Small Business Stewardship Group key messages 6 August 2024

Frontline Operations and payment

The Australian Taxation Office (ATO) Service Delivery group restructure has been implemented. The new structure, known as Frontline Operations, will ensure a more holistic client experience. Changes will not impact the service experience for taxpayers or their agents.

The ATO sought member input on its approach to fostering on time payment behaviour and preventing future debt. Key considerations include identifying focus areas to ensure success and community acceptance and advice on draft key messages and how they will resonate within the community.

The ATO recognises most small businesses do the right thing and pay in full and on time; however, there are some who continue to deliberately deprioritise the payment of their obligations. As the community expects, action will be taken against these businesses.

The approach to drive improvements in payment will occur in alignment with the ATO’s broader debt collection strategy. Forward strategy is heavily focused on a firmer and faster approach to non-payment of GST, PAYGW and Super Guarantee. These unpaid amounts have a consequential effect on employees, who miss out on entitlements, and have been withheld from employees or consumers on the basis it will be paid to the ATO.

The ATO will focus on the highest risk taxpayers and the minority of tax practitioners who encourage poor compliance amongst their clients. Taxpayers who have engaged with the ATO in good faith and have an active payment arrangement they are meeting will be excluded from the firmer and faster approach.

Member comments

• It is important to avoid applying blanket assumptions in approaches and instead focus on promoting good habits and recognising businesses that meet their obligations. It will be important for small businesses to recognise that good business pays, not just the ATO but suppliers.
• There is no incentive for non-compliant taxpayers to engage with the ATO. If the aim is to collect debt and influence behaviour, there is a need to incentivise.
• It is important to establish clear guardrails and to make it easier for small businesses to understand how they can access payment plans and the application of General Interest Charge (GIC).
• The ATO's approach needs to focus not just on payment of debt but the impact of debt on the broader community, including other businesses. The Disclosure of Business Tax Debt supports the broader economy to recognise suppliers that may not make payment.
• There is a concern that firmer action notifications may not reach the intended audience when a tax agent is listed as the address for service. Tax agents are unable to do anything if their client does not want to engage with a debt and the firmer and faster approach will resonate more with a client if received directly. Members provided mixed feedback on this point.
• It is important for agents to be trusted on debt recovery and reporting obligations. Members noted opportunities for the ATO to better support, value and engage with agents, including implementing systems that ensure follow-through on firmer action steps. Agents are advising clients to take action as a matter of priority, ensuring they get the best possible response when contacting the ATO. Steps should be in place to ensure advisers know the ATO’s position on payment plans and GIC remissions, enabling them to provide advice and propose likely acceptable solutions for their clients.
• The strategy needs to consider and delineate instances where debt is attached to vulnerable community members, such as those who have been exploited or coerced and have not benefited from the debt.
• A faster and firmer approach needs to consider regional and rural practicalities, including infrastructure problems, like limited internet access and the ability to collect hard copy correspondence, which may not align with the ATO’s anticipated engagement timeframes.
• Messaging and guidance should build on the community’s perception of fairness. This will resonate with Australians who do the right thing and expect the ATO to take action where necessary.
• There is a need to educate small businesses that the ATO is not a bank. This is a long-term communication strategy and may be separate to the firmer and faster strategy.
• ATO actions need to align with its messaging. It is essential that ATO support is available, consistent, and realistic in its expectations when re-engaging a non-compliant taxpayer. For example, when establishing a payment plan, it is important to acknowledge the difference between what a taxpayer agrees to pay and what they can afford to pay.
• Members gave general support for the pilot on firmer and faster action for the most non-compliant taxpayers. The ATO will schedule an out-of-session deep dive discussion of the proposed shift in communications intended to accompany this pilot.

Counter fraud program

There has been a noticeable growth in identity crime enabled fraud and scaled fraud attacks. Increased digitalisation, especially post-COVID, has amplified the pace, scale, and complexity of fraud activities.

While the ATO has been able to address the changed environment through a strong focus on detection and response, the 4-year Counter fraud program announced by the government in May 2024 supports the ability to move to a contemporary detection and prevention focus. This will support taxpayers to have greater trust and certainty when dealing with the ATO and confidence that changes to their accounts have only been acted on at their request and not by a fraudster impersonating them.

As a result of consultation undertaken to date, there is a clear pathway towards a sophisticated and best practice aligned approach to effective and efficient fraud prevention. Consistent with the experience of other large organisations being targeted by fraud, there will be a foundational period to consult, build and test controls and address responses by fraudsters.

Member comments

Members support the program and its prevention focus and highlighted the importance of ongoing consultation with intermediaries. Taxpayer notification via secure messaging gives taxpayers control of their ATO account, including identity, data, transactions, and experiences via ATO Online and the ATO app.

When identifying suspicious activity, the ATO should take a holistic view, considering factors such as the taxpayer's age and location, rather than an isolated and narrow tax view. The identification of suspicious activity is not solely for the ATO to determine. Real-time action should be taken when a taxpayer believes their accounts or data have been compromised, with responsive systems in place to address claims of fraud or coercive control that may have led to debt or non-compliance once enforcement action has commenced. Placing a 'lock' on a taxpayer's account due to suspicious activity should not hinder the processing of legitimate activities, causing delays in the release of funds.

The ATO acknowledged the foundational build period will require the ability to evolve as indicators expand and become more sophisticated. Matters raised by members are consistent with the ATO's desired approach to the development of the Counter fraud program.

Small business support

The ATO discussed the range of tools, resources and services available to small businesses to make it easier for them to get their tax and super right. Feedback was sought from members on key gaps in ATO service offerings and how the ATO can strengthen its connections with, and support for small businesses.

Essentials to strengthen your small businessExternal Link is a free online learning platform to help a small business operator set themselves up correctly from the start. Content has been updated to ensure accuracy. Tax time toolkits give small businesses essential information to prepare their tax returns and integrated key messaging they need to know.

Sharing Economy Reporting Regime reporting is now underway for online platforms and marketplaces providing taxi, ride-sourcing and short-term accommodation services. The ATO is continuing to work with online platforms to better understand the nature of their operations and has published an updated legislative instrument that creates exemptions for online platforms that are providing services not aligned to the policy intent.

There are opportunities to revise products based on feedback. For example, the phrase ‘Am I in business?’ is not resonating within the micro-enterprise market. Consequently, the education campaign is currently paused to ensure it is fit-for-purpose, with consideration to re-phrase it to ‘Are you receiving non-salary income?’

Additionally, further opportunities may need to be explored to improve support available to small business operators making decisions to retire, wind-down or close their business.

Member comments

• When things don't go to plan for a small business, there needs to be an alignment across ATO strategies linking support with payment behaviour engagement.
• Business viability is not the responsibility of the ATO. Some small business operators lack business acumen and are more likely to seek expertise from business advisers.
• The ATO should acknowledge the importance of trusted advisers, such as industry associations, business advisers, accountants, bookkeepers, and community outreach groups, and empower them to disseminate ATO approved support materials. Support is more likely to be accepted by a small business operator from a known trusted source, rather than a government agency.
• Small businesses expect that once they have provided information to one government regulator, it should be accessible to all relevant agencies. Government regulators need to consider internal cross-agency opportunities to share information without the need for further small business engagement.
• Small business operators require more non-tax and super specific information. There are many pressure points including increased rents, industrial relations and Workcover. Members queried where small business operators can go for more generalised support.
• Plain English messaging is important. Some tax specific language does not resonate with the broader community.
• Members acknowledged the ATO's efforts in recent years to engage, support and share information. Opening strong communication channels is creating positive change within the industry.

The ATO continues to look for ways to integrate messaging and support into established business processes, cycles, and natural systems. This ensures that communication is timely and reaches small business operators through their preferred channels. The goal of ATO communication is to encourage positive, enduring habits rather than simply providing information.

Persona deep dive

Members considered key elements where a small business operator is new-to-business, building resilience, a business in trouble, or exiting gracefully.

New-to-business

Members highlighted the importance of the ATO:

• establishing expectations for stages of business formation, for example when an Australian business number (ABN) is obtained
• creating an environment of meaningful engagement and support and raising awareness of ATO expectations prior to business operations commencing
• recognising an operator may become a small business with no intent to do so and may believe they are acting as an individual.

Building resilience

Members acknowledged the power of positive ATO messaging that recognises good compliance behaviour.

Business in trouble

Other than lack of cash flow, early red flags that a business is in trouble are limited. Performance benchmarking could assist in identifying potential trouble spots for a business. Non lodgment of an activity statement is an early indicator a business is in trouble. The ATO needs to engage early and offer support to ensure businesses are appropriately educated and addressing the problem. Online engagement methods are likely to be ignored by small business operators in denial that their business is in trouble.

Members queried if there are opportunities for the ATO to subsidise tax agents for small business operators.

Exiting gracefully

The provision of a dedicated ATO case officer to discuss options could help small businesses exit gracefully and minimise the number of engagements with different officers.

Agency updates

Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

The Small business pulse is a quarterly report that captures a range of data sources to provide an indicator of small business health. The report was first released in August 2024 and received positive feedback from members.

The scheduled shutdown of the 3G network in August and September 2024 is concerning due to the vital infrastructure the network supports for regional and remote Australians including, EFTPOS, telephones, security systems, medical alerts and many wireless operating systems.

Treasury

Parliament resumes in the week commencing 12 August 2024 with portfolio ministerial changes. The instant asset write-off for small business entities 2024–25 has been passed by the House of Representatives and will go before the Senate.

Recent consultation on the Tax Practitioners Board’s (TPB) registration regime, which concluded on 7 August 2024, sought to strengthen and modernise registration requirements for tax practitioners.

Tax practitioner representatives appreciate the opportunity to be consulted, but suggested current consultative processes are limited. They recommend extending consultation periods and expanding the methods of consultation. Additionally, consultation should include workshopping to develop concepts prior to the drafting process.

Members are concerned changes to the TPB registration regime will negatively impact the trust a tax practitioner has with their client.

ATO

The ATO is integrating hardship content into messaging and is directing recipients to services such as ASBFEO’s Tax Concierge Service.

Two out-of-session meetings will be scheduled in September to further discuss the ATO’s payment strategy communication approach, and the new reporting requirement for self-assessed income tax exempt not-for-profits.

Attendees

Attendee list

Organisation	Member
ATO	Will Day (Co-chair), Small Business
ATO	Karen Foat, Frontline Operations
ATO	Elissa Walker, Digital Delivery Solutions
ATO	Emma Tobias, Small Business
Australian Automotive Aftermarket Association	Lesley Yates
Australian Chamber of Commerce and Industry	Samantha McKenna
Australian Small Business and Family Enterprise Ombudsman	Bruce Billson (co-chair)
Australian Veterinary Association	Moss Siddle
Chartered Accountants Australia and New Zealand	Susan Franks
Institute of Certified Bookkeepers	Matthew Addison
Institute of Public Accountants	Tony Greco
Rural Doctors Network	Richard Colbran
Small Business Debt Helpline	Helen Davis
Small business operator	Angela Harlen
Small business operator	Donna Niazov
Small business operator	Lisa Dwyer
Small business operator	Paul Meissner
Small business operator	Shannon Smit
Small business operator	Tony Sama
Treasury	Anthony Seebach
Treasury	Bede Fraser
UNSW Tax & Business Advisory Clinic	Ann Kayis-Kumar

Guests

Guest attendee list

Organisation		Attendee
ATO		Adam O'Grady, Frontline Operations
ATO		Amanda Veit, Small Business
ATO		Anita Challen, Frontline Operations
ATO		John Ford, Fraud and Criminal Behaviours
ATO		Larissa Jones-Angel, Marketing and Communication
ATO		Michael Morton, Small Business
ATO		Michelle Allen, Superannuation and Employer Obligations
ATO		Sarah Vawser, Individuals and Intermediaries
ATO		Travis Deane, Marketing and Communication
Indigenous Business Australia		Chris Germain

Apologies

Apologies list

Organisation		Member
ATO		Andrew Watson, Individuals and Intermediaries
ATO		Emma Rosenzweig, Superannuation and Employer Obligations
Australian Retailers Association		Jason Robertson
Council of Small Business Organisations Australia		Luke Achterstraat
Indigenous Business Australia		Greg Ellis
Real Estate Institute of Australia		Jock Kreitals
Restaurant and Catering Industry Association		Suresh Manickam
Supply Nation		Kate Russell