On 21 November 2014, Tax Counsel Thilini Wickramasuriya FTI attended a meeting of the ATO Tax Practitioner Advisory Group. A large number of issues were discussed, and some of those issues are detailed in the ATO key messages extracted below. Of matters discussed which are the not detailed in the ATO’s key messages, members should be aware of the following:
- The ATO invited further suggestions for deregulation and reducing red tape. TTI noted that ESS forms could be streamlined and will be providing a detailed note to the ATPAG on these forms. Members with suggestions for reforming these forms or any other proposals should contact us at Tax Policy.
- Members discussed a specific issue relating to the switch to electronic activity statements. This was an issue raised by TTI and other members in August 2014 and relates to clients who lodge instalment activity statements by paper but have been switched to electronic once their agent lodges an amendment electronically. In such instances, clients have to contact the ATO to have statements manually changed back to paper. There is no list of clients impacted by this issue that an agent can readily access. The ATO are looking at options to fix this issue as it is now apparent that it has impacted approoximately 14,000 clients.
- The ATO are piloting a new compliance approach to work-related expenses which will compare a client’s work-related expenses against their “nearest neighbour” in terms of income, occupation and location.
- The ATO have ceased issuing further compliance letters regarding rental payments pending review of their strong wording, in particular the presumption that the expenses disclosed may be incorrect. Nevertheless, the ATO indicated that they will continue to make inquiries where the amount of expenses appear to be unusual based on data matching techniques. ATO indicated that in most cases they attempt to co-design such letters before they are issued but that was not done in this case. The ATO can extend the time allowed to respond to such requests for information. Please contact us at Tax Policy if you are in need of an extension of time to respond to one of these recent letters and we can put you in touch with the relevant ATO contact.
The ATO’s key messages from the meeting are extracted below:
During Tax Time 2014, around one million taxpayers lodged returns using myTax. The feedback from users of this lodgment channel was positive with a satisfaction rate of 90% and 82% provided feedback indicating myTax was a better experience than the channel they had previously used to lodge their return.
The ATO will establish a special purpose limited life working group with practitioners and professional association representatives to consult and co-design the approach to further increase take up of this product for Tax Time 2015.
Future of the Tax Industry
On Tuesday 18 November tax practitioners, software developers, professional association representatives and the ATO met to discuss the future of the tax industry. Two groups focussed on what is happening from now to the year 2016 and the future of the industry out to the year 2020.
In 2016 practitioners will no longer lodge income tax returns with the ATO via the Electronic Lodgment Service (ELS). Returns will be lodged via their software packages which will need to be enabled with Standard Business Reporting functionality. Practitioners and software developers are working collaboratively on designing software packages to meet this need.
The ATO will not be shutting down the Tax and BAS Agent Portals and will continue to maintain all services currently available in the Portals. We will progressively build the priority portal services in ATO online, and make them available to software developers to include in their products. The transition to ATO online will likely be seamless to practitioners, as ATO Online will be accessed the same way as you access the portals. The only difference you will experience is a more reliable and improved service.
In view of this, the group also discussed the most important services currently available in the Tax and Bas Agent Portals with a view to establishing an order of priority in which the ATO will make these services available on a stable and contemporary online platform.
Each year the ATO shuts down between the Christmas and New Year period. Planned system upgrades will occur during this period to minimise the impacts on the community. These include updates to ATO internal systems and a conversion process that will move over 400 million records between the ATO Integrated System (AIS) and Integrated Core Processing (ICP) systems.
The following systems will be off-line during the shutdown period (26th December to 1st January inclusive):
- ATO on-line
- Tax Agent Portal
- BAS Agent Portal
- Business Portal
- Australian Business Register (ABR)
- Super Tick, ETick and the Fund Validation Service (FVS).
The closure of these systems will mean that the ATO:
- Will suspend business as usual system processing between 25 December and 1 January. This includes processing of refunds and hardship requests as is the case every year during the Christmas shut down period.
- Will be unable to issue Tax File Numbers (TFN) for individual clients who apply between 18 December and 1 January 2015. This includes applications lodged though Australia Post, using the ATO on-line process and those sent directly to the ATO. The ATO does not usually issue new TFN’s during the standard Christmas shutdown period. There are standard provisions in place which allow employers to withhold at standard rates (instead of the top marginal rate) where a new employee advises that they are waiting on a new TFN to be issued.
- Will be unable to issue Australian Business Numbers (ABN) or associated TFN’s for clients applying via the Australian Business Register (ABR) between the 25th of December and the 1st of January inclusive.
The ATO advises that where possible, practitioners lodge all requests for processing, for example registrations or refund requests that are required, early in December to avoid delays due to the shutdown of systems. The ATO has prioritised processing of workloads to minimise holdings prior to the shutdown and expect to process all work stockpiled during the shutdown in early January within normal service standard provisions. A communications strategy is being progressively rolled out over the next month to inform both internal and external stakeholders of the scheduled system outages for this Christmas closedown period.
Working together on system irritants
The ATO and tax practitioners will analyse the activity of taxpayers changing their bank account details after a return prepared by an agent is lodged. The ATO would like to quantify this activity and members of the ATO Tax Practitioner Advisory Group will provide information to assist the ATO in understanding the extent and impact of this activity. If necessary, the ATO will work with practitioners in developing practical solutions.
Tax Time 2014 did not detect any increasing trends of refund and identity fraud, however, there is still a presence of these behaviours in the tax system. As global trends to online and international dealings continue, practitioners and the ATO have an obligation to ensure the safety and integrity of these transactions. Tax and BAS agents are in a trusted position with ATO online systems and that brings an obligation to mitigate risk in maintaining that trusted online access to ATO information and services.
The ATO continues to emphasise:
- The importance of knowing your clients.
- When dealing with clients in an online environment or via phone, to remember to apply the same level of scrutiny when verifying proof of identity that you would during your face to face client interactions.
- The importance of using anti-virus software.
- Regularly changing passwords.
Online security self-assessment questionnaire
Members who seek further information in relation to the above should contact us at Tax Policy.