Meeting theme
Third party reporting
Key highlights
- Treasury gave an update on relevant matters.
- The Australian Taxation Office (ATO) provided an overview of its compliance framework, specifically the potential fifth pillar of compliance, and introduced members to the three-tier tolerance model.
- Members discussed the ATO’s data and ethics principles, which guide its data acquisition, management, and use. The ATO also explained how it ensures data quality, security, and privacy, and how it balances data value and risk.
- The group heard from Pieter Vorster from Westpac, who discussed the challenges of data classification, storage, and flow, and explained how data products can help manage data better.
- The ATO gave an overview of its strategy to enhance its fraud detection, prevention, and mitigation capabilities, and improve assistance to individuals harmed by fraud.
- Members discussed current reporting regimes and data matching and use cases and shared suggestions on how reporting regimes and data matching could be improved or simplified in the future.
Opening comments
Jeremy Hirschhorn, Second Commissioner, Client Engagement Group, ATO; Jerome Tse, The Tax Institute
ATO co-chair Kirsten Fish was unavailable for this meeting, so Jeremy Hirschhorn co-chaired the meeting with external co-chair Jerome Tse.
No conflicts of interest were declared.
The co-chairs and members recognised the contributions of departing member Michael Croker, Chartered Accountants Australia and New Zealand.
Treasury update
Diane Brown, Deputy Secretary, Revenue Group, Treasury; Laura Berger-Thomson, First Assistant Secretary, Revenue Group, Treasury
Treasury provided updates on:
- Recently announced budget measures to provide cost of living relief, enhance multinational and foreign resident tax integrity, strengthen tax compliance and counter fraud and support investment.
- Consultation on tax policy issues including capital gains tax for foreign entities, production tax incentives for the manufacturing of renewable hydrogen and processing of critical minerals, and the response to the disclosure of confidential information by PwC.
Treasury also provided an update on the legal professional privilege amending laws consultation, which was an action item from the previous National Tax Liaison Group (NTLG) meeting. Treasury and the Attorney-General’s Department are jointly overseeing the consultation and are currently in the early stages of stakeholder engagement. Members can expect a consultation paper to be released later this year, focused on defining the problem, followed by a more policy-centric consultation in 2025.
ATO Compliance Framework and the fifth pillar of compliance
Jeremy Hirschhorn, Second Commissioner, Client Engagement Group, ATO; Anthony Siouclis, Assistant Commissioner, International Support and Programs, ATO
The ATO provided an overview of its compliance framework, specifically, the so-called fifth pillar of tax compliance (relating to third party data) and introduced members to the ATO’s three-tier tolerance model. The framework recognises that across a complex tax system 100% tax performance is not possible. Instead, the ATO considers the investments required to treat compliance risks to continue to improve tax performance.
Under the Organisation of Economic Co-Operation and Development (OECD) framework, a taxpayer’s compliance is determined by the 4 pillars of compliance: registration, lodgment, payment, and correct reporting. The ATO has introduced the concept of accurate and timely third-party data, which is becoming increasingly important due to digitalisation, as a potential fifth pillar of compliance.
Third party reporting is a way to improve tax system integrity, reduce taxpayer burden, and support voluntary compliance. Third party data continues to be a vital component to managing the integrity of the tax and superannuation systems. In addition to supporting the verification of compliance obligations, third party data supports the provision of better services for taxpayers.
Providing accurate and timely third-party data is typically the responsibility of business, but failure to provide this information can have a detrimental impact on the ability of individuals to comply with their tax obligations or be able to lodge in a timely manner.
The group discussed the benefits and challenges of using third party data.
The ATO presented its three-tier model, which classifies tax risks into different levels of significance, tolerance, and strategy. The three-tier model aims to provide a transparent and consistent approach to managing tax risks across different client segments.
The ATO advised that members could expect to hear more about this model in future meetings.
Data as uranium – how we collect, use and enforce
Marek Rucinski, Deputy Commissioner, Smarter Data Program, ATO; Christopher Short, Data Management Director, Smarter Data Program, ATO; Nicky Muscat, Data Management Director, Smarter Data Program, ATO; Hayley Busuttil, Assistant Commissioner, Individuals and Intermediaries, ATO; Larissa Evans, Assistant Commissioner, Policy, Analysis and Legislation, ATO
The ATO shared its data and ethics principles, which guide its data acquisition, management, and use. The ATO also explained how it ensures data quality, security, and privacy, and how it balances data value and risk.
Data was compared to uranium to emphasise the potential risks and responsibilities associated with its use. Like uranium, data can be incredibly powerful and beneficial when used correctly, but it can also be dangerous if mishandled or misused. Additionally, the analogy may refer to the concept of data having a ‘half-life’ where its value diminishes over time.
The ATO understands the need for careful handling, ethical considerations, and robust security measures to protect data and ensure it is used for the right purposes. Additionally, data must be managed appropriately to maintain its usefulness and mitigate any risks associated with storing outdated information.
Established data ethics principles apply to all data and analytics activities, including acting in the public interest, upholding privacy, and being transparent. Maintaining community trust in how data is used is vital to the continued quality and availability of data, and ATO has made its commitments public by publishing information about How we use data and analytics on ato.gov.au, including the ATO data ethics principles.
The ATO explained how data flows through the system via ingestion, storage, processing, and consumption, with the careful and appropriate use of artificial intelligence, machine learning, and automation. The ATO assesses multiple elements to determine data activity risk, including data direction, category, sensitivity, and governance controls.
Data as uranium – risk of misuse
Pieter Vorster, General Manager, Data Platforms, Westpac
The group heard from Pieter Vorster from Westpac, who shared insights on how data quality, use, and accountability have changed over time. Pieter emphasised the need to understand the purpose, source, and risk of data, as well as the ethical and fair use of artificial intelligence and analytics. Pieter also discussed the challenges of data classification, storage, and flow, and how data products can help manage data better.
Strengthening the ATO counter-fraud strategy
Louise Clarke, Deputy Commissioner, Fraud and Criminal Behaviours, ATO; Claire Miller, Assistant Commissioner, Enterprise Solutions and Technology, ATO
The recently announced Counter Fraud Strategy budget measure will be delivered by the ATO and will enhance the ATO’s fraud detection, prevention, and mitigation capabilities, and improve assistance to individuals harmed by fraud.
The strategy focuses on prevention and detection of fraud, as well as empowering taxpayers to have more control over their accounts and information. The strategy has 6 priorities, which include strengthening access controls, monitoring transactions, and differentiating between fraudulent and legitimate interactions.
The ATO is working with banks and industry to learn from their best practices and systems for real-time fraud prevention and verification.
Reporting regimes and data matching – learnings from current regimes
Anthony Marvello, Assistant Commissioner, Small Business, ATO; Hayley Busuttil, Assistant Commissioner, Individuals and Intermediaries, ATO; Larissa Evans, Assistant Commissioner, Policy, Analysis and Legislation, ATO
The ATO led discussion on current reporting regimes and data matching and use cases.
The quality of data reported to the ATO is impacted by several factors. The initial accuracy of the data held or received by the reporting entity, the precision of its digital recording and submission to the ATO, and the capability of the data to be matched and integrated with existing ATO data (where appropriate) to provide a service or achieve an outcome.
The ATO actively engages with reporters and intermediaries to ensure high quality data is collected at source and iterations of the data are reduced. Improvements in the quality of data being reported have been observed.
The group discussed ATO datasets including the Taxable Payment Reporting System, as well as Single Touch Payroll, large super fund reporting of member accounts and transactions, bank interest and landlord insurance data.
The group considered the possibility of the ATO sharing certain data with intermediaries in the future, noting that data is only made available to agents or in pre-fill when it reaches a level of maturity and reliability.
The ATO is exploring principles for high volume, high frequency, natural systems reporting, such as super fund reporting, where errors can have significant consequences. The ATO also recognised the need to address mismatches that may arise from different reporting regimes and bases.
The group discussed work underway to continue to increase data literacy and capability across the ATO to ensure that data is interpreted and used correctly for decision making and highlighted the need to balance the use of data with other factors, such as procedures, training and culture.
Reporting regimes and data matching – what the future could look like
Michael Morton, Assistant Commissioner, Small Business, ATO; Anthony Marvello, Assistant Commissioner, Small Business, ATO; Hayley Busuttil, Assistant Commissioner, Individuals and Intermediaries, ATO; Larissa Evans, Assistant Commissioner, Policy, Analysis and Legislation, ATO
The ATO invited members to share their perspectives and suggestions on how reporting regimes and data matching could be improved or simplified in the future.
The group discussed Tax Administration 3.0 and the future vision for small businesses, including how to leverage data from natural systems, provide timely guidance and assurance, extend the benefits from datasets, and segmenting the diverse population according to their characteristics.
The group explored the role of other actors in the ecosystem, such as digital service providers, banks and intermediaries, and the tax profession, and how to incentivise small businesses to adopt digital systems and get their tax right the first time.
Discussion identified some challenges and opportunities in the areas of data quality, categorisation, classification, and timeliness, and how to make the user interface simpler and more fit for purpose for different types of users.
Members expressed concerns about the delay in releasing the annual tax statistics publications, highlighting the risk of tax software relying on outdated data. It was suggested that releasing the data in a timelier fashion, even with a margin of error, could still offer valuable insights, thereby supporting more accurate tax reporting and compliance. The ATO noted there is a risk that preliminary datasets will be perceived as final if published externally but we will investigate the reasons behind the necessity for a complete dataset before release.
|
Action item |
NTLG 2406/1 Reporting of tax statistics |
|---|---|
|
Due date |
20 August 2024 |
|
Responsibility |
Fiona Dillon, ATO |
|
Description |
The ATO will investigate whether incomplete statistics can be published in the Tax statistics publication rather than waiting for full data sets to be available. |
|
Action item |
NTLG 2406/2 Small business benchmarks
|
|---|---|
|
Due date |
20 August 2024 |
|
Responsibility |
Michael Morton, ATO, Alexis Kokkinos, CPA Australia |
|
Description |
The ATO will discuss with CPA Australia how tax statistic and benchmarking data is used by the profession. |
Action items update
NTLG 2404/1 Examples of debt payment approaches
Responsibility: Tony Greco, Institute of Public Accountants; Sumitha Krishnan, The Tax Institute
To be closed – Members provided examples of existing cases of inconsistency in application of debt payment approaches to the ATO on 8 May 2024. The ATO will review its remissions and payment plan policy, noting there is scope for further consistency, and provision of greater clarity to both staff and agents and taxpayers about what is and is not acceptable.
NTLG 2402/2 Legal professional privilege amending laws
Responsibility: Laura Berger-Thomson, First Assistant Secretary, Revenue Group, Treasury
To be closed – Treasury provided an update to members on consultation by the Attorney-General’s Department in relation to legal professional privilege and will provide a standing update at future NTLG meetings.
NTLG 2402/2 Member feedback on ATO draft confidentiality deeds
Responsibility: Jerome Tse, The Tax Institute
In progress – Member feedback on the ATO draft confidentiality deeds is being considered by Assistant Commissioner Nicholas Shizas, ATO Corporate.
NTLG 2402/3 Proposed consultation
Responsibility: Jerome Tse, The Tax Institute
To be closed – Members will not provide further feedback on proposed consultation. The ATO advised that the Forex realisation event 4 updates will be published shortly.
NTLG 2402/4 Consultation reports
Responsibility: Jerome Tse, The Tax Institute
To be closed – Members will provide clarification on an aspect of their feedback provided on 9 May 2024, after which this item will be closed.
NTLG 2312/1 – ATO objections priority work
Responsibility: Sumitha Krishan, The Tax Institute
To be closed – Members provided feedback on the work the ATO should consider prioritising to progress the large numbers of objections currently in the system on 11 April 2024. The ATO will provide a briefing note on its response to member feedback for inclusion in the 20 August 2024 NTLG meeting papers.
NTLG 2308/2 Potential consultation with the law profession
Responsibility: Jonathan Todd, Deputy Commissioner, Office of the Chief Tax Counsel, ATO
In progress – The ATO is continuing to work with Law Council of Australia representatives on this matter out of session.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Jeremy Hirschhorn, (Co-chair), Client Engagement |
|
ATO |
Jodi Williams (Secretariat), Enterprise Strategy and Design |
|
ATO |
Tanya Canavan, Office of the Chief Tax Counsel |
|
Chartered Accountants Australia and New Zealand |
Michael Barbour |
|
Chartered Accountants Australia and New Zealand |
Michael Croker |
|
Corporate Tax Association |
Simon Staples |
|
CPA Australia |
Alexis Kokkinos |
|
CPA Australia |
Elinor Kasapidis |
|
Institute of Public Accountants |
Tony Greco |
|
Law Council of Australia |
Justin Byrne |
|
Law Council of Australia |
Mia Clarebrough |
|
The Tax Institute |
Julie Abdalla |
|
The Tax Institute |
Jerome Tse (Co-chair) |
|
The Tax Institute |
Sumitha Krishnan |
|
Treasury |
Diane Brown |
|
Treasury |
Laura Berger-Thomson |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Anthony Marvello, Small Business |
|
ATO |
Anthony Siouclis, International Support and Programs |
|
ATO |
Claire Miller, Enterprise Solutions and Technology |
|
ATO |
Christopher Short, Smarter Data Program |
|
ATO |
Emma Butler, Small Business |
|
ATO |
Fiona Dillon, Law Design and Practice |
|
ATO |
Hayley Busuttil, Individuals and Intermediaries |
|
ATO |
Larissa Evans, Policy, Analysis and Legislation |
|
ATO |
Louise Clarke, Private Wealth |
|
ATO |
Marek Rucinski, Smarter Data Program |
|
ATO |
Michael Morton, Small Business |
|
ATO |
Nicky Muscat, Smarter Data Program |
|
ATO |
Will Day, Small Business |
|
Westpac |
Pieter Vorster |
Apologies
|
Organisation |
Member |
|---|---|
|
ATO |
Kirsten Fish (Co-chair), Law Design and Practice |