Tax Practitioner Stewardship Group key messages 24 August 2022

Welcome and introduction

ATO co-chair Deputy Commissioner Hoa Wood welcomed members, asked if there were any conflicts of interest to be declared (none declared) and reminded the group of confidentiality requirements.

Hoa highlighted the agenda topics are now aligned to the draft 2030 Tax Practitioner Experience Strategy, strategic goals and objectives.

Co-chair Robyn Jacobson encouraged active discussion to take place during the meeting to best allow issues to be addressed.

2030 Tax Practitioner Experience Strategy

Strategic Goal 1 – Protecting the high levels of engagement and integrity in the tax, super and registry systems

Operation Protego

Assistant Commissioner Michael Morton provided an overview of the:

• behaviours being observed, noting Protego is not just about GST refund integrity, but also incorrect business registration and, at times, identity theft
• work undertaken which continues to strengthen controls to detect and prevent attempted GST refund fraud
• strategies being implemented to engage, educate and support Taxpayers to do the right thing, and new stronger compliance processes have been implemented to stop the further proliferation of this behaviour
• consequences for those involved.

Members were requested to disseminate messages to networks and the community, on the importance for the tax profession to be vigilant in supporting the integrity of the tax and super systems and knowing their clients.

Member comments

• The introduction of up-front substantiation at the claim stage for self-lodgers could assist with reducing fraudulent refunds.
• Understanding the agent profile and population impacted, and clear messaging from the ATO would better position the tax profession to increase awareness and prevent instances of GST fraud.

Shadow Economy

Director Deb Goldfinch provided an overview of the success of the Shadow Economy program since it commenced in 2018, including:

• raising an additional $3.8 billion revenue and collected an estimated $2.95 billion from targeted enforcement activities
• the launch of the new Tax Integrity Centre
• the development of the digital cash flow coaching kit
• supporting the delivery of the economic stimulus and small businesses
• implementing the requirement for a statement of tax record for businesses entering Australian Government contracts over $4 million resulting in businesses taking action to bring their tax obligations up to date
• implemented new measures, including an expansion to the taxable payment reporting system and improving the integrity of the Commonwealth procurement system
• contributed to the Australian Border Force lead Illicit Tobacco Taskforce
• leading the cross agency Black Economy Standing Taskforce.

In the 2022-23 year, funding has been approved to continue prevention and enforcement activities to combat the shadow economy, including the Illicit Tobacco Taskforce and the Black Economy Standing Taskforce.

Member comments

• It would be beneficial to be more transparent on the success generated from the program to create a line-of-sight on the return on investment for tax practitioners.
• To assist with translating the importance of reporting relevant information in a timely manner, the ATO could provide greater visibility and feedback loops about what the ATO uses data for. For example, in relation to the Taxable Payments Reporting System, there is a perception in the tax practitioner community that the ATO does not use this data set.

Strategic Goal 3 – Improve tax performance for clients of Tax Practitioners

Advice and guidance – Taxation Ruling TR 2021/D2

Assistant Commissioner Anthony Marvello advised the Draft Taxation Ruling: 2021/D2 Income tax: personal services income and personal services business published in March 2021, and was updated based on feedback received at the time. Prior to finalisation, members will be provided with a final draft to comment on any ‘showstoppers’ prior to publication.

Key updates include:

• the addition of practical examples of how the Personal Services Income Ruling applies
• combining Taxation Rulings TR 2001/7 Income tax: the meaning of personal services income and TR 2001/8 Income tax: what is a personal services business into a single Taxation Ruling.

Taxation Rulings TR 2001/7 and TR 2001/8 will be withdrawn once the consolidated Ruling is published.

Coupled with the release of the ruling, there will be a significant education program, which will include a website content refresh occurring in parallel to further support and guide industry and individuals. The Communication Content Working Group will be engaged to assist with this.

Member comments

Education, communications and appropriate web content will be important to ensure potential misunderstandings for TR 2001/7 and TR 2001/8 Rulings are addressed.

Strategic Goal 4 – Increase trust and confidence in the tax, super and registry systems

Taxpayers' Charter review – draft consultation plan

The ATO is seeking to review the Taxpayers' Charter and will be engaging the broader community to seek feedback.

The intent of the Charter is to provide taxpayers with clarity about their rights and responsibilities and confidence in the Australian tax and superannuation systems. The Charter was last reviewed in 2017–18.

The review of the Charter will focus on visibility, readability and usability, and whether the charter is meeting its intent.

Consultation will take place with the taxpayer community, commencing 12 September 2022 for 4 weeks. The consultation will be promoted to the public through advertising and social media channels.

Member comments

• Community awareness of the Taxpayers' Charter is important, acknowledging that most Taxpayers are aware of the Charter but may not have read it. Members suggested the professional bodies and community could assist the ATO by educating their clients on the Taxpayers' Charter.
• Members supported the consultation being made available to the broader community, noting the different strategies for different segments of the community.
• Consultation questions could be made available on the ATO website and initial questions should include asking the community about their expectations.

ANAO audit on ATO’s engagement with Tax Practitioners

Assistant Commissioner Kath Anderson advised members that the Australian National Audit Office (ANAO) released findings and recommendations following an audit on the ATO’s engagement with Tax practitioners. Audit findings included:

• The ATO is largely effective in implementing its tax practitioner engagement activities.
• The ATO's consultation with tax practitioners is largely effective in informing its strategies, services and support.
• The ATO is largely effective in providing services and support for tax practitioners.

ANAO recommendations included, the ATO:

• clearly link its strategies to its tax practitioner engagement objectives and communicate its strategic engagement approach with tax practitioners
• develop a performance framework, providing a basis for assessing its performance in engaging with tax practitioners to achieve efficient and effective tax and super administration
• document selection criteria to support transparency, consistency and diversity in selection of tax practitioners for standing and special purpose consultation groups
• consult with tax practitioners to better understand their concerns regarding the registered agent phone line and use this feedback to develop an improvement plan.

Member comments

• There are instances where the TPSG dialogue and post-meeting action has been productive. There are opportunities to better position and disseminate positive key messages from the ATO and professional associations to tax practitioners to demonstrate the ATO is listening and responding to the issues that are impacting the practitioner community.
• Communication between professional associations and their members is challenging; for example, not always receiving responses when asking members to provide insights on the issues impacting them most. Some items raised by members include:
  • amount of time spent on the phone, with calls taking too long with minimal outcome
  • inconsistency with advice and/or assistance received.
   
• There is some pressure and frustration experienced within the profession to respond to strict/tight deadlines when supplying information to the ATO, which is then not processed or actioned for some period of time. More proactive updates could be provided by the ATO to better manage expectations.

Draft 2030 Tax Practitioners Experience Strategy

Senior Director Katrina Donelan updated members on the progress of the draft 2030 Tax Practitioners Experience Strategy, noting the changes to the aspiration, strategic goals, and strategic objectives as a result of member feedback at the June workshop.

Members were invited to provide feedback on:

• the draft aspiration
• Strategic Goal 5 – Empower tax professionals to add value to their clients and the tax, super and registry systems
  • what initiatives the ATO needs to do
  • what the ATO is relying on others to do.
   

Member comments

• Have a streamlined or simplified version of the strategy for the general tax professional community so that it is easier to immediately see the relevance of the strategy to a tax practitioner’s work.
• Some of the terminology used may be perceived as the ATO pushing more responsibility back on tax practitioners

The ATO acknowledged and appreciated the frank feedback and noted the importance of this feedback to shape the strategy.

Strategic Goal 5 – Empower tax professionals to add value to their clients and the tax, super and registry systems

STP Phase 2

Deputy Commissioner Emma Rosenzweig provided an update to members on the Single Touch Payroll (STP) Phase 2 transition, advising that most digital service providers are tracking well with their product readiness and are supporting customers with the transition for STP Phase 2 reporting.

Emma advised it is important for employers to prepare for their transition if they haven’t already, adding that most of the errors the ATO is seeing is as a result of employers not being adequately prepared for the transition.

Some useful links:

• Common STP Phase 2 reporting questions and mistakes
• STP Phase 2 employer reporting guidelines
• Employer STP Phase 2 checklists
• News, events and resources for webinars

Member comments

• Not-for-profits are struggling and require education – they may not have the capability or resourcing available to support their transition.
• Errors are being encountered through entering award information into STP programs, due to the mismatch of codes.

The ATO acknowledged the difficulties being faced and will pass feedback onto Fair Work about the mismatch of codes.

Environmental Scan

Assistant Commissioner Kath Anderson provided members with the opportunity to discuss trends and issues that may be impacting the tax profession.

Member comments

• More guidance is required on the FBT rate for electric vehicles. The ATO advised that work is underway to progress Practical Compliance Guidance and that consultation will occur prior to release.
• Feedback was provided on the ATO’s approach to Work Related Expense audits, advising that in some instances ATO’s approach was aggressive in determining eligibility for claims. The ATO invited members to send through examples so these occurrences can be reviewed and to see if there is a more systemic issue.
• The profession as a whole is short staffed in public practice – the skill shortage is an issue. Hiring of quality staff is impossible, with members looking overseas to fill employment vacancies.
• Members requested a progress update on the working from home per hour rate. The ATO advised that the draft working from home Practical Compliance Guidance is near finalised and consultation will occur shortly.
• Tax Practitioners are not yet prepared for changes associated with Transfer Balance Accounting Reporting (TBAR) annual reporting and quarterly reporting for Self-Managed Superannuation Funds (SMSF). Education and awareness campaigns of the changes for the profession and general public will be required, noting the start date of the changes applies from 1 July 2023.

Strategic Goal 6 – Improve small business performance and the level playing field

Draft 2030 Small Business Future Vision

Assistant Commissioner Andrew Watson, introduced the draft 2030 Small Business Future Vision, providing an overview of:

• the vision to improve small business tax performance by evolving digital and data solutions, to seamlessly integrate tax administration as part of the natural systems and enable assurance to occur in real time
• the current tax challenges associated with the small business population
• the 3 focus areas
  • assurance built into the tax and digital eco-system
  • incentives to join a permission-based tax digital eco-system
  • integrity control for bad and opportunistic actors.
   

Members were invited to provide feedback on the draft 2030 Small Business Future Vision.

Member comments

• One of the greatest challenges in the small business sector is messaging to increase understanding that this population has one of the largest tax gaps.
• The importance of the role tax practitioners play in the small business experience needs to be called out more in the draft vision.
• Stronger connections with the draft 2030 Tax Practitioner Experience Strategy need to be made in future drafts.

Lodge and Pay

Deputy Commissioner Vivek Chaudhary provided an update on the ATO’s Lodge and Pay activities.

• In March 2022, the ATO wrote to almost 30,000 businesses advising we were considering the disclosure of their business tax debts to credit reporting agencies.
• A further 45,000 businesses received letters advising them the ATO are considering issuing Director Penalty Notices to collect business debt from their respective directors. One in 4 clients from these campaigns has engaged with the ATO and significant amounts of debt have been paid in full or managed via an active payment arrangement.
• Activity is resuming for non-pursued debt and debt on hold. Impacted clients will receive written correspondence to advise of potential offsetting implications.

Vivek thanked members for participating in the Lodge and Pay Working Group with the first meeting held mid-August. The focus of this meeting was:

• to gain further insights into issues faced by the tax profession
• to understand the effects of the ATO’s administration of debt
• develop and improve the operation of lodgment and payment
• understanding tax practitioner irritants associated with payment plans.

The next session will focus on complex payment arrangements to explore opportunities to improve.

Member comments

Members support the ATO’s approach of resuming normal collection practices but emphasised the importance of ensuring empathy is present in engagement activities.

Other business

Co-Chair, Hoa Wood, thanked members for the productive conversation and acknowledged that contributions were genuinely intended for positive change.

Co-Chair Robyn Jacobson thanked everyone for their contributions, advising members looked forward to the quarterly meetings.

Attendees

Attendees list

Organisation	Member
ATO	Hoa Wood (Co-chair), Individuals and Intermediaries
ATO	Craig Sargent (Secretariat)
ATO	Emma Rosenzweig, Superannuation and Employer Obligations
ATO	Grant Brodie, Client Account Services
ATO	Karen Foat, Australian Business Registry Services
ATO	Kath Anderson, Individuals and Intermediaries
ATO	Katrina Donelan, Individuals and Intermediaries
ATO	Kerry O’Loghlin, Individuals and Intermediaries
ATO	Siobhan Spencer-Arnell (Secretariat)
ATO	Vivek Chaudhary, Lodge and Pay
ATO	Will Day, Small Business
Australian Bookkeepers Association	Peter Thorp
Chartered Accountants Australia and New Zealand	Karen Liew
CPA Australia	Elinor Kasapidis
Income Tax Professionals	Scott Bailey
Institute of Certified Bookkeepers	Matthew Addison
Institute of Public Accountants	Tony Greco
National Tax and Accountants Association	Rodney Wilson
Tax and Super Australia	Neville Birthisel
Tax Practitioner	Keith Clissold
Tax Practitioner	Ken Thomas
Tax Practitioner	Mark Morris
Tax Practitioner	Phil McCann
Tax Practitioner	Shanna Hunter
Tax Practitioner	Steven Inglis
Tax Practitioners Board	Debra Anderson
The Tax Institute	Robyn Jacobson

Guest attendees

Guest list

Organisation	Attendee
ATO	Adam O’Grady, Individuals and Intermediaries
ATO	Andrew Watson, Small Business
ATO	Anthony Marvello, Small Business
ATO	Chris Cook, ATO Corporate
ATO	Melanie Casey, Superannuation and Employer Obligations
ATO	Michael Morton, Small Business
ATO	Peter Holt, Small Business

Apologies

Apologies list

Organisation	Member
ATO	Alex Adams, Enterprise Solutions and Technology
ATO	Michelle Crosby, Australian Business Registry Services
Chartered Accountants Australia and New Zealand	Michael Croker
H&R Block	Mark Chapman
Tax Practitioner	Warren Seeto

Key topics discussed at the Tax Practitioner Stewardship Group meeting on 24 August 2022.