Client-to-agent linking
The ATO provided an update on the rollout of client-to-agent linking for businesses with an Australian business number (ABN), excluding sole traders on 13 November 2023.
Client-to-agent linking is being implemented in response to increasing efforts by criminals to impersonate legitimate users to lodge fraudulent returns or gain access to data to generate funds.
It requires an agent to be authorised by a client when they change agent, or engage a new agent, via online services. This gives taxpayers greater control of who accesses their data and provides a greater level of security.
The need to tighten security to protect taxpayer information must be balanced with the need for an easy-to-use system.
The project has been successfully delivered to 191,000 entities including public and multinational businesses, Top 500 private wealthy groups, and government entities. It will be rolled out to all remaining business with ABNs, excluding sole traders on 13 November 2023.
Consultation has confirmed the need for clearly defined support processes for businesses as well as messaging that highlights the value of client-to-agent linking.
Members' comments
Members agreed with the ATO's proposed approach of leveraging intermediaries as key communicators to business on the nomination process and support materials.
Members acknowledged strengthening and updating the Australian Business Register (ABR) will provide value for client-to-agent linking as well as future projects. The ATO advised a communication strategy is being developed for intermediaries to encourage their clients to ensure ABR details are up to date.
With regards to known irritants, such as accidental removal or de-linking; members suggested provision of ATO linked information for intermediaries to share with clients.
Research and development tax incentive transparency
The ATO summarised the new requirement to publish information on entities claiming the research and development (R&D) tax incentive offset.
The ATO has an obligation to publish information about entities who claimed the R&D tax incentive for the income year that commenced on or after 1 July 2021.
Section 3H of the Taxation Administration Act 1953 was introduced to provide transparency on the benefits derived by companies from the R&D tax incentive.
The ATO will publish:
- the name of the R&D entity claiming the R&D tax incentive
- the entity's ABN or Australian company number
- the entity’s total expenditure on R&D (known as total notional deductions claimed - label Z in Part A of the R&D tax incentive schedule) less any feedstock adjustments (label B in Part B of the R&D tax incentive schedule).
The ATO has an obligation to publish this data as soon as practicable after 30 June 2024 and is planning for a mid-September 2024 release.
There is an outbound email communication campaign encouraging tax agents to raise awareness of the measure with their small business clients.
Members' comments
A communication to tax agents raising awareness of the measure and providing a list of the tax agent’s clients with R&D claims was issued in October 2023 and was well received.
Members expect interest in the published data will likely come from business competitors and R&D consultants. As such, the communication strategy may need to consider impacted businesses.
Members questioned whether details of R&D activities will also be published. The ATO confirmed there is no obligation to publish this detail; however, a high-level narrative on common R&D activities will be provided for context on what businesses invest in from an R&D perspective.
Sharing Economy Reporting Regime
The ATO provided an update on the second phase, or Tranche 2, of the third-party Sharing Economy Reporting Regime (SERR).
Under SERR, operators of electronic distribution platforms (EDPs) are required to report transactions relating to the supply of services facilitated through their platform biannually to the ATO.
Many small businesses are operating in the gig/sharing economy and the implementation of this regime may impact them, either as an EDP or as a worker who provides services using an EDP.
The first phase, Tranche 1 of consultation considered EDP reporting transactions related to a supply of taxi service, including ride-sourcing or short-term accommodation.
Consultation for Tranche 2 will include reportable transactions for all other industries, with awareness raising, engagement and consultation now underway.
Given the complexity, diversity and fluidity of the environment there are difficulties in identifying platforms. The ATO's approach is to communicate as early as possible and build broad awareness whilst simultaneously developing a deeper understanding of the EDPs, their business operations and the seller experience.
The ATO invited members to raise awareness of the regime and sought support to identify EDPs and their sellers to enable engagement towards 1 July 2024.
Members' comments
Members agreed there is a need to be pragmatic in identifying platforms to bring into the regime; however, they noted the level playing field is an important consideration in maintaining alignment to the policy intent.
Members acknowledged SERR data may help identify the point private selling moves to a business enterprise, presenting engagement and education opportunities.
Members agreed to share information with their networks.
Lodge and pay reset and supporting vulnerable clients
The ATO provided an update on the lodge and pay reset and proposed approach to supporting vulnerable clients.
Members' comments
Members requested guidance on payment plan changes to support authority of advice from trusted advisers to clients. The ATO confirmed the advice is pending and it is working closely with the tax profession to consult and co-design the rest. This includes establishing a special purpose working group comprised of members from the Tax Practitioner Stewardship Group and BAS Agent Advisory Group.
Members questioned whether business tax debt can be disclosed through non-subscription channels under the disclosure of business tax debt measure. The ATO confirmed the measure limits information being published outside credit reporting bureaus, which require subscription. The ATO will continue to explore opportunities to leverage the measure to enable greater coverage and utilisation in the small business community, noting success internationally.
Members questioned where trusted advisers sit in the vulnerability framework, noting it is unclear in presentation materials. The ATO noted the framework has been designed from a client perspective and agreed to update materials to make this clearer.
Members noted certainty of process and parameters for vulnerable clients are needed to support trusted advisers to provide guidance to their clients.
The group discussed financial vulnerability and the ATO confirmed continuing support for businesses experiencing financial distress. Options may include longer payment plans.
The Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO) Tax Concierge ServiceExternal LinkExternal Link can support the design of products and tailored treatment strategies for vulnerable clients.
Members noted the poor user experience for a taxpayer ‘googling’ where to get support. The ATO confirmed this is part of its program of work.
Members are comfortable with the direction of the vulnerability framework and pleased the program is in place.
Agency updates
ATO
The ATO is encouraging eligible small businesses to take advantage of the small business lodgment penalty amnesty before it ends on 31 December 2023.
The ATO is working through the implementation of agreed recommendations from the Inspector General of Taxation's report The Exercise of the Commissioner's General Powers of AdministrationExternal LinkExternal Link.
Members noted low numbers of clients being referred to the Independent Review service. The ATO confirmed it is focused on increasing awareness of dispute resolution pathways and partner offerings such as the ASBFEO Tax Concierge Service.
Treasury
The review of the Franchising Code of Conduct review is underway. A final report and recommendations will be delivered to the Minister for Small Business in December 2023.
The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill is before the House of Representatives. The small business energy incentive and the instant asset write-off for small business entities are being worked through.
Members noted the value of a single definition of small business. The differing definitions of small business across policies is introducing complication.
Members complimented Treasury on the Payday Super consultation.
Australian Small Business and Family Enterprise Ombudsman
The ASBFEO procurement inquiry is ongoing to examine the impact of reforms to Commonwealth Procurement Rules on small business. A final report with recommendations will be provided to the Australian Government in December 2023.
Members called out the value in the Small Business Data PortalExternal LinkExternal Link published by ASBFEO.
Members' comments
Small businesses are in a vulnerable environment given:
- interest rate rises continuing to impact consumer behaviour across the board with discretionary spending in decline
- wage increases and staffing availability
- red tape and administrative burden in meeting banking requirements, parental leave modelling.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Will Day (Co-chair), Small Business |
|
ATO |
Emma Rosenzweig, Superannuation and Employer Obligations |
|
Australian Chamber of Commerce and Industry |
Natalie Heazlewood |
|
Australian Small Business and Family Enterprise Ombudsman |
Bruce Billson (Co-chair) |
|
Chartered Accountants Australia and New Zealand |
Susan Franks |
|
Indigenous Business Australia |
Greg Ellis |
|
Institute of Certified Bookkeepers |
Matthew Addison |
|
Restaurant and Catering Association |
Suresh Manickam |
|
Small Business Operator |
Paul Meissner |
|
Small Business Operator |
Tony Sama |
|
Treasury |
Johanna Travis |
|
Treasury |
Jordan George |
Guests
|
Organisation |
Attendee |
|---|---|
|
ATO |
Andrew Stinziani, Small Business |
|
ATO |
Anita Challen, Lodge and Pay |
|
ATO |
Anthony Marvello, Small Business |
|
ATO |
Bianca Armytage, Marketing and Communication |
|
ATO |
Brooke Bloye, Enterprise Solutions and Technology |
|
ATO |
Deb Goldfinch, Small Business |
|
ATO |
Elizabeth Bott, Lodge and Pay |
|
ATO |
Jacqui Marchment, Lodge and Pay |
|
ATO |
James Meredith, Individuals and Intermediaries |
|
ATO |
Jane Mitchell, Australian Business Registry Services |
|
ATO |
Kelly Canavan, Private Wealth |
|
ATO |
Laura Bagnato, Private Wealth |
|
ATO |
Michael Buscema, Lodge and Pay |
|
ATO |
Robert Thomson, Individuals and Intermediaries |
|
ATO |
Vanessa Kelly, Small Business |
|
ATO |
Ziva White, Individuals and Intermediaries |
Apologies
|
Organisation |
Member |
|---|---|
|
ATO |
Andrew Watson, Individuals and Intermediaries |
|
ATO |
Emma Tobias, Small Business |
|
ATO |
Karen Foat, Australian Business Registry Services |
|
ATO |
Vivek Chaudhary, Lodge and Pay |
|
Australian Retailers Association |
Jason Robertson |
|
Australian Veterinary Association |
Moss Siddle |
|
Council of Small Business Organisations Australia |
Luke Achterstraat |
|
Direct Selling Australia |
Adele Sutton |
|
Real Estate Institute of Australia |
Jock Kreitals |
|
Treasury |
Anthony Seebach |
|
Treasury |
Bede Fraser |