the ATO's own audit and risk committee process. So since 2014, we don't do post implementation reviews to see how things have been progressed and implemented. But instead what we do is we write and confirm at various regular intervals with the Audit risk committee that they're seeing sufficient evidence of the implementation by the Tax Office of those recommendations. It's also fair to say that because we do still engage actively with stakeholders, if things that have been promised to be implemented and are not actually either progressing fast enough or they're not being implemented in the way that it was once anticipated they would be, we get stake all the feedback on that and we, you know, we go and make independent inquiries or individual inquiries to say, hey, what's happening there? So deceased estates is a classic. There are still a lot of complaints that we get around the ATO's administration of deceased estates, and I still get lots of stakeholders coming to me saying, Hey, this was supposed to happen and it hasn't and where is it? And we're, you know, we do chase those things.

Robyn Jacobson

Have there been any positive changes as a result of your report, an investigation into the handling of deceased estates?

Karen Payne

Look, there's been a recognition that the representative that the Tax Office can engage with is not always going to have probate. And there has also been a recognition within the tax office that the threshold before, which, you know, they can deal with somebody, has been increased to allow more people to engage with the Tax office, even though they don't meet those formal legal, personal, representative requirements.

Robyn Jacobson

Because the law is very strict around, of course, who is authorized to act on behalf of the taxpayer or when your taxpayer has passed away, then they, of course, can't authorize anybody. And we often see the example of the executor and administrators a slightly different situation, because it tends to be, of course, that more court appointed. But an executor wants to go to the accountant who looked after the deceased person's affairs and said, Well, why can't you just do this? Why can't you just lodge the outstanding return and why can't you make this happen? And there's all this administrative red tape around what they're able to do and what they're authorized to do. So they've got to be some practical cut through as well.

Karen Payne

Exactly. And there was actually a report that was released earlier this year. It's not in the tax base, but it's on the operation of my golf where they acknowledge that, you know, not everyone who should or needs a myGov account is going to be computer literate. So the suggestion I think it was some folks report the suggestion was that you should have some kind of a nominee arrangement that is acceptable in relation to my job rather than people basically defrauding their relatives, pretending to be them. You should just set up a nominee account or a nominee arrangement and that should be permissible. I'm not sure where that's all got to, but I guess it's the kind of same theme where you have a number of well, in the case of deceased person, they're dead, right? They can't they can't engage with the tax office. But somebody who is acting on their behalf and or who has responsibilities to wind up their estate, even if they don't need probate, why can't they be recognized for the purposes of engaging the tax office.

Robyn Jacobson

And just to play devil's advocate, in this current climate, an environment of identity theft and cybersecurity issues and even elder abuse, I can see why there would need to be a great control series of controls over who would be authorized to do that, because you certainly don't want to pave the way for people who are not authorized, who claim to be authorized getting access to that type of information.

Karen Payne

I totally agree. But you also want it to be user-friendly, so you try to keep in balance these two competing objectives sometimes. But provided you've got the right checks and balances in the system, it does still seem appropriate that you can have lines of communication that are user-friendly and that are accessible.

Robyn Jacobson

So turning now to your current investigations, there are certainly three that are currently sitting on your website, and this has to do with the exercise of the commissioner's remedial power. Secondly, the exercise of the commissioner's general powers of administration. And thirdly, the ATO's administration and management of objections that you've been working on these for many months. In fact, I've got to suggest over 12 months in some cases. Where are these actions and when can we expect for those to be publicly released? And what do you hope will come out of these three reviews?

Karen Payne

So the report that looks into the commissioner's administration of his general powers of administration is currently with the minister. That report makes recommendations for both the Tax Office and makes recommendations for legislative change because it includes recommendations for legislative change. It has to be I don't get to release that publicly. It has to be released by the minister, but I've provided the report to the Minister for his consideration and he may or may not choose to respond to the recommendation at the time he releases it, but there is a statutory obligation to release it within a particular time frame. I think it's 25 House of Representatives sitting day. So that should be out before the end of October. Similarly, the remedial power report is largely written and if not currently with the Tax Office soon to be with the tax Office. So again, I would say that that should be released to the public sometime before the end of October. And importantly for me, because I see both of these reports as dealing with to some extent a similar problem. I wanted to do these two reviews together, but I was persuaded that we should separate them. So anyway, they'll both be in the market largely around similar times. The objective report. We're still working through a raft of information that the Tax Office has given back to us. The phase one process was to put out the will. This is the data, and then phase two is then to go and interrogate for some of the concerns that people were raising, whether it's around the data. So that's probably not going to come out. I haven't seen a draft of that report. I don't believe that will be out this year, but in the meantime, we've released other reports and we're doing other self-initiated or unemotional reviews. So we recently released a report on the ATO's administration of the Small Business Litigation Funding program, which the funding from the Tax Office came to an end on the 30th of June this year. But I believe the Tax Office's intention is that it will just roll into test case funding. We've made a number of recommendations in that report, even though it wasn't a review. We did it on the back of having done two very detailed dispute investigations where we engaged a cost assessor who's, you know, clearly experienced in the ways of the Federal Court to come to look at what the process was for those funding arrangements. And based on their report back to us, we've then made, if you like, recommendations on on what we would like to see as improvements to the funding arrangement, because fundamentally people were not clear upfront on what costs would or would not be compensated. And if you're about to go into litigation, I think you need to be very clear on is how much of these costs are you funding yourself and how much is being funded. Because the Tax Office has chosen to brief somebody externally. And then we've got a number of other own motion investigations that we're either currently scoping or will we'll get off the ground soon. One concerns the way in which the ATO administer a debt release on grounds of serious hardship, and that was a follow on from an earlier review that we did in relation to collectible but undisputed debts. And then we've got another review, a self, an own motion review where we're looking at the concept of an approved four. Now you might say, well, that's a pretty specific thing to be looking at, but it has big implications on whether or not the commissioner has a discretion to give you more time to lodge an approved form. So we're kind of we think it's important to take a deep dive on that.

Robyn Jacobson

There's always a lot that you're managing, but with all of that going on, what's ahead in the next 6 to 12 months? Say what's on your radar and how do you see your role evolving even further to bring fairness to the system?

Karen Payne

So there's a lot on my radar. There's a lot of things I'd like to be doing. I have to manage resources and do, you know, do the things that we can do. And for that reason, I have to prioritize. So the one thing I would say is we keep a register of potential review investigations on our website. I wouldn't mind if people took a look at that and maybe feedback through the Tax Institute. You know what are your top three issues? If you have a look at that list, or maybe there's something that is on your top three that's not on the list that you want to feedback to us. And that way that helps us to prioritize what we should be looking at in terms of the dispute investigations. The key thing we're looking to do in the next 6 to 12 months is to implement a new case management system. That system, I think, will be game changing for us because it's going to have a protected portal that allows a complainant to see where our investigation on their complaint is at. And that way they'll feel like there's more control from their end in terms of understanding, you know, is it the ATO that's delaying the in the conclusion of their investigation? Is it the fact that we requested information from the Tax Office and we haven't got it, or is it in fact the complainants delay because we've asked them to give us something to, to progress their investigation and we're waiting on that so we can progress it. I think that aspect of our complaint Investigation service will help us a lot in terms of helping the community understand where their investigation is at. And take a if I'm frank, take a lot of the frustration run out of the process because sometimes it does feel like a bit of a black box. And I totally get that.

Robyn Jacobson

Considered also improving the relationship or communication because essentially what you're describing here with that system upgrade is improve transparency and visibility. So instead of something being submitted through a website or ad, that's generally how complainants will do so. But they might also make a phone call that might save some of those unnecessary calls, which the more occasions your staff are dealing with phone calls to say, where is this at, the less time they have to spend on actually investigating the particular issue. But certainly having that transparency will be a really good thing to taxpayers.

Karen Payne

Yeah, So I agree. I think it's all about improving the transparency of our investigation, but improving the accountability within our investigation by for those that could objectives.

Robyn Jacobson

And I assume there'll be some communications about that next year when all that rolls out and improved experience for the complainants. 

Karen Payne

We hope so. Absolutely. 

Robyn Jacobson

Karen, thank you so much for your time. It's been great chatting with you. 

Karen Payne

Cheers. 

Robyn Jacobson

Thanks for listening to this episode of TaxVibe. I've been chatting with Karen Payne, Inspector General of Taxation and Taxation Ombudsman, to keep up to date with Tax five. Be sure to subscribe, rate and review wherever you listen to your podcasts. If you'd like to connect with us, you can find us on socials. Not a member of the Tax Institute. Join a collective voice of 10,000 practitioners at the heart of the profession and find out what the best tax professionals have in common. Visit taxinstitute.ocm.au.  We look forward to joining us next time. 

Robyn Jacobson

Hello and welcome to TaxVibe, a podcast by the Tax Institute. I'm Robyn Jacobson, the senior advocate of The Tax Institute and your host of today's podcast. I'll be chatting with some of the tax profession's great thought leaders who will take valuable and practical insights you may not hear every day. We hope you enjoyed this episode of TaxVibe.  

I'm joined by Emma Rosenzweig, Deputy Commissioner Superannuation and employer obligations at the Australian Taxation Office. Emma is responsible for ensuring a complex ecosystem of employers, workers and retirees and ensuring that superannuation funds operate efficiently. Support willing participant nation and safeguards entitlements has worked for the ATO for 24 years in a range of roles across nearly all areas of the organisation. Emma holds a Bachelor of Laws, a Bachelor of Commerce and a masters of tax. Emma, you last spoke with us just over a year ago now. So welcome back to TaxVibe. 

Emma Rosenzweig

Thank you, Robyn. Thanks for having me. 

Robyn Jacobson 

Look, it's really good to check in with you on a regular basis to see what's happening in your ecosystem. And it's a big one when you're looking at the employer obligations as well as the entire superannuation system, both large funds and small. So there's always a lot we can talk about. But as usual, that's a good place to start with the superannuation guarantee regime. Now a few things are going on here, but let's just set the scene. We've had 31 years now of the regime and yet it continues to be a challenge both in the area of law, the way that it is interpreted, the way that it's applied and of course dealing with it in practice by both employers and employees. But there is still a really significant gap and that is basically the difference between what you should be receiving by way of employer contributions through the superannuation system and what is being paid. So what's the extent of the gap and what's the ATO doing about it? 

Emma Rosenzweig

That's right, Robyn. So people would be familiar. We measured tax gaps across a range of the texts that we administer and so the super guarantee gap does the same thing as you describes. Our last measurement of the gap puts it at 4.9% or $3.4 billion, and that is the net gap. So after our intervention, that compliance intervention, so, you know, that is still a very big number. A small percentage in a very big system still relates to a very big number of gap. It does mean that a large number of employers are doing the right thing, though, and I think it's important not to lose sight of that. It's easy to talk about the problems, but that that really does say that 95% of the contributions that should be going into the system are going in, which is actually really, really good. So we should recognize that most employers are doing the right thing there. But it is important that we tackle those employers that are not doing the right thing. And I guess for the ATO Super Guarantee is one of those things where we do probably have a tolerance for people who are not compliant because that is entitled minutes that we collect on behalf of employees. So some of the things we take it very seriously. We obviously action any of the complaints that we get from employees about unpaid super. I've got the figures for the 21/22 year. We got 19 and a half thousand complaints from employees in that year and actioned all of those complaints. We also initiate our own cases based off data that we have, and we also get voluntary disclosures from employers who do undertake things like payroll audit or they have an employee come to them directly and they realize that they've made a mistake. And so we do have employers come to us voluntarily to lodge super guarantee charge statements. So we do try to be very active in this space. But I really predominant approach is to try to help employers get it right this time. So we also try to do a lot of communications and messaging. We've got some videos out at the moment having conversations like these. We do a lot of speaking engagements, conferences or direct to employers where we try to help them make sure they understand their obligations and get it right, because that's really the best way for this to work that they get it right the first time and super goes into funds for those workers 

Robyn Jacobson 

Like so many other parts of the tax system. The ATO relies heavily on data in regular data, not just through single touch payroll, which has been in place for a few years now, depending on whether employees transitioned in early or later on. But of course, you've now got the data coming in from super funds, so there's quite a bit of matching going on. To what extent is this vital to the work that the ATO does? 

Emma Rosenzweig

So data is a growing increasingly important part of the work that we do, and we are making some big investments in the way we can bring that data together. We were provided with some additional funding by government in budget to do that as well and to enhance our ability to be much more proactive where employers have made a mistake. So we've been talking for a while to both employers and super funds about the importance of quality of data and the importance of so the data that they were reporting to us is right because we are increasingly bringing those to big datasets to talk to that together to try to identify where an employer has not met their obligations. And one of the things that we are looking to do is for April next year or the end of the first quarter next year, we'll actually be starting to nudge employers who have not met their obligations to that quota. Or five forces will be starting to prompt them and actually write at them, indicate that we're aware. We've identified that there might be a problem. We will obviously make sure those employees get a chance to correct Doctor, if that's incorrect. You know, sometimes that happens, but we will be much more proactive. So at the moment, you know, compliance activities are predominantly driven by employee compliance. And we still take that very seriously. But we really want to get to a position where we are proactively identifying those underpayments much earlier, and we're not reliant on an employee. We don't put employees in a position where they feel that they have to come and complain to us. So data, as you can tell from that, will be increasingly important. And I know you want to ask me about payday Safer in a bit, but if you think about as we work towards payday Safer on 1st July 2026, it's really important that employers start to have those expectations that we will be more proactive and that we will be identifying problems earlier and that we will be acting on it and expecting them to act on it, which we also hope will help employers get back on track. So I think super can be one of those problems where if people get behind, they can bury their head in the sand a little bit and then the problem grows and grows and sometimes gets to a point where they actually can't deal with it. It gets to be a very big liability that they have to be paying off. So we also hope that by acting earlier, we will actually be able to put employees in a position where they can respond faster, hopefully get back on track quicker. 

Robyn Jacobson 

You’re right Emma, I will be asking you about payday super very shortly, but before we get onto that, it's probably worth reminding our listeners that the rates are continuing to increase at the moment and when I say at the moment, there was some rate increases put through some years ago that go right through until 1st July 2025. So at the moment we're on 11% for this year. Is the SG rate or the charge percentage and it will move to 11 and a half and then finally to 12% of years' time. With all the pressures on businesses at the moment, in fact, more broadly across the entire community with cost of living and rate rises and so on, are you findin that I guess there are two issues in here. One is about the change in the rate and making sure employers are on top of that information so they know when they go into a new income year, they are actually applying the correct rate. And there's the secondary issue that as that rate increases, depending on whether the employee is on a package, which means as the rate goes up, take home pay comes down, or whether it's more a wage plus super, in which case the employer pays that and that becomes very much a financial impost that's increasing on the employer.

Emma Rosenzweig

That's right, Robyn. I think you've described the scenario. We do a lot to try to remind employers about those rate increases at the right time. We don't see that as a big problem, that employers are getting that wrong. So that's great. Obviously, the message is getting out there. I think also many payroll systems actually have it built in and have those automatic updates built in, which also makes it really easy. That is probably one thing that with checking, sometimes employers have overridden those automatic updates or they might have an agreement in place that they've put a different amount in. So it is always worth checking at the beginning of the year that your system has actually updated and has gone to the new amounts. So we don't see it as a really big problem that employers aren't on top of those increased rates. But yes, all those challenges you just noted that that working out the total remuneration package amounts or whether this is in amount on top is something that employers just need to keep on top of. 

Robyn Jacobson 

Let's turn now to the rising debt. So you've referred a couple of times to employers who sometimes don't pay it and then it becomes a growing problem and sometimes it all becomes too much and they just turn away from the problem but that doesn't make it go away. And I do remember the ATO saying at a conference years ago that, you know, don't ignore us because we don't go away. We're still here. And that debt doesn't disappear and it's not going to magically evaporate just because you don't want to deal with it as an employer. So when you talk us through these, the level of debt now a concern, what is the ATO doing about this? How closely do you work with the Chaudhri and his team at Lodge and Pay? And just on that point, we have separately recorded a podcast with Vivek and we will be releasing that in the next little while. And what sort of action are you taking in respecting employers who don't do the right thing? So it's quite a bit to unpack there.

Emma Rosenzweig

Look there sure is, And look, I was going to say, many of you or many of your listeners might have been at the tech summit and heard Vivek speak personally about the reset approach to our collection activities, which is really critical and super guarantee is a priority for them. As part of that. So if I just paint a bit of a picture, the debts to super guarantee, which is the amounts that we have identified, people go and actually crystallized as a liability, has grown from just under $1,000,000,000 before the pandemic to around $2 billion today. So really increased significantly in a fairly short space of time. The other challenging part of that picture, to paint is that about 87% of that unpaid super guarantee debt is owed by small businesses. And as I said earlier, super is an amount that really is an entitlement to your employees. And these are the people who are working in your business, helping your business grow or thrive or survive perhaps. And so amounts that you're not paying are really directly impacting their futures. So we do take that pretty seriously. And as you can see from that growth, it is something that we are concerned about. I'm sure that we'll talk to you in the other podcast with him about some of the actions he's taking. But certainly we give people plenty of opportunity to engage with us. The best outcome is that they can be in a position to pay those amounts and get on top of their top of their liabilities. But if people can't and if people or people won't engage with those debts, there are steps that we can take. So we have direct penalty notices that we can issue. We can issue directions to pay any fee. And if you Don't comply with the direction to pay. It is a criminal offense. We also wind up businesses and can prosecute people. And another power that we have that we haven't used very much yet. We were given this just before the pandemic. And so it is something that we're thinking about, how we use that we actually now have the power which is an exception to our secrecy provisions, that if you have not met your super obligations, we can actually inform all of the employees that you have of that, not just employees who have complained to us about unpaid super. So obviously that is almost putting people on notice about your behaviour as an employer, because often employees don't pay attention to this, so they might not realize. So that is another power that we have to make sure that the people who are affected by this understand that. So, you know, I think, as I said, those are all almost last resort things we'd like to do. We'd really much prefer to be in a position where we can work with the business and get them back on track, paying their obligations. 

Robyn Jacobson 

I’d like to ask you about the winding up, and I know over many years we've been conversations around, well, if the ATO proceeds with winding up, then doesn't that eliminate the ability to recover anything? Whereas if the business continues to operate, at least there's a chance of recovering something. How do you respond to that? And also, where does the issue sit as a priority in terms of that is do you see liability in a winding up of the company? 

Emma Rosenzweig

So I might start saying I'm not insolvency expert, so Super guarantee does have priority in a winding up. And as I've said a couple of times now, that is because it is an entitlement that goes to the workers. So that's important to realize. And look, getting that balance right between is a business in a position to be able to trade out of the difficulties or not. It is a real judgment call that our staff have to make And it is a hard one tonight. I would say if you're a business who is having that conversation with us, the more engaged you can be in that and helping us understand why, on what basis you think you can actually try it out of that, the better informed stuff to then make a judgment about whether I agree with you not. I think people also need to think about not only do you have to be in a position to recover the liabilities that you currently have, but you have to do that on top of then meeting your ongoing obligations as they do. So there's no point cutting up past liabilities if you're actually just digging a bigger hole next door with new ones. So all of those things are relevant. I think in the case of business with employees who are not meeting the super obligations we have, and I certainly have a lower tolerance for businesses who may be just digging a bigger and bigger hole and getting themselves into more and more trouble. And so that judgment call about the reality of cannabis and actually try tried out of this problem is probably one we have a lower tolerance for when there is belt simply because you know I've said I'm like a broken record today but it is the employee's money. And in a sense we have to really think about how long we let that business go on becoming more and more indebted to their workers before we take any action. So, look, I think getting that balance right, it's not a science, it's a bit of an art, but the more informed out stuff be, the better position you can put them in to understand your thoughts on it.On why you think you can trade out the better decision making might

Robyn Jacobson

We think about superannuation. I am not suggesting that it is any more or less or greater importance than paying salaries and wages. But if I don't pay you a dollar today as an employer, you're missing out on that dollar. Let's assume that some after tax that when we're talking superannuation, a dollar today that's not sitting in the superannuation fund and isn't invested for what could be 40 years, we're talking an enormous compounding benefit that's not available to the employee either.

Emma Rosenzweig

That's exactly right, Robin. So and I think one of the challenges with Super is that often employees, particularly young employees, might be in this job. It's not something that they're necessarily thinking about and it's not as easily identified to them if it's not being paid. So if you're not getting salary wages and you can't go out on Saturday night, you might have been paid. That's really obvious. If you haven't been paid to super, it's not something that particularly young people are really checking. So I think some businesses think it's easy to get away with it because it's one of the last things that people might identify that they haven't paid and I guess this goes back to the point we were talking about, about our use of data. We really want to be in a position where we put all the data that we've got in the system to work really hard so that we can identify when that happens. And those young people go out on Saturday night and know that we we are looking after it for them. 

Robyn Jacobson

There's also the power imbalance that when you've got a young employee, they might find it incredibly challenging. And I get why to take on their employer and challenge them on the fact that maybe super's not being paid for fear of losing their job or for it to have an effect on the way that responsibilities are allocated to them in the workplace or their relationships with their colleagues or their employer. So it becomes really difficult from a workplace perspective too.

Emma Rosenzweig

That is true. That is that is very true. It is interesting. We are saying, you know, we're in a tight labour market at the moment and we're actually seeing an increase in employee notifications coming to us. So that's where employees come and complain about unpaid super. And we are seeing more and more employees complain while they're still employed then previously used to be much more common for people to wait till they had left a workplace to complain. You know, I've not done any scientific analysis to prove that that is related to the tight labour market, but it is a really interesting thing to observe that some people seem to they might also be students, that there's a lot more conversation about super at the moment. And so that encourages people to pay a bit more attention. But we are seeing a lot more people come forward and complain at the moment.

Robyn Jacobson 

And if nothing else, it shows there's an awareness of that mechanism to be able to notify the ATO. So that's good. 

Emma Rosenzweig

Yes, that's right. 

Robyn Jacobson

Okay, Payday Super. Let's chat about this. So it's an announcement that was made in this year's federal budget. It is due to commence 1st July 2026, which sounds like a long time away. But having already been involved on behalf of the Tax Institute at some of the target of consultation, that's taken place, I've got an insight as to just how much work is involved, and we're going to need every minute between now and then to be able to design the framework, get the policy implemented.  And of course that needs to pass through Parliament. And then of course the ATO needs to turn its mind to the rolling out of this in the awareness campaign and so on. So broadly, can you tell us what Payday Super is all about, What's going to change and for both employers and employees and so many other stakeholders in this, for those two cohorts, what does it mean for them?

Emma Rosenzweig

That's right, Robyn. It's it's quite an exciting reform that the Government has announced. So I'll probably need to qualify this by saying it is in announcements and it's not law yet and there is still work to do to come back to budget in next year to consider the actual detail of the policy. But the announcement was that employers will be expected to pay their super at the same time they pay salaries and wages. And I guess we've been on this journey for a while with the introduction of single touch payroll. We started reporting at event. So rather than once a year getting that reporting from employers that we actually get event based reporting through single touch payroll, this takes the next step to say actually we need event based payments as well of superannuation. So that's that's the basics. So employers just pay more frequently or some employers pay more frequently than they are now because we know there's already a large number of employers paying more often than the quarterly minimum obligation at the moment. As you said, though, there's lots of parts of the system now that need to actually operate to make this work. So employers are reliant on the software providers to report to us, but also to automate these payments. So we know that digital service providers are going to need to update their systems to do this. There are clearinghouses that offer services to employers. They're going to have to be able to accept these super funds who report regularly to us on contributions. And so they're going to have to make changes to allow for this. And one of the other potentially slightly overlooked, except perhaps by super nerds, elements of the government's announcement was the fact that they will be made to be changes to the super guarantee charge regime as part of this in order to really could temporize those rules about what happens if an employer doesn't meet their obligations. So that is a huge job, but also a really great opportunity to be able to tackle some of the issues that we know employers struggle with at the moment. We know some of the rules are very inflexible and it's partly because they were designed a very long time ago. So very different operating environment than we're in now with prior to choice, prior to a quarterly regime, even never mind a pay day regime. And so it's a really good opportunity to think about what what is the right mechanism to have where employers do not meet their obligations and how do we have the right consequences in place to tackle those problems. So really exciting opportunity and I'm really looking forward to it. I know that we've got a very diverse group of stakeholders in the community as well who will really work with us to help get this right.

Robyn Jacobson

I see it as a golden opportunity to modernize these rules and they were, of course, the back in the early nineties. So history we've had since 1992. Back in those days, we didn't have quarterly payments. That only started in 2003. We had payments made by check. We certainly didn't have a hefty we didn't have the clearing houses, we didn't have stapled super, we didn't have choice of super as you say. And we've ended up all these years later, over 30 years with a system that you describe it as inflexible. I'm going to go a step further and call it draconian because when you've got employers who are treated exactly the same way, regardless of whether they never pay the super for their staff or they pay at one day late, that happened not to tell the ratio through a formal history statement and paying the charge. And that's where it's unfair because it shouldn't be the same penalty regardless of the level of culpability. Also, the fact that the nominal interest continues ticking on whether or not you've paid the amount when that was actually designed to reimburse the fund for the lost earnings, for the contribution having not been made up when it was supposed to. So if you paid the contribution a month late, but you still do till the 80, So that interest keeps ticking and in my view it becomes effectively a double penalty because we've already got the part seven penalty for not notifying the ATO when at a policy level you've also got this interest that keeps on ticking. So that's nothing the ATO is able to exercise discretion on. There is no flexibility for the commissioner as we well know. So that's why I call it a golden opportunity because I think this is a chance to bring these rules into a modern environment, into the 21st century, where we can acknowledge the digital tools we've now gotten, the technologies we're not paying by check, but as you say, to have a quarterly charge when you're going to be potentially paying on a weekly or a fortnightly payroll basis just doesn't work.  And that's why it does need to be altered and refined and made much more flexible to cope with a flexible payroll cycle. 

Emma Rosenzweig

That's right. And look, we've done what we can in terms of we do have party remit the pot seven penalty. And so I think we've worked with a bunch of people a little while ago to put out a press statement about how we would apply those. And that seems to be working very effectively. And the goal of that is to really think about applying or remitting those penalties in line with the behavior of the employer, whether they're someone who regularly doesn't pay, whether that's someone who one off has made a mistake, we hope. And I think the way our penalties are applying now does genuinely reflect that behavior much better. But I think this is an opportunity really to take all of that feedback about the current consequence rules, the current charge regime, and think about what's the right model to have in an environment of pay discipline, a digital environment and really contemporary it. So I agree, Robyn. I think it's a golden opportunity. I don't want to preempt what that outcome might be, but I think reflecting that the goal of this is to get money into the fund for employees in a timely way. It is really important and I think it is a real opportunity to ensure that employees are getting the right amount of money to ensure that business is can manage their cash flow appropriately, reflecting the fact that those amounts are really entitlements. So they work as is really a great opportunity. 

Robyn Jacobson

We shouldn't overlook either the cash flow impact. So it's one thing to change systems and upgrade software systems and technologies and processes, but this will have a real impact for those who are currently paying super on a quarterly basis. The idea is if you're paying smaller amounts more frequently, then you more able to keep on top of those obligations rather than it building up and even potentially falling behind. 

Emma Rosenzweig

That's exactly right. You know, the thing is, I gave you before so that 87% of the current debt is held by small businesses and in some cases they are businesses. Very few cases. Their business is willfully not paying. In most of the cases that we see, they are businesses who have struggled to manage their cash flow in a way that lets them meet those obligations. And so I think that's right. There will be a real impact that hopefully we can get on top of the issues earlier and in the small moments.

Robyn Jacobson

Moving to another issue that never goes away and that sort of employee base as contractor from the perspective of looking at how the tax rules deal with this, there's currently a draft ruling 2022 D3, and there is also advice under development with the ATO at the moment and that can be found on the ATO website. This continues to remain a challenge. So do you have any remarks about where we're at with this particular debate? And of course we've had the recent High Court cases and I'm sure there'll be more cases in the pipeline.

Emma Rosenzweig

 It has been surprisingly active lately. This issue, you know, it goes for a bit of a lull and then we have had a number of cases. So as you said, we have put out a new draft ruling at 2022 slash 33, which was drafted after those two big high Court cases in gem sick and personnel contracting. It also has we have also put out a practical compliance guideline with it which talks about where we're putting our flags on the dates in terms of employers making decisions about how they treat their workers and where they can expect us to apply our resources to looking at those issues. And I'm really grateful for all people who provided a step back and comments on that. So far they seem to be taking an approach that seems to be practical and realistic for people to be able to comply in a way that might give them a bit more certainty. They asked to draft. We have had a bit of feedback on them, but we also had a recent Federal Court case of James versus the commissioner and we want to make sure that we reflect the considerations in that case in those two cases. So if there are more cases in the pipeline that then it will become at what point do we finalise these and have to update the cases? We're not aware of any other cases at this point, although we have sought as special leave to appeal in the JMC case on one particular element of it. So we are just waiting to hear about whether we'll be granted that special night before we finalize those. There has been a bit of a that has taken a bit longer to finalize them than we initially thought, but we do want to make sure that they genuinely reflect the current state of affairs in this issue. But but it is an interesting and complex issue. We know for a lot of businesses to work through. So we really do highlight that our approach in that case gives some clear guidance about the steps a business can take if they want to have confidence about how they will look at the decisions they've made.

Robyn Jacobson

Neither of us are particularly Fair Work experts that I just also want to mention to our listeners that there is a bill before Parliament that is dealing with proposed changes to the Fair Work Act, and for that reference, it's the Fair Work Legislation Amendments, Closing Loopholes Bill of 2023 and might be good to look to bill once it goes through Parliament, may be early next year and have a chat about what that means from an employer and a superannuation perspective.

Emma Rosenzweig

Yes. So that that Bill does not make any changes to superannuation or tax legislation. And so we're obviously interested observers in how that progresses. It's been referred to a committee who are due to report early next year, but at the moment that Bill does not make any amendments to any of the tax laws. So we don't say it directly affecting the way we administer any of that current legislation.

Robyn Jacobson

Thank you. So to another of your huge portfolio, Fringe benefits tax. Now, we're not in FBT season at the moment, as we all know, but you are still finding that there's a bit of a knowledge gap, and particularly with this tight labour market that you have referred to already, you're saying particular types of behaviours that concern the ATO because there could be some employers not aware that they're offering taxable fringe benefits and therefore could be overlooking their obligations here.

Emma Rosenzweig

That's right. So I would say maybe it's not FBT return season, but perhaps all year is FBT big. And if you are offering some of these benefits. So, you know, I have to put a plug into good recordkeeping here and make sure that even though it might not be tax return time, it is important to think about the records you might want to keep. But that's right. We are seeing more and more employers think about how they can retain staff or check staff. And part of that might be to offer them non-salary benefits. And that might mean some employees who've never been part of the system before are now suddenly brought into it or aren't aware that actually they should be paying if they pay on these benefits. So really want to encourage people know your business listening to this and you are providing non-cash benefits, whether you're giving people tickets to the footy or to the theatre, or you're providing a car or all sorts of things, if, if it's a benefit you'll give in to your employees. Have a think about whether they could apply. And if you're a practitioner, perhaps it's great to ask some of those questions to, to some of your businesses as well about whether they've taken on any paper or offered any new package arrangements to people because it is a real challenge to make sure people are aware that they've got these obligations.

Robyn Jacobson

You provide some specific examples of the sorts of benefits you're seeing out there that perhaps are more common or perhaps being offered by an employer for the first time? 

Emma Rosenzweig

Well, look, I think one of the things that we might have seen a little bit of media on recently, because we've been trying to bust some myths about the fact that providing a car, particularly a use this seems to be a myth that if you buy a you can provide it to your employees that it's not subject to if they take a there's no magic in it being a ute. And so I think it's really important to people to know that it will be subject to FBT unless there's really minor and incidental private use of that vehicle. So that's one of the things we say, you know, people providing a car, that car can be taken home in the weekend and you drive kids to soccer games and you might go camping with it. Particularly Ute’s really good set camping that is not incidental personal use and does make that subject to fringe benefits tax. So I think thinking about the use of work cars is really important. There are record keeping requirements people need to meet to to show the use of the car. And we do look at those. If we if we come and look at you and ask you questions about your as they say, the cars would probably be one of the biggest benefits, Robyn, that we say people, people get wrong, 

Robyn Jacobson

but it could also include tickets to events and I'm thinking of, for example, the Melbourne, the Australian Open is coming up again and we've got Melbourne Cup season coming up and football finals and all that sort of thing. So a lot going on down in Victoria. There could be school fees being reimbursed by the employer that you may have to sacrifice arrangements, not into super, but I'm talking other types of benefits. So there could be a range of things that people do need to turn their minds to.

Emma Rosenzweig

There are a whole range of benefits that people offer. And and I think that's right. There's all sorts of entertainment benefits that we say people are afraid to say meal expenses, reimbursement of living expenses. So all of those things can be subject to, as they say. And so I think if you're providing any of those to your employees, it's worth going and asking the question.

Robyn Jacobson

Might be worth highlighting another one that people can overlook, we've got the changes over the last year relating to the provision of electric vehicles. And if I might, certain conditions they can be exempt from FBT, but it doesn't stop them being reportable as a reportable fringe benefit. So that's something else that employers need to be mindful of and employees because it can affect, of course, their overall reported income.

Emma Rosenzweig

That's right. So it's still important to recordkeeping purposes to make sure that even if they do meet all those requirements to be exempt, so an employee salary packaging an electric vehicle, it may well be exempt from FBT. But you're right, Robyn, that it will still be considered a reportable fringe benefit. And that is important to report through to us. And as you say, it can affect people's entitlements to other benefits, welfare benefits. It can affect if you have a fixed it, it it gets included for calculation of your HEX debt. And the other thing with electric vehicles, I think is important to note, so things like the running costs of the vehicle registration insurance and I understand they don't need anywhere near as much maintenance, but repairs and maintenance costs can also be, if they take free things like the provision of a home charging station is not actually included in that exemption. It is it is not part of the vehicle running cost. And so that's another thing to think about too. If you're actually providing reimbursing for the home charging station, that is likely to be subject to if it's a property fringe benefit or an expense payment fringe benefit.

Robyn Jacobson

Helpful. For the last one, on a technical level, consolidation for income tax purposes does not facilitate consolidation for FBT purposes. They're quite separate pieces of law. 

Emma Rosenzweig

Yeah, look, it is something we do see that some that businesses are trying to lodge a consolidated return and so that makes it really hard for us to data match. It is very likely that if you're trying to lodge a single FHA return for a group of companies, that it will generate some questions from us. And generally people prefer to avoid having us come and knock on the door and ask them questions. So I really encourage that if there is a corporate grade in place, the H employer in the group needs to lodge their own FHA return. 

Robyn Jacobson

So in closing, any tips or where people can go for more assistance or help? 

Emma Rosenzweig

Well, we have plenty of information on our website ato.gov.au. We try to give it in lots of different formats. We have some great videos on Super Guarantee and a lot of information about FHA as well. If people are interested in what we do do in terms of super guarantee compliance, if they search for ato.gov.au/sgsnapshot, you will get straight to some information about the compliance activities we do and we'll be updating that in about October when our annual report goes out. That would be the latest SG gap as well. But obviously then organisations like yours as well, Robyn, and tax agents, BAS agents, payroll advisors are excellent resources for people to ask for assistance in. 

Robyn Jacobson

As always, there's always so much to unpack, so much more we can say that I thank you for your insights and for sharing your various experiences and anecdotes with us.

Emma Rosenzweig

Thank you so much for having me. 

Robyn Jacobson

Thanks for listening to this episode of TaxVibe. I've been chatting with Emma Rosenfield, Deputy  Commissioner Superannuation and employer obligations at the Australian Taxation Office. To keep up to date with TaxVibe. Be sure to subscribe, rate and review wherever you listen to your podcast. If you'd like to connect with us, you can find us on socials.

Not a member of The Tax Institute? Join a collective voice of 10,000 practitioners at the heart of the profession and find out what the best tax professionals have in common. Visit, TaxInstitute.com.au, we look forward to you joining us next time.

Robyn Jacobson

Hello and welcome to TaxVibe, a podcast by The Tax Institute. I'm Robyn Jacobson, the senior advocate at The Tax Institute and your host of today's podcast. We love the vibe of Tax, and here at The Tax Institute, we do tax differently. I'll be chatting with some of the Tax profession's great thought leaders who will say valuable and practical insights you may not hear every day. We hope you enjoy this episode of TaxVibe. I'm joined by Ian Raspin, who is an estate taxation specialist and managing director of BNR Partners, based in Melbourne, which is specialised in the taxation of deceased estates since 2008, provides estate taxation, compliance and technical advice services across Australia exclusively by referrals from legal practices listed on public trustee companies and by direct appointment from the Supreme Court. BNR has one of the only dedicated teams of accountants in the country who specializes in this neat and often complex area of taxation, which frequently involves cross-border estate issues. Ian is highly regarded nationally and internationally on estate taxation matters as a published author, as a frequent presenter at legal and accounting conferences and events across the country. Ian also consults with the professional associations, government agencies and regulators and the private sector on estate taxation issues. Ian is a chartered tax advisor at the Tax Institute, a fellow of both CPA Australia and CAA NZ, a current sitting member of CPA Australia's Tax Centre of Excellence for Registered Practitioner at the Society of Trusts and Estate Practitioners, of which he is the current National Chair and a graduate member of the Australian Institute of Company Directors. Ian, welcome to TaxVibe. Great to have you here.

Ian Raspin

Wonderful to be joining you again, thank you for the invitation.

Robyn Jacobson

So, Ian, you've certainly established yourself as one of the preeminent experts when it comes to the taxation of estates and related matters. And we can draw back on a very famous quote from 1789. I don't think anyone who works in the tax profession, who hasn't had this one and many outside the profession, from Benjamin Franklin, and he said, ‘Our new constitution is now established. It has an appearance that promises permancy. That in this world nothing can be said to be certain except death and taxes. And you've very successfully combined the two.

Ian Raspin

Growth industry at that too, Robyn. Great, great quote.

Robyn Jacobson

So what makes this area of law so complex?

Ian Raspin

Great question. And really, I think we need to sit back and look at it and say, well, as tax practioners we are working with federal tax law, so, you know, Income Tax Assessment Act, but a state law is a jurisdictional base thing. So every state in Australia has their own jurisdiction or staff succession law as well as the trustee act. So it's an interplay between tax law, the Income Tax Assessment Act and those particular areas. You overlay that and say, well, the income Tax Assessment Act has particular provisions in the way that deceased estates are actually treated and estate actually falls into Division six of the act. So it's treated like a trust, but by default that creates a whole heap of technical nuances when it comes to deceased estates. So it's a combination of those sort of areas. We also need to be, I guess, judicial changes in our interpretation of law. The location of the beneficiaries and the LPR also changes the domicile and treatment of assets and tax purposes out of that and believe it or not, the circumstance of the deceased are their wealth, what structures they've got that wealth in their migration patterns. Where were they when they died? How does that interplay in relation to this area of tax as well? And I think overlaying all of that, you've sort of got to go well, complex area that's probably not appreciated by many practitioners, but at the end of the day, that is there is ITII guidance out there. Some of that guidance is dated and some areas and it's sort of lacking in relation to that. And look, I think in that sort of area that things are progressing very quickly, whether it's generational wealth transfers and growth and in death rates in Australia. So it's an area that needs quite a bit more focus I think.

Robyn Jacobson

And the expertise of practitioners, how specialised or otherwise do they need to be to work in this space?

Ian Raspin

Look, I think a lot of it starts with the Manila estate where with things are black and white and it's pretty straightforward. You know, mum and dad were guys a hassle? I'd be a bit of money in the bank on the share portfolio and that's that's about it. And prima facie, again, it's a pretty simple estate, but embedded into that, there's a lot of potential through tax nuances and traps that come along with it. And what can seem to be very simplistic can soon become quite a complex estate and given numbers. United Small Estate. The risks probably pretty small. If it's an estate, tens or hundreds of millions of dollars, all of a sudden the risks exposures and those levels are quite high. And one of the nuances I guess with deceased estates is that the LPA, the executor, administrator or whatever title might be given in that particular case is personally liable for tax. And, you know, they finalized the estate administration, their liability remains. It's not on to the beneficiaries. And so if something goes wrong, that means that those people will be turning around to their technical advisors as to what's actually go on here. So I think an awareness of these areas are really good. Know what you do know and what you don't know? And to reach out when you get into some of these technical nuances and every day I'll reread the legislation around provisions I know just to make sure that things navigate their way through the way I think they should on a particular matter.

Robyn Jacobson

And to give us a sense of the scale of the number of estates you cover each year, what are we talking about?

Ian Raspin

On average, we'd be doing with about 5000 estate tax matters a year across Australia, which sounds like a very large number. But when you sort of break that down and you say in Australia last year there was just over 190,000 deaths in Australia that's an average of 521 deaths per day. You know, so many dealing with a fraction of the market. But I think if you start looking at that too and you go, well, a lot of those estates are just going to be really simple estates, age, pension, not much else. That's a nice easy estate to just off. So that deals with the majority. But there are the others and that's where the Frankenstein monsters are, is for the Paid Representative Tax Institute. Just a couple of weeks ago.

Robyn Jacobson

As I go into this next question to you, I just want to set the scene, because sometimes terminology can be a bit confusing and there is a whole different language when it comes to estates. So, for example, we talk about someone who dies intestate. And I want to make it clear, I didn't say interstate, it's interstate. You might be interstate when you die intestate, but it's about someone who doesn't have a valid will when they die. Now, that itself informs the terminology we use because we've already mentioned the other legal personal representative, which is effectively the trustee of the deceased estate, the trustee of the trust. But it breaks down into further terminology. So if you die with a valid will, you have someone who is called the executor. And in fact, the executrix, if we're talking about the masculine and feminine version of those words, whereas if you die without a valid will, holds an administrator, and again there is a female equivalent of that. So in our space, we often see accountants taking on the role of executor for their clients. And yet you've seen a trend by many legal practitioners who in fact decline copies of invitations from their clients. So what are some of the risks and why do you think the lawyers are perhaps moving away from taking on those roles? But we're seeing accountants still taking that on behalf of their clients.

Ian Raspin

I personally won't take on the roles any longer because I become very much aware of what's involved here. I think to the legal fraternity, you know, remember a while ago there was one year I attended. I regularly speak at law courts across Australia. The three conferences in one year where somebody got up as a presenter and actually lectured a roomful of lawyers, that qualified lawyers that specialized in this space with their master's degrees or specializations, accredited specialists, and telling the audience not to act as executors. The risks in the area are phenomenal and thus look at it and say, well, look, if the legal fraternity at telling people that understand law and are actually qualified just in this space and focus in this space not to act executives, well, why would another professional stand into that place like an accountant? We don't understand that most accountants would not understand or probably haven't read the succession Law Act in their local jurisdiction, let alone understand the terminology. You look at it and you sort of go, Well, am I covered? And this is a really important one for a journalist to be looking at. Am I covered by professional deputy insurance? And when you look at the PR cover for me, accounting firms, you are not covered to act as an executor. So it's a personal responsibility, not a professional responsibility, right? You will be held paid professionals standards in relation to acting in that role. So a number of times I can give examples where I saw practitioner will act as an executor and the impact on their practice from doing so is just phenomenal. You only need a simple family maintenance claim against the estate and you find yourself in court, know, defending the estate and the world against those sort of claims. And so much of your time and energy has gone to that you're not really qualified to do and you're getting legal advice to be able to do that, that you drop the ball around your own practice. And I've certainly seen practitioners suffer significantly from taking that so wrong. I advocate very strongly that probably not to look at it. It's very nice. You know, a client comes in, they'll be the client for years and you go, Well, hey, you know, you act as my executor again. This is a major, major honor, you know. Yes, I'm happy to do that and help tie the family together. But again, you can do that, but you might find yourself in a fight with next generation. Then you end up with no clients. Right.

Robyn Jacobson

So it could be better to keep your arm's length and charge for your professional services as you need to, but not get legally involved in the arrangement.

Ian Raspin

To find someone else. Now, more so where, you know, people will actually say, I'd like you to refer to my accountant X, Y, Z for advice on this matter. Therefore you can go looking to charge those professional fees as an executor. You might be an executor or a commission born into the world, but it doesn't mean you're actually going to get that commission. It's open to challenge by the beneficiaries in judicial interjection. So it's not necessarily a cash cow. Some people think it's going to be.

Robyn Jacobson

So moving on to some broader estate issues I've already discussed with you, we have people who die with and without valid wills, but I often feel there's a perhaps a false comfort that people get by having a will. They think that it kind of deals with everything. And in fact, there are quite a number of assets that you can't deal with through your will. Can you give some examples of those?

Ian Raspin

Oh, absolutely. And really good point. You know, particularly for some practitioners out there that are trying to have those discussions with their clients around estate planning. Superannuation is not part of your estate unless you get a binding death benefit nomination to pay to the estate or the deed is hard wired for it's county estate. That's often an estate planning technique not to have it part of the estate, particularly if there's a second, third or fourth family. Nobody knows about their assets holding companies or individuals, trusts, family, trust. That is, they don't form part of your estate loan accounts to those entities. Well, maybe the assets within a company that owns a whole heap of real property, you know, you won't own the real property. You own the shares of the company, but it doesn't give you the right to actually transfer that real property in the company to a particular beneficiary and of course, jointly held assets. The rules of survivorship can come in here where the asset actually moves across to the surviving spouse. And so it's a matter I think it was sitting down and listing what the assets are, who owns them. So estate planning, working out who's ultimately are they an asset to which a will can actually control?

Robyn Jacobson

It's an interesting one because if you have, say, a couple who are both killed at the same time, so let's assume there's a car accident and they're both killed instantly. The law of survivorship, where you've got one person leaving their estate to the other and vice versa, you've got a tiebreaker needed because how do you work out which model you invoke first? And the law says that the oldest person is taken to die first.

Ian Raspin

Exactly right. So marry somebody older than yourself.

Robyn Jacobson

All right. So to superannuation, we talk about the role of the Biden death benefit nomination. Now, you could either arrange to leave all of your superannuation benefits directly to your estate or of course superannuation being a trust in its own right. You can direct the trustee of the fund to pay those benefits out to nominate a beneficiary. It strikes me that in recent years we've seen increasing litigation, often involving, as you say, the second, third and fourth families that people didn't know about. I'd like to think people did know about the vote anyway. So in terms of that litigation, it's often two generations that you'll have, if you like, the current partner and perhaps the children of the first or former partner. And it can lead to some pretty ugly disputes between families.

Ian Raspin

Are hundred percent. In fact, the Law Council of Australia, you know, started a few years ago that this is the biggest or one of the biggest growth areas in litigation in Australia and that is around the sister states and super is part of that. You know, beneficiaries going after executors or going after each other or going after professional advisers. Litigation is rife in this area, people trying to obtain what they rightfully think is theirs and recipients start looking, well, what's the binding death benefit, you know, executed in accordance to the terms of the will and not the will? The trustee wasn't in the right format, was it actually submitted to the trustee? You know, there might have been completed, but was it ever submitted or acknowledged it lapsed.And so all these sort of things into place through there. So a very, very complicated area in which professional advice is very much needed. But yes, a lot of litigation.

Robyn Jacobson

In terms of administration. When you very briefly outline the concept of probate for those who may not understand it and for those who don't have a will, because probate suddenly where you do have a will is called matters of administration.

Ian Raspin

So it's an application of the court. So the Supreme Court, in the relevant jurisdiction, you make an application and effectively turn up with will. Your Lloyds ends up with where we make an application. And the role of the court, I guess, is to determine whether that's the most current and valid will and therefore the appointment of the executor. And by getting that in the case of a will, by getting your letters or a grant, what actually happens is that's effective your license now to go and deal with banks or the assets or to represent that particular party in the case where there is not a will as you sort of said, that's an intestacy. And so that goes down to the last administration and as a ranking order is who can actually apply for that. But you go on to make an application as administrator and effectively the same sort of thing. It gives you a license once the courts are allowed you onto that or appointed you to act as the administrator to deal with those assets. I think what's really important is to concepts here. One is that once appointed, it's very, very hard to get out of it, to renounce will be removed. So once you're in there, you're always in there. And secondly would come in that you intermingle with some estates that as you actually start to act as an executor, even though you haven't been formally appointed, you may actually be deemed to be the executor, and therefore you may end up in that role, but you don't want to be particular in. So I think it's really important to not intermingle with the estate during those early stages until a grant has actually been provided. Third thing outside of that is just in every state of Australia except for Queensland and these are required Queensland, you don't necessarily need a grant of probate to be able to act for the estate. So again, that sort of goes down to every state is different.

Robyn Jacobson

I want to play back to your remark then about that period in between. We know that when an estate is beyond the stage of probation, it's being administered. It is, if you like, a regular trust. Now there are special tax rules that apply as to how the incomes taxed and so on. But broadly, we're into a tax base where it has to lodge a tax return, it gets its own TFN and you either distribute the income to the beneficiaries or the income's retained on the assets to the trustee at a special tax rate. What about the period between the date of death? So when the estate begins to be administered now that could be a period of months or even years and legally owns the assets in the meantime.

Ian Raspin

Good question. And that'll come down to a state by state jurisdictional basis. But generally you will find that will actually exist within the public trustee around Australia. But there's no no active role where it's this thing just sits and idle. It's all, you know, often a grant is actually provided to then the executor or PR. It's got LPA as the term for executor administrator. It's sort of a joint term. They still retrospectively become responsible for that all the way back to the date of death and need to deal with the tax returns, etc., during that period. So it's not once they've been appointed, once they've been appointed, it's not like you can wipe your hands and say, well, that was at eight months that we don't have to write that. Now, you still have that responsibility retrospectively.

Robyn Jacobson

There's a whole lot of administration, and I particularly at this point, want to go into the TFN for the estate and DE-REGISTER and GST and ideas, but there's certainly a lot of bureaucratic process that needs to happen from that perspective. In terms of notifying the ATO and receiving the administration of the estate, what are the issues that need to be considered here?

Ian Raspin

Well, there's an obligation to actually notify the ATO death form. So simple form, you need to notify the ATO death and nowadays that needs to be submitted to the ATO. Sadly, in hardcopy it needs to be sent with certified copies of will, probate, etc. Along with that, the ATO has a little bit of a problem and it's time that you bring that up because you know, you need to submit this to the ATO to prove that somebody died. That makes sense. They want to know somebody is dead before they actually, you know, provide access to the ATO portal, etc.. Right now this process can take 3 to 4 months with the ATO. Not only that, even though in my office, again we deal with a large volume of these, you know, you send them in, we'll do it by certified mail where be able to track it's the ATO that it's physically been received by the ATO, but then it falls into the void and often we had one matter just this last week we've done three different submissions for the same estate in relation to date of death notifications, because whilst we can prove it's been there, it's just been lost. There's no lying issue here. That's certainly creating a lot of social media attention at the moment too. And that is that you said that you need a certified copy of the will and grant, etc.. Well, lawyers are signing those. You know, you act for a client you've drafted. Well, you've now they've died. You've got these documents, you certify, you send them in either through us or through your accountant or directly and the ATO announcement around and saying, well actually there's a conflict of interest there. You know, you've acted for the client, we can't accept you certifying this document. And so that's creating a backlog on this sort of stuff as well. So once you get through all of that, you can then get access to nowadays in the deceased's pre-death area on a portal access. And obviously as you and I have spoken about previously, that was an issue for a few years. Then we can certainly access that and apply for an estate to and start that process. But until that point, it's an offense for the ATO officer to speak to anybody around a person's tax affairs that they don't have authority for. And it's a sexual offense that carries a two year jail term, but for the ATO officers, so they take this role very, very seriously. So you have to jump that hurdle before you can really start interacting.

Robyn Jacobson

You talked about having to notify the ATO of the death toll signature and not receive information from the Registry of Marriage.

Ian Raspin

Robyn, I think he just playing with my buttons here today. Yes, yes. So there is data sharing and this is one of the areas I think is quite frustrating that certainly does interact with the registry of marriage, births and deaths right around Australia. Again, a state by state or territory based jurisdiction thing, but that just doesn't seem to correlate into this area here. And whilst there has been recommendations by our Inspector General of tax the get away from this area up and through to explore this that certainly hasn't happened. And as far as I'm aware, saying not on any immediate ATO radar list, I'll take that. It's helpful to Robyn and it's a sad indictment because sort of set of a lot of the states are very simple and small and you know, this is surviving spouse that needs access to that money, those kids that need access to the money, maybe 30 or 50 grand. But, you know, by the time you get a grant of probate, you go through, notify the ideal things you might be a year or two later before you can get that out. The process should be a lot simpler for those simpler estates.

Robyn Jacobson

And that has real ramifications for beneficiaries.

Ian Raspin

100%. 100%.

Robyn Jacobson

So the Inspector General of Taxation and the Taxation Ombudsman, Karen Payne, did release a report in July 2020 titled Death and Taxes An Investigation into ATO Systems and Processes for Dealing with Deceased Estates. And that investigative report is on Inspector General's website. What have we learned out of that investigation?

Ian Raspin

Great [ ], investigation by the campaign at her office, the inspector general on that, and to commend the office for the work that went into that. But I think at the end of the day they raised some very pertinent points and the ATO has responded to a number of those points and has acted in parts of some of those points. But I think there's still some serious work there to be done and trying to build that space up and to bring all that together. But I think in the scale of things and to the Commissioner's sort of defense, I mean, the tax revenue, as I understand it from the space is about 4% of tax revenue in Australia that comes from deceased estates. Currently it's growing. And so the focus of the ATO on these areas aren't necessarily as large as it is, but there are holes and chance reports, certainly points some of those out and I think it'd be good to see a little bit more traction from that report.

Robyn Jacobson

We'll keep an eye on that one. Now, in terms of the tax issues, look and you and I could spend the rest of the day talking about this stuff, but let's just perhaps pick on a few of the high points we've got to trust. Let's assume that we are retaining the income while the estate is being administered. We're not distributing assets or income out to the beneficiaries at this point. In a sense, we've got the normal rolls in Division six, in part three of the 1936 Tax Act. That is, the trustees assessed on that share of the trust's taxable income. To the extent that no one is presently entitled to the trust income, there are special rights. And what do we do when it comes to resolutions? Do we still do them when it comes to a deceased estate question?

Ian Raspin

So, yes, look, a couple of things. There are special rights. It's Section 99. So ordinarily, our listeners will be aware of Section 99 rights which apply to a trustee of a trust, and that is tax rights all the way through context to the stage two state section 99 rights apply at the commissioner's discretion. He generally use that discretion if he lodge the returns on that basis, and that will apply for the first three income tax years after death. So if I died on the 1st of May, my first income tax year would only be two months. Okay, so two years and two months. And that effectively Texas's adult marginal tax rates the 18,200 tax free providing it's a resident trusts estate and not a nonresident trust. And thereafter Section 99 rights will apply. But without the 18,200 tax rates are still progressive marginal tax rates. But I go back to my point that it's at the commissioner's discretion and he can invoke 99 rights at any time that he believes the estate administration has been delayed intentionally for tax advantages. I don't want the example. We have every beneficiary in the highest marginal tax rate, so they want to try and take advantage of the longer years. And so I really, really caution against that.

Robyn Jacobson

If you've particularly seen that in practice when 99 has been used instead of 99.

Ian Raspin

Per cent of [ ], and I've seen cases where it really should be invoked and I say in a live case no, because the way we practice and I guess the trustee companies around Australia practice and we consult and work with, we certainly adopt a more considered view on that because you'd be exposed as an executor if she did something like that, the beneficiaries may come after you. I am aware that there are practitioners and practices out there in Australia that are taking advantage of these provisions and they bear the risk. I guess is the best way I can respond to that.

Robyn Jacobson

Question, what about resolutions? Are they still needed?

Ian Raspin

Yeah, look, I think so. As a tax ruling, I tell you, 2622, very outdated ruling. It came out before self-assessment in Australia, certainly. BANFIELD And in an Australian tradition. So it certainly needs to have a right, which I think at the tax conference last year, Robin, the ATO representatives did say there were close to releasing a redrafting my take 2620 to understand it's on backburner now but that sort of talks around stages of administration and divides the estate into three stages. So during that stage where you're trying to work out what's going on, what the assets, how the liabilities, get a grant, etc., all incoming as the trustee, it's a it's a matter of that ruling matter in law. So that's clear middle stage. You're in that stage where if you make an interim distribution that's were beneficiary of income, they would be assessed on their share of trust income. And the final stage, obviously, where you've got to the stage that you've basically administered the estate, you might not have transferred assets, but you can say, well done, everything. Now I've put money aside to pay for tax pull out. Now I've got to do is to transfer assets. At that point, beneficiaries can be presently entitled to income. I'm a big advocate, however, the sort of game I think doing resolutions around present or specific entitlement, particularly specific entitlement are absolutely paramount in this space, particularly for the larger states where you really want to clearly demonstrate what the intention was. And again, it comes down at risk. Then in failure to do that, you know, the trustee will be assessed against that capital gain or that income. And it was a capital gain, for example, or a beneficiary had a capital loss or it was a not for profit beneficiary. And I said, for the not for profit sector are shaking down the market at the moment. They will come after executives and advisors for not doing that. So I think best practice is definitely to look at that and say, no, let's, let's do a resolution, let's get this correct. That's really document and demonstrate what the intention of the LPI our trustee of its testamentary trust is at year end in relation to both those areas.

Robyn Jacobson

Let me respond to the notion that a deceased estate would be regarded as a fixed trust.

Ian Raspin

Or another really good question. So really the fixed trust sort of thing during the estate administration stage? No, they can't really be a fixed trust until the end of the state administration because, one, you don't know whether you're insolvent. You know, a person may look solvent, but they might have a couple of million dollars worth of debt. You know, it's in the background that nobody knows about. There might be ATO history you don't know about and you don't know whether you can distribute. So it's only in the final year of estate administration that you can actually turn around ground and go, Well, is this a state, a trust? And in that final year, certainly you could argue you're that's final stage. You might have beneficiary offshore, for example, entitled to the capital gain from a nontaxable Australian property. You could try and argue that that was a fixed trust at that point. And certainly we've got some rulings with the ATO where that's actually been confirmed. I will 540 which effectively means that if the fixed trust are to which the nonresident beneficiary is in receipt, the trustee wouldn't be taxed on the non taxable Australian property portion of that distribution. But I think it's sort of one of those areas that I would never take for granted. Certainly the trust sector right across Australia, wiseguys for rulings and those sort of areas as well to to make it there. And given the delays in getting proper rulings at the moment of the ATO, you want to make sure it's a sizable amount of money before you started delaying processes.

Robyn Jacobson

Division 7A, another area where of course across the country and across private companies there are some very substantial sized loans. Yeah, even the old quarantine ones, those were made prior to the 4th of December 1997, when Division seven commenced. They are still liabilities that are effectively owed by these individuals. I don't know is regarded as such, but an asset that is receivable by a company by definition means that it is payable by the shareholder or the associate. So when they die you do have to consider the implications of that line. So briefly, can you talk us through what happens when you've got a line that inside back to a private company and it hasn't been repaid? Does the estate then assume that liability?

Ian Raspin

So yes, and this is a really complex little area that sort of dies out. So if you had a the estate does, so the executor effectively stands into the shoes of the deceased and so you become the deceased for all intents and purposes. So that for tax purposes is a separate area, a separate tax entity. So any individual seven guideline agreements that are in place when that person dies, an executor needs to continue to meet the obligations of that division, separate loans through the estate administration, and that is to pay the minimum amount with interest, etc., all the way through back and finally to do that will trigger a Division seven dividend to that extent, which is a little bit of a problem. It's interesting, though, that if a deceased died and let's say there was a loan and it was taken out in that year of death and in that particular case there, they hadn't actually entered into a loan agreement, but the company's tax return lodgment date hadn't come to light as yet. Well, the taxpayer hasn't had the opportunity to enter into a Division seven guideline agreement. The APRA is not obliged to do so. And so whilst yes, it's still an effective line back to the company, it falls outside of the scope of Division seven provisions. And so you've got those sort of areas through there. And if it happened during the loan and the estate was compliant on the way through, you know, the deceased was two. Again, you don't have that issue. But as an executor, if you sort of students the shoes of the deceased and you go on, okay, well, we do have this loan agreement. Are they retrospective years? What was non-compliant? You had that obligation to look backwards and go, well, three years ago, we failed to make this right. We need to go in a minute, depending on your amendment periods, because it's a real issue and we'll see. Often people will draft wills where they sort of, I think, give these lines, you know, either way. And they try to clear things up. And we just got to watch their, I guess, the commercial debt forgiveness rules, etc., and the implications that they could have on it. So a really, really important area to look at up on the other side, Robyn. You know, that's an estate asset and so that's an asset that could be called upon or should be called upon by the estate or the administration. It might be an asset that they pass across the next beneficiary like an upper until they've lost trust as opposed to calling it in and effectively maybe causing the trust to collapse. This is where it starts to get a little bit more nuanced and we need to sort of really sit down and have a look at what's going on.

Robyn Jacobson

With other thoughts. You talked about the commercial debt forgiveness rules if the loan is forgiven, but if it's a Division seven alone and it's forgiving, you could actually just have a straight deemed dividend and depending and on the estimate itself, my other thought was if your loan is big enough so you might have the beneficiaries, the family who think I we're going to be inheriting $5 million from the family member who's passed away. But it turns out that there was a $6 million loan back to the private company. So, in other words, when I say back to us, the money was went to them and that's a liability. So you may actually have an insolvent estate because by the time the loan is discharged, you may not have any net assets left over.

Ian Raspin

Also say whereby the shares in the company are being gifted to one party and the residual beneficiaries who thought they were going to get in. Your example, $6 million end up with a Coke bottle at of time that loans going back where they all went up one person.

Robyn Jacobson

So even if the loan is repaid which effectively depletes the value of the estate if they become the shareholders of that company, then effectively all you've done is convert a receivable in the company into, let's call it cash back. But if it's other shareholders who take over the control of that company, then the benefit of that line being repaid goes off to somebody else, as you say.

Ian Raspin

So it goes back to our early conversation around litigation. Now, this is the massive area of growth of litigation in this area, and that is if you're say you and your brother were in that scenario and it all went to you and your brother began, Well, I actually I should get everything this was never the intent. I've got to go and challenge the will. I've got to take the executor to court. If that executor happens to be one of our members, well, they've got to be in court for the next 12, 18, 24 months, whatever it is trying to argue that as opposed to focusing on their practice, unintended.

Robyn Jacobson

CGT, huge area when it comes to estates. And again, there's so much to unpack that we can't possibly achieve in our short time together that we of course have rules around the date of death being pre or post CGT post 85 we've got when the asset was acquired, how the asset was used. There are special rules for the CGT discount and of course we've got all our main residence issues as well. So and in fact you and I have run sessions together talking about mine residents. So this short time we have. What do you see as the key aspects or the key considerations when it comes to the maintenance.

Ian Raspin

Of things for practitioners to put in their mind? And that is that to the extent that is the main residence of the deceased at date of death, you get a market reset at that particular point. But one of the requirements is that it's not income producing a date of death. And so I had a case just this last week whereby, you know, it was a property mum had that she was living in her property, but the granny flat out the back was rented to a third party. So all of a sudden we have a problem because it wasn't primarily used for her date of death as a principal place of residence. So to that extent we can get that uplift. I think that's really important to look at. But then you've got to step back and go, well, what was the size of the property? We had one and Toorak of all places, and you go into our problems, it's going to influence the exemption size of two hectare exemption. Well, this lady had actually acquired just over two hectares of land and we put an African mansion down a track. And so, you know, point whatever percent of her estate was now subject to capital gains tax when her main residence was sold. And again, the amount of tax in that was quite considerable, let's just say just over six figures just on that small proportion. And again, if you failed to pick that up in an active audit, they didn't match with title officers. They lost more than two hectares executors going to where that and I can't go after the beneficiaries Brown's case 950 whatever it was they'll come after your cover. So it's about sitting back and going, okay, two hectares, is it under that? Yes. Do we get the market uplift? Yes. Were they a resident or non resident when they died? That changes the entire dynamics but one but yet again. And then looking at it and saying, well, proportional rules, you know, days that it was main results versus days it wasn't main residence and the ability to be able to access those provisions as well. Also very important. I think the other thing that I'll be saying there is that and a really interesting one that's often missed is that, you know, you have two years from date of death on which to sell a principal residence without triggering CGT as a concession. It used to be 12 months and often it's two years. They've now come out with a peg which allows you to say, Gee, six, 19, slash five, I think it is, which allows you to extend an additional 18 months on that in the Safe Harbor rules. So looking at those and sort of going well, we saw it as sort of two years. Do we now have another 18 months? Do we make those rules? If we don't, doing it's going to get a private ruling by the commissioner, you know, to protect that the parties that are actually involved, a really important sort of considerations as mine residency rules to step up to market value also attach themselves to any private residential property. So if you had a couple of investment properties that were pretty five that were owned by the deceased, now you get market step up as a daily death as well, but you get two years to sell them without capital gains as well. So you might be as so say three properties in my example without CGT consequences within two years, without a death.

Robyn Jacobson

In the situations where you don't get the market value, uplift in cost base for whatever reason, it could be that within fact got it high CGT property that wasn't solely a main residence, for example. There are going to be enormous challenges in identifying when it was acquired, what the cost base is. And imagine this three chains of muscle chains of estates. So, you know, I'm very good at my record keeping, but I know that plenty of people are not. And so when you got someone who bought it as the home is on the ever used it for their home but let's say they were renting out the granny flat at the end. Suddenly you can't use the market value rule on death. So in fact, we've got to go back and reconstruct the cost base. How do you manage that? What do you do with the records?

Ian Raspin

It's horrific. We had an estate for about three years ago and I think they had about 15 properties in this estate and they were all being try. And so I think we're in the fourth, we just heading into the fourth generation. But these properties have been a series of, you know, fairly quick deaths that had happened through this family. But those properties had all been used for different purposes through the years as main residence for different people and different things. And it's a matter of tracking that back and being able to work it out where it is. And I think a really important note to our members is to say that when you lodge a tax return, not only is the client saying it is true and correct, but so is the taxation. And so if you can't backtrack on that and I've had many a scenario where you can't you can get to the titles office from most jurisdictions and get a detailed research which provides you the cost base of the property, etc., not necessarily the duties that were paid on all the legal costs. Nothing around the swimming pool that was built in the backyard or capital improvements. You put together what you can and sometimes it's a matter of going to the commissioner and saying, look, vulture disclosure, you know, basically we've got everything we can here to pull together on this. But this is what we've got to and I'm a big advocate to say that, you know, adopting a more conservative approach, particularly, is the opposite. Personally liable is probably the better approach. And government commissioner putting a position up to say, well, look, basically this is the best that we can possibly do. Can we get some effectively coverage from this? We've agreed to these terms and therefore, can we pay the tax on the settlor and settle the estate administration without leaving the executor personally? But, Robyn, that that opens a paradox. There are issues, too, because these are historically, you know, lots of senior tax counsel around the country, etc., that do work in this space. You know, they watch these sort of voluntary disclosures to the ATO, and we've been out to settle millions of dollars worth of tax debt across Australia with the ATO on these matters, on many, many estates. And it's a bit of a change of practice in the eighties at the moment where they really push back on such voluntary disclosures around assist states, and I'm not sure whether that's an administrative practice, but somehow states have sought, according to within the aggregate, whether it's a broader issue that that in itself is relying on state administrations as those parties are actually now having to grapple. Well, we can't sign this tax return because it's perjury, but we can't administer the estate because we to be personally liable, that's going to clog up the judicial system in Australia as people go for court directions to be able to take themselves on that or they're going to continue fine with the ITII in trying to release those. So that's an area we're actively engaged in some discussions with the ACA at the moment, but if you can't sign it, it's not correct. You need to open up the door ways to try get that certainty.

Robyn Jacobson

As we say, we've fallen short on what we would like to have as the documentation or the tax position. Can you help us out?

Ian Raspin

Correct. Yeah.

Robyn Jacobson

Look, there is one shining light in all of this doom and gloom that we've been talking about and try to reconstruct records and those tax liabilities, those who pass away, who still owe a hex or helped debt. It's one of I can think of two things that go to the grave with you. Apart from any personal belongings, capital losses and tax losses cannot marry for to the estate or the beneficiary. So they go to the grave with you. Now, that's not a good thing necessarily.

Ian Raspin

It's very, very pertinent observation. As I say, too many tax practitioners where matters are referred to as post their work that send a message that they can't use those losses in the estate. I think.

Robyn Jacobson

They're gone. But so as you [  ] you help liability. So there has been some talk over the years about possible legislative changes which haven't proceeded. So the current law remains the case that when you die out, the liability does not pass to your estate or to any surviving beneficiary of the estate. It goes to the grave of you. It's completely white.

Ian Raspin

Now, it's an interesting topic. In the year of death, the executor still have to pay up to the date of death in a proportional sort of basis because the personal still life and they have it. You're right, the debt's written off. And you also make a good point. There's been many discussion around that's not fair. It's costing the Australian economy so many dollars and significant amount of money. But I think we need to sit back and this is where it always sort of starts to pull back on and to say, well, who are the parties that that debt is? And you know, we all think every day, you know, it's you know, when you turn 80, 90, 100, whatever, by accident or something, you're going to die. So it's an aging population that many has died. I a car accident 30 year old you know suicide 35 year old fire. All these incidents like that, young people die and these people are often just recently married. They leave a spouse, maybe two or three kids, you know, maybe a mortgage, maybe nothing, maybe maybe they were living on the brain, borderline.And there's an extent and there's a little bit of superannuation or a little bit of something coming in. So it's probably not a good example, but a little bit of money there that could help that family significantly. But if it has to go unchecked, it and that's why this thing keeps getting pulled back. But it is still very much a lot of discussion. Your 100% are on.

Robyn Jacobson

A bundle of issues to wrap up with things like control of entities. So we've spoken about how you might own shares in a company, but you don't personally own the assets in the company. So the role of the director, the trustee, the appoint, all those office holders that control entities, this doesn't automatically pass to the APRA, does it?

Ian Raspin

Not at all. And this is again where estate planning, particularly space, is really, really critical. I recommend going to an accredited specialist or a member of Step Society Trust. And so practitioners there, people that just do it's not general practitioners that I guarantee GP the documents need to be provided. You need to have a look at the trustees on the constitutions. How does control really pass? Is it possible to hardwire that in the will do you need to change, you know, the constitution of the company to be able to make this happen. And in a maybe and I've seen this happen to where, you know, the deceased is a sole shareholder and director of a private company that employs people, dies. How do you pay the staff? You know, if there's nobody in control of this thing, like how does this sort of get dealt with? And this sort of issue is live issue. And it's a matter of addressing this as part of estate planning and working out how it goes. Now, an example such as that, arguably, yes, the estate will inherit the shares once you get a grant, a probate three, six months later, you know, ordinarily you could then you have the shares you can vote your self in based on those shares as director. But you got my staff left. They've all gone walkabout. So I think it's really important to look at that. But also situations and we've had situations whereby there's a company in the state is no control there. But at the end of the day, you know, we had one here in Melbourne whereby the family thought this guy would support, you know, those $1.3 million in their bank account. His company, the estate got the shares. That's how we found out about it. But it was like, well, hang on a minute. What does that money come from? They all thought he was doing nothing since drugs, this is people trafficking where they come from and like, holy cow, who wants to be director of this thing? What liability or responsibility you want to take. So they sort of issues are really pertinent to be part of the estate plan.

Robyn Jacobson

What about digital assets, cryptocurrency, social media accounts, other digital assets that have wealth that are sitting in these accounts? To me, the control and being able to access those accounts is a crucial feature and very much an emerging issue because a lot of people are getting into this space.

Ian Raspin

Then very much an emerging issue and. You're right, the control of those things. How do you get that? You know, Facebook, for example, I believe it varies jurisdictions, you know, they block that. They won't pass it on to an executor. Okay. So as far as what sorts of things in there that all of a sudden you can't access, so you're not necessarily dealing with Australian law, you dealing with different jurisdictional law in relation to the grants of access and agreements that people have just ticked as they are into these environments that they haven't read the detail or ever considered. And if there's some real intangible assets within some of these areas, that needs to be considered as part of the estate plan, it's that about access. You know, you sort of turn around and say, well, somebody has got a few Bitcoin, you know, IP worth half a million or ten, 20 mil, who knows? You know, but how do you pass that across? How do the coding to be able to get access to that on the Keys? And you know, there's a law conference just last week, two of them actually speak at regular law conferences and both conferences. There were there was a speaker talking exactly around this and that we're recommending to lawyers, do not hold the keys to these things in your vote. You do not want to take that responsibly only so these sort of things need to be brought to the table. Our members are understand, I hope, how you know, cryptos taxed, etc. but these are real, tangible assets and they can be some real value in a it's a nightmare. That's an entire conversation at a time.

Robyn Jacobson

It is. Look, so is this next point aging population. So challenges in the next, let's say 10 to 20 years. What do you see as the major issues there are?

Ian Raspin

Look, we've just on the cusp of the largest generational wealth transfer to ever occur. 2019. The wealth transfer by succession in that year was just on $107 billion. By 2050, they're going to say it's projected to be $224 billion one year because all of a sudden you've got all this intergenerational wealth transfer going on. We have a people in Australia, a very multicultural society, so we have assets, beneficiaries, executors, all sorts of things in and out of this jurisdiction all over the globe.  And we're one of the most multicultural countries in the world. So that into place. And so to me it's really the issues and the challenges in the next few years is one of the biggest growth areas litigation going on biggest in the generational wealth transfer a recurring the complexities around structures and things that are people have got their overlay with international jurisdictional sort of play on all of these across all of those parties involved in an estate and the assets and tax law that really needs to be looked at. You know, to me, the sister states, because it was kind of it was logical at the time you and I formed part of Division six antitrust provisions, but it doesn't necessarily make sense to be there. You know, we because of that, we fall into things like family trust elections. We fall into nonresident estates. So I could be a resident of Australia.I point somewhere in Singapore as my executor and my state becomes a nonresident estate and that opens up an entire paradigm of new tax issues there. Go to the UK, the residents of the estates determined by the residents to the deceased. So that would stay in Australia. So I think there needs to be an overhaul. I'd like to see special provisions invoked around assisted states in Australia. I'd like to see the domicile put back here, Australia and particularly with a risk to our members around this litigation. It is absolutely horrendous. It's an exciting area, it's a growth area, but there's a lot of a lot of risks and a lot of complexities in there that people need to be aware of.

Robyn Jacobson

And this is within the around 40% of Australian adults having a valid will.

Ian Raspin

And how scary is that, you know, because you love the people around you, but yes, there are rules of intestacy in which who's going to get what? But they need to go and deal with that. If you want things to be uncertain direction, go make a well. It's not hard and I deprecate our clients in our clients, our members, you know, representing taxpayers. So these people are your clients, you know, they're paying you money. One question whether you don't have an obligation to actually try and point them in this direction, you know, go get a will, get professional advice, deal with these matters. Just reverting back to your earlier comment about, you know, what else I see playing out, I think that you'll see a death tax play out again in Australia. I'm not an advocate for it. I think if you look across the OECD world, you know, a lot of countries are actually pulling back from the administration of death duties, you know, gifting provisions in place as well for these sort of things. And administrative costs of running those and all these other jurisdictions often outweigh the benefits of these areas. You know, if you got a 0.5 or 1% move to GST, you might get a similar outcome here in Australia as opposed to the administrative burden of doing the other. But I think politically there will still be a push for this. It does keep raising its head. It's tall poppy syndrome, the haves and have nots, the minority, you know, taxing the upper echelon to to death duties, etc., sort of politically makes sense. It's an election platform or it was an election platform that was lost on a few years ago. I do think we'll see that surface, but it's just demonstrated anecdotally around the globe and I've said countries that do do these things, but it just doesn't work the way it should.

Robyn Jacobson

So and you're going to be speaking at our Death and Taxes conference in Brisbane in early October.

Ian Raspin

That's correct, Robyn. It's a fantastic annual event. I'm really looking forward to that. I'm sitting on a panel up there and I'm really looking forward to the event two day event in Brisbane and highly recommended to our members.

Robyn Jacobson

Terrific look. Thank you. And your insights as always have been so valuable and thank you for your time.

Ian Raspin

Nice to be involved. Thanks, Robyn.

Robyn Jacobson

Thanks for listening to this episode of TaxVibe. I've been chatting with Ian Raspin, managing director at BNR partners. To keep up to date with TaxVibe, be sure to subscribe, rate and review wherever you listen to your podcasts. If you'd like to connect with us, you can find us on socials. Not a member of The Tax Institute, join a collective voice of 10,000 practitioners at the heart of the profession and find out what the best tax professionals have in common. Visit TaxInstitute.com.au, we look forward to you joining us next time.

Robyn Jacobson

Hello and welcome to TaxVibe, a podcast by The Tax Institute. I'm Robyn Jacobson, the senior advocate at the Tax Institute and your host of today's podcast. We love the vibe of tax, and here at The Tax Institute we do tax differently. I'll be chatting with some of the tax profession's great thought leaders who will share valuable and practical insights you may not hear every day. We hope you enjoy this episode of TaxVibe.

I am joined by Tim Loh, Assistant Commissioner and Tax Time spokesperson at the Australian Taxation Office in the Individuals and Intermediaries space. Tim's role is focused on understanding the risks and behaviours that drive noncompliance and designing a strategy to address those concerns with the aim to reduce the tax gap and make it easy for individuals to comply with their tax obligations. Prior to joining the ATO, Tim worked at one of the world's largest mining companies, two large international law firms and a big four accounting fair. Tim holds a Master of Laws, Bachelor of Laws and a Bachelor of Commerce. Tim is a chartered tax advisor and is admitted to practice in Victoria and Tim, this is not your first rodeo with us. So welcome back to TaxVibe.

Tim Loh

Thanks for having me, Robyn. It's really great to be here again.

Robyn Jacobson

Look, it's that time of the year again. You're on your usual media circus. You've been chatting to anyone and everyone who listen about tax time. So we're very pleased to be here today and have a chat about what this means for taxpayers and for the profession. So what are the key messages and why is tax time important?

Tim Loh

Yeah, thanks, Robyn. And I've seen you on the circuit as well, so it's fantastic to see and hear your voice as well. You're incredible role model in the tax industry. So it's great to see you on the look out over the next few months and millions of Australians will be watching their tax returns and my job as the spokesperson for the ATO is to get out there on the TV screens, airwaves and print to help people get their tax returns right the first time. And we know for many interacting with the is a once a year occurrence if you don't live and breathe tax like we do. Robyn Communicating these key messages means taxpayers are aware of any key changes and focus areas and can avoid mistakes when it comes time to lodge.

Robyn Jacobson

Look, we get rather excited about tax all year round, but for these people it is a once a year occurrence. So to try and get together and get all that information and all the documents which we're going to run through, it's something that people do tend to put off. Others will jump in in the early days and lodge so we can chat about that. So how long does tax time typically run for?

Tim Loh

Well, as you know, text time begins on the 1st of July. And for most self preparers, they'll need to lodge their tax return before the 31st of October of this year. Now I have access to later lodgment dates if you are up to date with your lodgment. But those planning on lodging with an agent will need to be on the books of a registered tax professional before the 31st of October. So if you do use an agent, you typically have until May four. It's really important that if you've got all your prior lodgment lodged on time already.

Robyn Jacobson

And just on that point, Tim, it's really important that taxpayers understand they may have a delayed or deferred lodgment date of, say, 15 May if they're lodging for tax agents. But that doesn't mean they should be turning up on the 13th of May and saying to their agent, Well, I'm here, make sure you can lodge within two days. The purpose of a Staggered Lodgment program is so that agents can manage their workload over that entire 1011 month period. So I really encourage people not to leave it until March, April, May, to turn up at their age and say, Well, here I am, that actually try and get to their agent earlier in that period.

Tim Loh

That's right, Robyn. So it's really important that, you know, you've got all your information ready. You really organize it present to the registered tax agent, all that information so they can streamline that. And like you said, don't leave it to the last minute.

Robyn Jacobson

I imagine the tax office does a lot of preparation well in advance of one July. So what are the some of the things that The Age has been doing this year to get ready for tax time?

Tim Loh

Yeah, look, it's a really a year round job for us. As soon as one tax time ends, we're already preparing for the next one. I know a couple of colleagues already who are already preparing for next year's tax on it for 2024. And what we are doing at the ATO is we're obviously constantly trying to work and build and improve our systems through updates and testing. You know, the tax agent community is a really important partner for us when it comes to that testing. And we have a range of new data matching technologies that we're trying to use to help assist with incorrect reporting and making sure that tax agents have access to that so we can actually help reduce the tax gap. Now, leading into tech start, we develop a range of communication and media activities to help educate taxpayers and reach the tax agents, making them aware of any changes. Our focus areas and additional resources we have available to support them and help understand their obligations and eligible deductions. They always are constantly working to improve our online services. We anticipate that during the tax time period, particularly through July into September, of course, centers and service centers will be in high demand and we may see some increase waiting times. We know that most people call about these issues and some of these issues particularly can be managed through our online services. So that's something to keep in mind. If your client can use the online services to view their income statement and check the progress of their tax return, for example. And while tax professionals can use online services for agents, among other things, check your client's progress and return. Set up payment plans if they're in a deposition lodge business activity statements and also report single touch payroll as well.

Robyn Jacobson

Tim, is there a key message that profession should hear as to their role in how they can assist the ATO or making tax time run more smoothly?

Tim Loh

Yeah, so look, from our perspective, it's we've got up to date information. Our systems, it's really important that you check that information out on our system so you can really plan in terms of their workloads with your clients. You know, this year, remember mining tax professionals to make sure their clients preferred financial institution details are included on all returns.And this includes when you lodge multiple returns and for debit assessments as well. So when the information is left off a client's tax return, their financial institution details will be removed from their income tax account, which means any refund or future payments, including interest from early payments, will be issued as a check, which we know is in anyone's preference. Right. We also recommend that tax professional utilize any pre-filled data that is available in the preparation of the tax return at this minimizes their errors and actually save you time as well. Talking to clients to understand if any of their circumstances have changed. For example, do they have a second job or side hustle? That's really important in terms of getting the tax return right the first time.

And finally, the terms and conditions for online services agents have been updated. From one July of this year, agents are required to complete verification prior to providing tax or agent services for those clients using IT systems. As you know, Robyn, you need strong client verification that helps take tax professionals, clients and Australia's tax and superannuation system from misuse and abuse due to identity theft and related issues that we've seen quite a bit over the last 12 to 18 months.

Robyn Jacobson

Not more about identity theft and scams later, but it is rife and right through our community. We hear every day of people that are being scammed and cyber attacks. It's it's just awful. So I think on this particular point, it's important to mention that agents shouldn't be retaining these documents per say. So you don't want to take a photocopy of your client's driver's license or their passport and keep that on your files, physical or virtual, in an electronic form.

Because if that information is stolen, whether it's a physical break in or something where it's a cyber theft. So there are lots of software solutions available today where practitioners can verify this information, but it's not actually storing that off the site. So it's something for them to consider.

Tim Loh

Absolutely.

Robyn Jacobson

Right now, terms of lodgement stats have you got some rough figures on how many tax returns a year we lodge collectively across the country? It must be many millions.

Tim Loh

Yet to date, 3 million income tax returns have already been received this year, which surprisingly is an 8% decrease compared to the same time last year where we had received 3.3 million tax returns in total. Last year we received nearly 15 million income tax returns and when it comes to lost income, know 67.8% of those income tax returns were lodged by REG the tax agents and the 32.2% were lodged by self preparers.

Robyn Jacobson

So it's really interesting. It's often been maybe more than two thirds, even three quarters of individuals use the tax agent. And I think the figure, something like 95% of business taxpayers use the tax rate so that 2122 figure is suggesting it's down slightly. So it'll be interesting to see what the data looks like for the 23 year amount.

So that's in.

Tim Loh

Yeah. It will be interesting to see, you know, from our perspective, we're always, you know, big believer in choice whether you want to do it yourself or whether you want to use a registered tax agency, it really is up to you, and particularly if you've got more complicated affairs. We do recommend using a tax engine to help with your tax return.

Robyn Jacobson

Absolutely. And look for the world that I live in. We certainly know how complicated the tax law can get. So, yeah, there are minister. I think. Can be extremely useful. So let's turn our minds now to what's new this tax time. There are quite a number of changes that taxpayers need to get their heads around.

Tim Loh

Yeah, look, there have been a number of changes, Robyn. That's right. The first one that a lot of people are talking about is the working from home expenses and how you can calculate that to claim working from home deduction for the 2020 223 income year. There are two methods to choose from the actual cost method and the revised fixed rate method when it comes to the revised fixed rate method from the 1st of July of last year to the 30th of June this year, we have the revised fixed rate method that would increase the rate from $0.52 per hour to $0.67 per hour when you work from home and the key change that's happened, there are a couple of changes that happened there, but one of the key changes is no longer either dedicated home office space or Home Office to use that method. So you could be working on the couch, the kitchen bench or the dining table, and you can access that method.

Robyn Jacobson

So many more people are working from home permanently. Now, whether that's five days a week, seven days a week in some cases, or whether it's just two or three days a week, the idea that you're no longer bound to an office and I think this recognizes that post-pandemic there are much more flexible work practices.

Tim Loh

That's right. One of the reasons for updating the method was to reflect the changes coming out of the pandemic in the way we work. And one of the things we wanted to change was making sure more people had the ability to access the revised fixed rate method. Then one of those big changes was to remove that dedicated workspace requirement.

Now, in terms of what else has changed with the working from home expenses, we've also changed what expenses are included in the rate. So the right now includes the cost of any additional running expenses. So things like energy costs as well as any computer consumables, stationery and phone and internet usage as well. On top of that method can also claim separately for the declining value of any depreciating assets that you purchased during the year that you use to work. Those are things like your laptops and home office furniture that you might have purchased during the year. Now, most importantly, the recordkeeping requirements have also changed. Using this revised fixed rate method, the clients are required to keep a record of the number of hours they've been working from home so you can use a timesheet or diary entries. So document the number of hours that you've been working from home. Now, one thing we have done for this year as a transitional provision is allow for a representative period from the period of 1st July 2020 2 to 24 February this year. And you can just use effectively a representative periods of four week diary or timesheet entry to reflect that period. But then from one march of this year to the 30th of June this year, you need to show the number of total number of hours using that diary or timesheet entry time.

Robyn Jacobson

It's also important to note that this requirement to keep a record of actual hours is ongoing. So certainly for the period one March to 30 June for this tax time. But as we move into the 2324 year and onwards, that requirement to record actual hours will be ongoing.

Tim Loh

That's right, Robyn. So it's really important that you've got good record keeping always on the TV or radio, same records, records, records and you know, having good records gives you the flexibility to choose the methods that suit your circumstances the best. Right. So you may want to choose the revised fixed rate method used to calculate that we've got you on the show or speak to your registered tax agent that might give you a particular result or the actual cost method, if you've got really good records, can give you a potentially a better result. So it really is up to you. But if you've got really good records and as you suggest, probably keeping a record of the number of hours you've been working from home, the receipt for anything you purchased during the year that will give you maximum flexibility to choose the method that gives you the best result. Now, one last thing I wanted to mention in terms of record keeping was any of those additional expenses that you have incurred. If you are using the revised fixed rate method, just make sure that you've got a copy of the phone bill, electricity bill or an Internet bill in your recordkeeping suite. Now, more details about it on our website at update forward slash I.

Robyn Jacobson

Thank you Tim. Look I'd also expect there would be an inverse relationship between people that are claiming travel expenses and working from home expenses. In other words, you can't have it both ways. You're either traveling, in which case you're not at home or you're at home. In which case you're not traveling. So I would expect that if taxpayers had claimed significant working from home deductions at the height of the pandemic and they normally do a lot of travel for work, that their travel expenses would start to increase. So maybe the employer is covering those costs for them and they're working from home. Claims would drop down. So people just need to be mindful that this sort of relationship is noted by the ATO. And if you've got someone is claiming high travel expenses and high working from home expenses, that could be a red flag raised.

Tim Loh

That's right. You know, everyone knows that you can't be in two places at once. Men can't be in two places at once. And what we say to people is, don't just copy and paste loss use claims. It's really important to look at your facts and circumstances. And like you said, we're tracking all sorts of different records. We do see the trains much busier between Tuesday and Thursday because employees of US employees are coming back into the office. So yeah, absolutely right. You travel expenses might go up to the extent it's not reimbursed by your employer, but it's really important just to look at your particular facts and circumstances, especially you might have even changed jobs or have a second job, that it could be different expenses that you might be able to claim. So copy and paste, you might be undercutting your own tax return because you've just been copying the previous year's claim. So it's really important to put your facts and circumstances.

Robyn Jacobson

All right. So what else is new or different this year?

Tim Loh

Yeah, two other things that have changed this year is on one July of last year, the requirement to exclude the first $250 of certain self-education expenses has been removed. This change applies from 2020-2023 financial year onwards. And the second thing that's changed is for those who are eligible to claim those cards, Spencers, the cents per kilometre method, if you are using that method, has increased to $0.78 for the 2020-2023 income year. So that was $0.72 previously. So that's quite a decent increase as well.

Robyn Jacobson

It is. And look really good to see that old 250 rule being removed. Most people wouldn't understand it was actually a legacy from some changes that were made way back in the early to mid eighties. This just remained in place and it really shouldn't have been in place all these years. So that is now gone and that's good to say with the cents per kilometer. If anyone's thinking about car or engine size, that's irrelevant now. It is just a flash cents per kilometre. And I think I'd also just point out to everyone, just make sure you're picking the right rate for the right year. We're now sitting in the 23-24 year, but lodging the '23 returns. So make sure you're using the rate in your 23 return being the $0.78, not the $0.72 from the year before or the $0.85 that now applies that this current financial year.

Tim Loh

That's right, Robyn. A really good tip.

Robyn Jacobson

Also worth noting with electric cars, the ATO has provided some guidance around what sort of rate per kilometre can be claiming working out your electricity charging, because clearly you're not going down to the servo and filling up your fuel tank. So the ASIO's released a draft package which is 2023 D, one which puts forward a proposed rate of 4.2 cents a kilometre. Now that sounds really low when you compare it to the $0.85 for this year or the $0.78 that we'll be using for the '23 year. But this is really about working out the FBT aspect for employers who provide a car or for those who are using the logbook method. And this enables you to work out how much electricity charge you might be using because it's very difficult to keep track of this in practice. But I just want to point out to everyone that you can't claim your 4.2 cents for these electric vehicles on top of the $0.78 that you might be claiming under the cents per kilometre method. So you've got to make a choice which method you're going to use.

Tim Loh

Yeah, that's a really good call that, Robyn. And it's really important that you don't you do double dip in terms of the deduction methods that you're using.

Robyn Jacobson

All right, So let's turn now to record keeping, which is, I've got to say, the dullest part of tax. Even as we get excited about tax, can't get excited about record keeping, but it's a very important part of the tax process. So what sort of advice can you offer to people in this space who are wondering what records they should keep or how long ago to keep them for and how to go about it?

Tim Loh

Yeah, you know, I'm going to sound like a broken record, but it's red records, records, records. Robyn And if your clients are planning to claim deductions, you need to have records full stop. And these can vary, obviously, depending on the type of expense that you have. And you can use the information on our website to help guide those conversations with the clients. Now, if your individual sole trader clients want to, I would suggest using the ATO, the actions tool. It's great. It's a great place to have all your receipts in the one place. And we are the records as well. And when it comes time to lodge, they can easily send them to the tax agent or if they are self-repair, I can upload it into my tax. So I always say that's a really good place to keep your records. Whenever I talk to people, everyone's got slightly different record keeping processes. You know, when I speak to a number of people, they sometimes have a folder in their email account labeled Tax. That's another way in which you can keep all your records. But the key thing is, starting from the 1st of July, making sure you've got those records, and then when you come to lodge your tax return, you're not looking around in the old shoe box for those receipts or manila folder here or the glove box in the car. Having an all in one space ensures that you're not rushing when it come to lodging your tax return. And then you can also maximize the deductions you're entitled to nothing more, nothing less.

Robyn Jacobson

The issue is often spoken of three golden rules, so we should roll those out again to remind everyone what are the three golden rules when it comes to record keeping?

Tim Loh

Yes. So when it comes to record keeping, you must have spent the money not be reimbursed. Second, the expense needs to be related to your work so they can't be a private component to it. If there is a proportionate. And the third is making sure that you've got good records or receipts, the best form of records to have when you ignore deductions like.

Robyn Jacobson

The many years the shows put together some very useful tax time toolkits. I think the actually loves the alliteration here with all these trades. So what do these tool kits having them? How are they useful for taxpayers.

Tim Loh

When it comes to these tool kit? So what we try and do is we're not about to audit people when we need to. But, you know, our preference is for people to get it right the first time. We always talk about prevention before correction and making sure that people have the right information so they can actually get their tax return right, whether they're lodging the tax return themselves or using a registered tax agent. When it comes to the tax agents, we want registered tax agents to help the clients get it right the first time. So we're all about producing these tax time tool kits to really make sure that people, I guess, get it right. As I said before, the first time. And so we've got a number of different toolkits that are available this tax times. We've got a regular tax time tool kit that helps so preparers work out what deductions they have. We also got nearly 40 occupation guides to help people get that right in terms of what deductions that they can and can't claim. So registered tax agents can use that as a guide to help them educate their clients about what kind of claims that they might be able to claim when it comes to lodging their tax return. When it comes to investors. We've also got an investors tool kit as well, which is a really great useful resource for anyone who's got a rental property investment as well as any investments in shares crypto as well. So my box is to really have a look at those types of toolkits. They're really great resource and they can help facilitate a much more well rounded conversation with the clients as well.

Robyn Jacobson

I'm not sure how routinely the ATO does this, but we've certainly seen cases where the ATO has engaged with the employer. So for example, if there's a taxpayer who's claiming a higher amount of work related expenses and then they speak to the employer and the employer says, no, they don't travel or No, they don't need to carry that for work or whatever the case may be. So, there are occasions where you may engage with the employer or other third parties to help establish the profile of the taxpayer or verify what they're saying is correct.

Tim Loh

Yeah, this can happen on occasion. You know, our preference is you already have information to substantiate your clients. As I said before, it's all about the records. If you've got the records, there's nothing to worry about from our perspective. But typically we find that when we have to progressing to that direction, the taxpayer doesn't have those records and we don't have those records. Life becomes a lot more tough. And we go, we're going to go through things with a bunch of Australians want to know that people are doing the right thing. So it's really important that you have those records. But like you said, you know, there are certain situations that will go in that particular direction to get that substantiation, to corroborate the claim that people are making their tax returns.

Robyn Jacobson

A quick anecdote. I was in one of the major department stores speaking to one of the sales assistants in the handbag department and these are the ones that are all chained up, the really extensive ones. And I was looking around and having a chat to this lady about the rate of theft in this store. And she didn't tell me how much is stolen or quantified, but it just gave me a sense that it is a substantial cost for retail businesses. And it just made me think if you look around the store of all the goods that have to factor in the cost of theft, they have to price all of their goods accordingly to cover that cost. So I think it's the same with tax. If everybody paid exactly the right amount of tax that they should be paying, potentially we'd all be paying less tax because the government wouldn't have to cover the cost of evasion and avoidance that's undertaken. So that's an interesting aspect about people that think, oh, well, someone else is doing better out of this, so I'll just claim this because no one will notice the ATO does notice and it does affect the system as a whole.

Tim Loh

Yeah, that's spot on Robyn. And I always say you know when you over claim incorrectly by $100, if everyone does that it's about $1.5 billion. We're talking a lot of schools, it's probably a hospital, you know, in terms of operational costs. But, you know, for schools and hospitals and all the public services that we rely on as a first world country. So it's really important that people understand that it's important to do the right thing just because someone else is doing it doesn't mean you should do that. And I think the commission feel comforted by the fact that we are making sure that people do the right thing at the ATO and we will come down on people who are deliberately gaming the system.

Robyn Jacobson

You remember that series of ads in the zine? Just because the traffic was doing it doesn't mean you should as well.

Tim Loh

Yeah, that's right. That's right.

Robyn Jacobson

So it's interesting the increasing use and understandably this use of data and we've seen for many, many years now the ATO using data matching projects where they will obtain data from a third party and then extract certain information or run certain tests through it and match it up to what's been lodged in these things don't make sense. So some practical examples of this. There are some projects underway at the moment with landlord insurance. So the ATO is going to the companies that provide landlord insurance, which tells the ATO who owns a rental property, and then that can lead you to inquire about if the rents are appropriate or deductions are appropriate or whether there's a capital gain on the sale of it that's been properly declared. You're going to the banks to look at who's obtaining loans for obtaining residential property and again, whether if that's a home, they shouldn't be claiming anything. And if it's a rental property, is that being done properly? There's also a current project underway for motor vehicles. So the ATO is going to all the registration boards all the way down to Victoria. We call it VicRoads, of course, and understanding who owns a vehicle and that's a really good one because if it's owned by a company or trust, then the obvious question is how is the FBT looking if it's owned by an individual, well, do they use it for work, in which case it's okay that there are claims being made, but if in fact it's not being used for work, why are claims being made? So I think there's a whole series of questions that come out of this. But when I look at the scope of what the ATO can gather, so it has information, mobile phone, metadata, sort, it need to be making a phone call for the ATO to know that my phone's connected to a particular tower. And we know, for example, in criminal investigations the police are using this increasingly to place people at a certain point in a certain location. So you come back to superman earlier comment. He can't be in three places at once. Well, how can I be on the phone in a holiday beach area or a vineyard area when I'm claiming to be meeting a client in the city and therefore claiming some sort of tax deduction relating to that meeting? So with passport records, if I'm claiming I'm in the country using my car for work purposes, but my passport shows that I'm voluntarily out of the country, then questions need to be asked.

Tim Loh

Yeah, that's right, Robyn. And I think you touch on a really important point, which is we are using data a lot more, both from a compliance perspective, as you pointed out, but also we want to use it from an education perspective as well. As I said before, you know, it's all about prevention before correction. We want people to get it right. The first time we are in the business of auditing everyone, we are in the business of making sure people get it right. The first time. So for us it's about how do we make it easier for people get it right. First time there's an education component to it, but also, as I mentioned before, there is a compliance component, but we only want to use that component for the people who are deliberately doing the wrong thing.

AD BREAK

Robyn Jacobson

All right. So what are your top areas that are being focused on for 22, 23 returns? So this is the 23 income. Yeah.

Tim Loh

Yeah. So we talk obviously a lot about expenses, work related expenses. You mentioned before around the travel expenses and not copying and pasting losses claims. That's a really important area for us. It will continue to be important area for us this financial year and beyond. We've also focused on capital gains tax. We are seeing people make errors in relation to disposal of property, particularly around the main residence. So we are seeing a lot more people rent out a room in their main residence. So we're just reminding taxpayers there are capital gains tax consequences when you do sell that main residence into the future. So just making sure that got good records in place. The other thing we're focused on is rental property deductions, in particular for rental property investors. We are seeing nine out of ten rental property investors get it wrong. So it's really important they get it right this time.

Robyn Jacobson

That's a really high figure. Nine out of ten returns.

Tim Loh

It is a very high figure. It's something that we're very conscious of. And of these returns, 87% are prepared by tax agents. So what we're saying to people is particularly agencies, to ask those extra questions of a client in relation to the state of affairs to make sure that they're giving you the right information. It's really important that you do that because we just can't have those mistakes being made year on year. And one of the key things that we do see people make mistakes with is just in relation to rental income being left out. So for example, some of the things that we are seeing able to claim the matching amount after deductions from the annual property management statement rather than the gross amount and then claiming deductions. Again, it's another example of double dipping, right? So it's really important that you just take the extra care into making sure that the right income's been included. There isn't the double dipping of the deductions and the client is giving you all the information that you need to make a proper assessment particularly, but also around relation to introductions as well, where there's a bit of refinance you've done for private expense. It's just really important that you get this right because it is an area, as I said before, that we're really focused on this year.

Robyn Jacobson

And this is quite dynamic at the moment. And I mean that because we've had all these months of rate rises over the last 14, 15 months now, that's had an effect on, of course, potentially pushing up negative gearing losses, but it's also going to be an increased cost along with everything else going up with the cost of living and insurance and rights and so on. So rental incomes are also going to be going up. So there's no one size fits all in terms of the outcome. I've got to say, for taxpayers, some might have bigger losses, some might have more positively geared income coming through. But my point is that I'd expect to see changes this year compared to last year's return.

Tim Loh

That's right, Robyn. That's exactly right. So, yes, obviously the interest rates rises will potentially have an increase in terms of the deduction side. But we also know that there is a shortage of rental properties and the rental incomes have gone up as well. So we expect that to increase. But like you said, it really depends on the area city involved in the location. So like you said, it's really important to understand that your tax return will be different this year and the agent is really important just to make sure that you ask those questions of your clients to make sure they can get it right the first time.

Robyn Jacobson

That one on the net rent is really interesting and I could see how that could happen because if you own a property and it's managed by an agent, they of course take their agents fee and certain of the repairs and maintenance that they arrange out of that gross rent. So if you were simply relying on your bank statements and you went through your used bank statements and picked up the rental figure, yes, that will be the net rent received from the agent. So that's why I think it's really important for agents, international tax agents, to be asking the right question of their clients to say, would you give me this rental income figure? But as you said, Tim, is it the gross or the net figure? And maybe some taxpayers just don't realize that they have to declare the gross amount, not just simply what turns up in their bank account.

Tim Loh

That's right, Robert. So, yeah, it's just really important that you take that extra care. Like I said before, it's a real strong focus area for us this year and going forward. So people need to understand that you've got to get it right the first time and that's why those investor toolkits are really important kind of access. It's got all the information there for you to make your job a lot more easier and have those conversations and ask those questions of your clients as well.

Robyn Jacobson

One more mention on property before I move on to the next topic. But holiday homes, we've always had issues with people potentially not allocating expenses when they use it for private use or during mates rights or things like that.

Tim Loh

Yeah, look, it's that's again is another focused area, you know, holiday homes, Robyn, it is important to distinguish between a rental property and a holiday home. People can't claim deductions for those periods. They are producing income which includes when they use a property for private purposes with a renting out mates at mate's rights. And when the property isn't advertised in a way that is desirable for tenants.  So for example, we've seen properties stipulating a three night minimum stay, then every Sunday it's blocked out, right? So those are things that we're looking at and we'll be taking a really close interest this text on.

Robyn Jacobson

Right. So onto capital gains tax. It's been around many decades now, but it continues to be a complex area. So why the focus this year.

Tim Loh

When it comes to capital gains tax? We are seeing people make mistakes on it. And if your clients do have investments like shares, crypto management investments or rental properties, they need to tell you when a CGT event occurs. So that includes things like selling assets, share buybacks, transposons, exchanges of crypto gifting, typical situations where you no longer the legal or beneficial owner of the asset. So it's just really important to ask those questions when you are speaking to clients now, when it comes to selling property, as you know, Robyn, some of your main residence is exempt from CGT. But as I've said before, if you are renting out a room through Airbnb or stage, it's important that you have good records and when you do sell the property there are some capital gains tax consequences that you need to work out, which can be quite a complicated calculation. So I would suggest speaking tourism, taxation about that one practical tip I have is typically getting a market valuation done at the time. So you've got a starting point to calculate that CGT rather than waiting to eventually sell out potentially years in advance, do that again. It's those records which I keep talking about. I do sound like a broken record now, but that is really what it's all about when it comes to working out what those capital gains tax consequences are going to be coming out of that. The other thing to note is that we've got a new fact sheet that we brought out in our investor toolkit. As I mentioned before, you can find that out today for such a fact sheet. So it's really important that just to finish up on this particular point that we don't want your clients to fall into the trap of thinking we won't know this if we sell an asset for a gain and don't declare it. As you said before, Robyn, we're using a lot more data from different sources. So we've got the residential investment property loan data, over 1.7 million individuals, but the landlord insurance data as well. So we've got different data points that we're using to cross-match against the data that we have on our systems. And then we use that to make sure we cross-check against the information that's put in the tax return as well.

Robyn Jacobson

Cryptocurrencies is a burgeoning area and we've got lots of tax payers getting into this space either for the first time or have been doing it for many years. But the point is there are still CGT implications for dealing in crypto and if you're going to exchange one type of crypto for another, it's no different to exchanging some Telstra shares for BHP shares, for example, CGT that still get triggered. So try to get that message through. How, how's the ATO going with that particular issue?

Tim Loh

We think of these things similar to kind of other investment assets, right? So we think of it like shares in many cases. And as you were quite rightly pointed out, Robyn, there are capital gains tax consequences when you sell, swap or change cryptocurrency. Now everyone knows that cryptos fluctuate a lot over the last 12 to 18 months. So some people would have made a capital gains, some people would make capital losses. But if you have held some of your crypto for at least 12 months or more, you can get the 50% CGT discount. So that's something that investors should be aware about. The other thing to note is with any capital losses that you made into your crypto, you can offset any other capital gains not just from crypto but any other message that you have. So just something for investors and clients and savings to think about when you lodge any tax return this year.

Robyn Jacobson

But you can apply those capital losses against your normal income like rent or interest on your salary.

Tim Loh

That's right. Robyn. Yeah.

Robyn Jacobson

Now side hustles, gig economy. There are lots of names for this particular part of the economy. What are you seeing in this space?

Tim Loh

Yeah, we've got a lot of data that's showing that nearly a million people have multiple working jobs. So that's about 7% of Australian workers working two or more jobs or supplementing their income with these side hustles or gig economy activities. And look, there are obviously new and different ways to earn an income these days. You can be driving movies or you could be making content on Instagram and you can get some dough out of that. So it's really important that whatever way you were earning your money, the tax obligations are exactly the same. Clients need to make sure they keep accurate and complete records and declare all their income in the tax return. Now, if new clients already come through continuous and repeated activities for the purpose of making a profit, that's going to be considered a business. And it's really important, as I said before, to declare that income into your tax return. You know, some things aren't going to be considered to be running a business if you're doing the annual garage sale of some old items, that's probably not going to be a side hustle. You won't have to include that in your tax return. And one thing to kind of also note in this is if you do have clients earning income, that isn't just money. So could be just goods or services. They receive tips or gifts, you know, subscription payments or fees. That's considered to be income. I need to include that in the tax return as well. And one thing that we have noticed is people have been getting tax bills. And part of the reason for that is people with some of these side hustles aren't having any tax withheld at the time they receive some of these payments.

So that's resulting in a large tax obligation at the end of the year. So it's really important that you have a think about signing up to the page. You go withholding installment regime to make sure that you are withholding tax on an ongoing basis so you don't have a big tax bill at the end of the year.

Robyn Jacobson

Really good advice, too. And we certainly see instances and it's reported across the media a lot lately with people with unexpected tax bills and some of these people have formerly been employees where all this was taken care of them. And when you go out on your own, you are now responsible for your own tax position. So if you've not been paying installments along the way through Pay I YJ and you've no longer got an employer taking withholding amounts out of your salary, then yes, you will have a shortage of tax paid during the year, which means it's got to be paid almost into the return. That's when some of the surprises happen. But also it can lead to unexpected steps that people aren't prepared for. And of course, they're not getting super support because there's no employer to pay that anymore. So they also need to think about should they be putting some money aside for their own super. And it's difficult because often gig economy, they're on relatively incomes.

Tim Loh

Yeah, that's right, Robyn. And you know, you're spot on in terms of what you just said when you are with an employer panel where you think it's kind of like living at home, your parents typically pay for everything, but then when you move out of home, you've got to take more responsibility. And it's really important that you put aside money for your tax obligations. And as you said, a really important point when it comes to superannuation, consider whether you need to keep some way for when you retire, which is always a bit hard to do because it's obviously many years into the future. But super is a really important asset for your retirement, so it's well worth having a think about that and speak to a financial advisor. That's something that you're interested in doing.

Robyn Jacobson

We know that there have been some taxpayers with unexpected tax bills this year. Part of this that I can't say it's wholly attributable to this is the removal of the low and middle income tax offset, which ended on June 30, 2022. Now, whilst it ended that date, people of course, were still seeing it coming through their income tax assessment notices throughout 20 to 23 years. They lodge their 22 return. So it's really only now one year on that people have said, oh gosh, we're now seeing a smaller refund of perhaps some even payable. There was plenty of messaging about this at the time through the ATO and by the profession that maybe not everyone understood the implication of what the removal of that offset has done. So I think it's important to note that the amounts of the low and middle income tax offset was effectively baked into the stage. Two personal tax cuts that kicked in some years ago, and then it was temporarily extended for another couple of years. So if people have unexpected tax bills, what can they do? What sort of support is available for people that find themselves in a tax position they didn't expect?

Tim Loh

Yeah, look, if you do get into a tax debt position, it's really important that you don't bury your head in the sand. It's really important that you do know that we do have payment plans. So you can do that, actually do that yourself online. And if you do get a tax bill, just don't stress about it too much about it, but make sure that you do lodge as per normal. And then if you are having trouble paying for this, make sure you're trying to pay a and you can do it yourself or mine or you know, or you can speak to a registered tax agent who can help when it comes to agents, you know, you can use your online services for agents to view, set up, adjust or cancel payment plans for your clients.

Tim Loh

So that's something that happens as you start to lodge a tax return on behalf of your clients. Do go to our website, which is Oakdale Value Forward slash module paid and get some further information to help you out in relation to this.

Robyn Jacobson

What about agents themselves who might be feeling under the pound for a bit overwhelmed? We know there are still labor shortages across the profession as there are in many sectors across the economy. What can I do to seek support?

Tim Loh

Yeah, good question, Robyn. Tax time is a really busy and challenging time for the profession. You know this, I know this, and tax agents listening know this. And we do acknowledge the aggregation of events over the recent years, including the pandemic, has added significant pressures on all of us. Really. We think it's really important that you're having those conversations with your clients to manage expectations. And we know a lot of agents are already doing this as well. And as you said before, we've been telling people for months now about potential for lower refunds and potential depositions. But we do know, you know, that some agents might be encountering circumstances beyond their control that will prevent the potential of lodging on time. So we've got, as you know, a lodgement program and lodgement deferrals that can provide agents with additional time to lodge without incurring the failure to lodge them. Time penalty. Now, the problem of your experience affecting your whole practice, for example, as a result of a significant event or ill health, you can request assistance via a supported lodgement program. So whatever the reason, we're here to help and work with you to get your lodgement program back on track and making sure that we can tailor our support to you, to your particular facts and circumstances. So my best tip is to check out our website, look after reports that lodgement program help and get some further information to help you with the potential support options that we have to help you get your practice back on track.

Robyn Jacobson

We've also got a new feature within a CSA online services for agents, and it's a new lodgment deferral function. So any agent is listening to this. So remember the, the wonderful days of having to send in a spreadsheet with a list of clients they Clare's ato can we have a on these particular lodge lodgment and a working group and set up of which the Tax Institute was part of. And through this process we collaboratively designed this new feature. So we're really pleased to see this go live and effectively it's a digitalized approach. So instead of the old fashioned spreadsheet being sent in, there's now a digital feature where you can basically say to the ATO, These are the clients, we want to submit a deferral request form and in real time you can see what's happening. You can keep track of what's being progressed. If something needs to be manually dealt with by the ACR, then they're made aware of that as well. But it seems to be much more efficient and more responsive than the old spreadsheet.

Tim Loh

Absolutely. Whenever you have to look at a spreadsheet on Excel, it's a good thing. I would say, look, you're absolutely spot on. We have worked collaboratively with tax practitioners, professional associations like yourselves to come up with this new function. We do hope it does dramatically cut the time it takes to lodge a deferral request and we wanted to make things easier. You know, this is a cost to tax agents that they shouldn't have to deal with. And we hope this new process helps tax agents streamline their processes. This tax time and beyond.

Robyn Jacobson

Something that people should be aware of. And this isn't a particularly happy note, but the amount of a penalty, you know, increased again on the 1st of July. We do see indexation every three years, but we also had a separate increase on the 1st of January. So one penalty unit is now worth $380. Now that may not sound much when you're talking one unit, but when you go to the tax law and you might have ten penalty units or 20 penalty units or 50 penalty units for not doing something such as lodging or not attending to a particular obligation, these penalties can get quite substantial. So I just remind people that in the background where there is a breach of a particular tax obligation, you can find yourself with some hefty penalties as a result, and that's separate from the general interest charge. So turning now and basically finishing our discussion on another not so happy note scams, cyber security, fraudulent misuse of identity and it's just such a hideous part of reality that we all need to deal with. We've seen the banks tighten up an enormous amount of spend that they've invested in tightening up security. We're seeing all the government departments and agencies doing the same thing, and scammers will always find the weakest link. So if they find that at the government level, things are so tight they can't penetrate the defenses so good, then they'll just go to the next weakest link and they might filter down through the professional, they filter down to businesses or they filter down to the individual taxpayer. What are your best tips? I mean, there is so much available online that people can rely on, but there are certainly some do's and don'ts when it comes to being really smart about looking after your data and your identity.

Tim Loh

Really good points and observations from the weakest link observations are really pertinent point and unfortunately, you know, scams are becoming increasingly widespread. There's been a lot of data breaches at Optus, Medibank and a few other organizations as well, and the scammers are just unscrupulous, right? They're going to, like you said, find the weakest link to make sure they can potentially get that data and use that to infiltrate not only the government systems, but any other organization for that matter, to extract moneys for devious purposes. Now, when it comes to the advice that we give when it comes to tax time as we are now, it's just pretty important to be on the front foot, be wary of any scam emails or text messages, phone calls and impersonated accounts on social media claim to be in the show. So a few tips I'd like to tell people is never provide any personal identifying information by email service will never include that type of request in those emails. Something else that you don't like to do is any hyperlinks. Hyperlinks are typically there to fish information from you so that scammers can direct you to a fake website where you're putting your personal details. And through that, they can access information relevant to you and use that to commit identity fraud. The other thing is, when it comes to phone calls, we always call you with a no caller I.D. So a number that would never project onto your phone and the other thing to also note is, will never speak to you in a threatening tone, threatening rigorous deportation or jail. Typically contact you in a friendly voice at the ATO. And the third thing is we do engage on social media, which we do. We never ask for personal information like your myGov details, your bank account details or your text phone number. Given why you might give details like giving away your case to Australian Media House and then watching them change the locks on your house, it's not a place that you want to go and with identity as this they can make your life so and it's really important that don't give those details away. So those are my best tips in terms of making sure that you look after your personal information and your bank account. You want to give your bank account details to a stranger. Why would you give your Marg update details to a stranger? So take those really personal details, then hold them really closely to him.

Robyn Jacobson

How do I know if someone calls me and they say they're from the 1890? How can I be sure? How should I respond? How do I act?

Tim Loh

Yeah My best tip is actually to hang out. My best tip is to hang up. If it does, tell me that it's a scammer. So my best hope is to hang up. And there's two things you can do. The first is to call us on our dedicated scam hotline, which is one 800 00540. And the other thing you can do is also check out our website at 8:00 today for that scam. Now, it's really important to ring that number because sometimes it could be a genuine person from the show, but by ringing that number, you can find out if in fact all the genuine call from the show or indeed was from a scammer. So that's my best tips when when it comes to working out whether it was a scam or someone calling me.

Robyn Jacobson

Thank you, Tim. I know that wasn't the most positive note to end our discussion on, but a really important one. As our community continues to be vigilant and fight off this hideous aspect of modern cyber activity. We love the online activities and we love being able to do things efficiently and be connected. But it does come with some really big risks.

Tim Loh

Yeah, and I just want to add probably one thing which relates to tax agents. Obviously, as you've said before, we talked about ad nauseum, Robyn, about identity fraud and cyber security risk across the community. It's really important as an agent, but you've got those range of controls and security mechanisms in place to prevent the fraud, which agents are responsible for managing their own security and cyber protection, and to not lose sensitive identifying information. And it's really important they've got that security in place. So some of the tip I have is to check out a website. I talk to you for us, touch professional security for for more information on this. It's really important because it can be quite disruptive if there is a situation where the scammers get a hold of your information or your client's information.

Robyn Jacobson

Absolutely. Because one of the first things the show will do is close off access to online services, which means you can't logically engage with the ATO, you can't access your client information. So it becomes very debilitating. And speaking to agents who have had this happen, there's a lot involved and it can take many, many months, if not longer, to be able to get them back up and running again.

Tim Loh

Yeah, that's right. And it's unfortunate, but these scammers are unscrupulous and un-Australian, and they'll do anything to take people's money.

Robyn Jacobson

Yeah. Look, Tim, thank you. I also wanted to personally thank you in terms of your contribution to the tax profession. I know this is your last round as tax time spokesperson for the ATO. You've become a very familiar face on our TV screens and across the airwaves and right throughout social media. I hope you've enjoyed it as much as we've all enjoyed your little anecdotes and your tidbits of advice, but you've done a wonderful job in this particular space now.

Tim Loh

Thank you so much, Robyn. It's been a privilege to have the opportunity to represent the ATO but also represent the tax community as well. For me it's been a real privilege after working many years in this space. But yeah, looking forward to getting back into the books a little bit more over the next coming years. So thank you for that wonderful acknowledgment.

Robyn Jacobson

You’re very welcome. Thank you, Tim. Thanks for listening to this episode of TaxVibe. I've been chatting with Tim Loh, Assistant Commissioner and Tax Times spokesperson at the ATO in the individuals and intermediaries space. To keep up to date with TaxVibe, be sure to subscribe, rate and review wherever you listen to your podcasts. If you'd like to connect with us, you can find us on socials. Not a member of the Tax Institute? Join a collective voice of 10,000 practitioners at the heart of the profession and find out what the best tax professionals have in common. Visit taxinstitute.com.au. We look forward to you joining us next time.