TPSG key messages 31 May 2024

Welcome and introduction

Co-chairs Andrew Watson and Robyn Jacobson welcomed members to the Tax Practitioner Stewardship Group (TPSG) meeting.

Tax Time 2024

(Links to strategic priority – Increase trust and confidence in the tax, super and registry systems)

The Australian Taxation Office (ATO) discussed its preparedness for the upcoming Tax Time 2024, with a particular focus on its telephony service, processing and complaints. An increase in calls and processing is anticipated over the coming months and the ATO is looking for ways it can reduce demand on the system.

Tax practitioners are encouraged to use the dedicated tax agent phone line with the relevant Fast Key Code to reduce wait times. The ATO confirmed call blocking is not used on the tax agent phone line.

The ATO also discussed the tax and BAS agent complaints process and sought member feedback on the drivers for including multiple clients under a single complaint.

Recognising the value of providing insights and communicating messages to the profession, the TPSG tax time meeting series will commence from early July and will initially be held weekly.

Member comments

Members provided the following feedback and observations:

• The reduction in agent-related complaints could be linked to the positive impact of the range of digital improvements the ATO has implemented, for example the online lodgment deferral process and increasing the limit for automatic payment plans.
• From an agent's perspective, when a complaint relates to an issue impacting multiple clients, it is reasonable to lodge that as a single complaint. However, when there are a range of different issues impacting different clients, separate complaints should be submitted. Members agreed the complaints channel should not be used as a method for escalating an issue.
• Members raised concerns about the proof of identity document scanning process and agreed to send examples to the ATO for investigation.
• Members suggested that delays in processing standards and timeframes are communicated to agents in the Tax professionals newsletter to reduce the need for agents to call the ATO about the status of returns.
• A higher-than-normal increase in calls to the ATO is anticipated during Tax Time 2024 due to the new self-assessment of income tax exemption reporting for not-for-profits (NFPs).

Small business

(Links to strategic priority – Improve tax performance for clients of tax practitioners)

The ATO provided members with a small business update, including the ATO’s readiness to implement the small business energy incentive and instant asset write-off measures announced in the 2023–24 Budget. The ATO will ensure tax time messaging provides clarity for small businesses, should Royal Assent not be received prior to 1 July 2024.

Post meeting update: Royal Assent was received 28 June 2024.

The ATO also provided an update on the implementation of the Sharing Economy Reporting Regime and sought members' assistance to raise awareness of the regime. The ATO has been engaging with electronic distribution platforms (EDPs) and other key stakeholders to build a deeper understanding of the business models of affected EDPs. This engagement has informed the development of a legislative instrument that is currently being finalised following public consultation in April 2024. The legislative instrument sets out reporting exemptions to provide greater certainty for EDPs and support them to lodge correctly.

Member comments

Members emphasised the need for clarity in messaging regarding the small business energy incentive and instant asset write-off measures as there is still confusion, particularly regarding the start dates of the measures.

Tax time for individuals

(Links to strategic priority – Improve tax performance for clients of tax professionals)

The ATO led discussion on tax time for individuals, which included an update on key areas of focus for upcoming tax time communications, information on key data used to support individuals (not in business) to meet their tax return reporting requirements, and related insights.

The ATO also facilitated a workshop to gather member feedback on which non-investor deduction label substantiation requirements are the most challenging for agents and their clients. The ATO will distil the workshop information and report back to TPSG members later.

The ATO’s Tax Time 2024 messages will include ‘tax basics’ aimed at improving individuals’ understanding of the tax system and how it might affect them. The development of the messaging was informed by a workshop discussion at the November 2023 TPSG meeting to identify the drivers and impacts of individuals debt (tax) and explore opportunities to improve support, education and guidance. The Tax Time 2024 tax basics messaging will include:

• claiming the tax-free threshold across multiple jobs
• not having compulsory study loan repayments withheld from income
• the impact of side hustles, investments or multiple jobs on tax assessments
• overclaiming private health insurance rebates
• the overall impact of receiving income from multiple sources, culminating in an under-withholding of tax on a tax return.

The ATO discussed the important role of data in the individual tax return. Data is used extensively in pre-filling (particularly for income) and supports many of the ATO’s compliance activities. Using data and insights enables the ATO to develop strategies to address risks at both the lodgment stage and post assessment. The ATO encourages taxpayers to wait until income information is pre-filled in their tax return before lodging to reduce the likelihood of errors. The ATO reminded members to be alert to identity crime, particularly during tax time, and to report suspected fraud to the ATO in a timely manner.

Member comments

Members provided the following feedback and observations:

• To ensure a greater reach to individuals during tax time, the ATO could broaden its use of social media and extend its consultation and engagement network to include younger agents.
• Members support the ATO’s position on waiting until pre-fill information is available in later July before lodging income tax returns.
• Members discussed ATO messaging and media reporting on rental claims and income.
• Association members suggested that a fact sheet of information they could communicate to their members to reduce typical tax time mistakes would be beneficial.

Not-for-profit self-assessed income tax exemption reporting

(Links to strategic priority – Increase trust and confidence in the tax, super and registry systems)

The ATO provided an update on the new self-assessment of income tax exemption reporting for NFPs.

From Tax Time 2024, non-charitable NFPs with an active Australian business number (ABN) are required to lodge an NFP self-review return to notify their eligibility for income tax exemption. Organisations that are not eligible for income tax exemption and are taxable may engage a tax agent for the first time to assist them to prepare and lodge their income tax return.

The ATO has published guidance on How to access and lodge the NFP self-review return. Clients that have difficulty accessing Online services for business will be able to submit their NFP self-review return using a Self-help phone service 13 72 26. This service is available as an interim lodgment channel for the 2023–24 transitional year.

The ATO has developed, and is progressively expanding and updating, a suite of guidance information and materials on Reporting requirements to self-assess income tax exemption to assist NFPs and their agents, including NFP recorded webinarsExternal Link. Members were encouraged to subscribe to the monthly Not-for-profit news via the Not-for-profit newsroom.

NFPs have until 31 March 2025 to lodge the NFP self-review return without penalty and the ATO will continue to consider what support strategies are required.

Member comments

Members provided the following feedback and observations:

• NFPs will need ongoing support as they adopt the new self-assessment reporting regime.
• It is anticipated that there will be a significant increase in calls seeking assistance to determine the correct assessment and reporting requirements.
• Latitude and access to the practical compliance approach will be important, particularly in the transitional year.

Law reform update

(Links to strategic priority – Increase trust and confidence in the tax, super and registry systems)

The Tax Practitioners Board (TPB) provided an update on the status of law reforms and TPB guidance products, including breach reporting guidance. The TPB also provided a summary of feedback received to date on breach reporting draft guidance, and the associations provided a high-level overview of the points raised in their joint submission. Members raised concerns about the impact of the new breach reporting requirements on professional indemnity insurance.

The group discussed the TPB’s minimum requirements for verifying a client’s identity and whether the ATO’s client-to-agent linking process is sufficient to satisfy these requirements. The TPB and the ATO are working closely to develop further guidance to provide tax practitioners with greater clarity on the interaction between the client-to-agent linking process and the TPB’s proof of identity requirements.

Member comments

Members provided the following feedback and observations:

• Associations have provided a joint submission to the TPB seeking a reduction in legalistic terminology, a greater range of examples, and the provision of guidance as to what is a reportable offence under Division 7A.
• Members have asked that the TPB consider the impacts breach reporting on professional indemnity insurance and whether there is an obligation for any breaches to be reported to the insurer. The TPB confirmed they would investigate this issue and asked if members have had discussions with providers on the impacts.
• Members asked for consistent messaging between the ATO and TPB, particularly in relation to client-to-agent linking.

Superannuation

(Links to strategic priority – Improve tax performance for clients of tax practitioners)

The ATO led a discussion on the status of Payday Super, paid parental leave, Single Touch Payroll reporting and the Small Business Superannuation Clearing House.

Consultation groups

(Links to strategic priority – Improve tax performance for clients of tax practitioners)

Client-to-Agent Linking Working Group

The ATO is currently undertaking a post-implementation review of the deployment of client-to-agent linking to ABN entities, including feedback sessions on the experience of different users to identify opportunities for enhancements.

Client-to-agent linking was introduced because of criminals attempting to commit fraud by taking over the identities of honest tax agents, linking unknowing businesses, and committing refund fraud. Since client-to-agent-linking was introduced, the ATO has not seen any successful attempts where an agent has been compromised by criminals, and new clients added to harvest the information or commit refund fraud, without the client knowing.

The ATO acknowledged the strong advocacy of the working group, and accounting and bookkeeping professional associations on behalf of their members, who have experienced difficulties with client-to-agent-linking. The ATO will make improvements, where possible, while stopping the types of fraud that client-to-agent linking addresses. The ATO will continue to engage and look for opportunities to capitalise on any changes to technology that will improve the process for agents and clients.

The ATO plans to extend similar protections to the remaining populations; that is, individuals, sole traders, and non-ABN entities. Extensive consultation and change impact assessments will be undertaken for these groups to inform the solution design and delivery options, over the next 12 months.

Lodge and Pay Working Group

The ATO noted the 2024–25 Budget announcement providing the ATO with discretion not to offset refunds against tax debts of individuals, small businesses and not-for-profit entities, where the debts were placed on hold prior to 1 January 2017 and remain on hold. As this measure is not yet law, the ATO’s current approach remains for this tax time. Until the measure has been enacted, the ATO will continue pausing offsetting of debts for individuals, small businesses and not-for-profit entities that were placed on hold prior to 1 January 2017 and remain on hold. A communication strategy is being developed to explain to clients with a debt how that debt will be treated.

Member comments

Members provided the following feedback and observations:

• Instances of BAS agents being de-linked have reduced following the implementation of the Online services for agents in-system guidance.
• Client-to-agent linking continues to have significant impacts across the community (for agents and clients) and the full impacts will be unclear for some time.
• The visibility of debts placed on hold could be an issue if they are included in the statement of tax record.

Environmental scan

Members led the environmental scan discussion which covered a range of issues including:

• funding received by the ATO in the 2024–25 Budget
• access to Online services for agents for association representatives
• messaging on the tax deductibility of super and payments that must be received by super funds by 30 June.

Other business

The group noted the following tabled papers:

• Super guarantee nudge letters
• Commercial deals
• Modernisation of Trust Administration Systems
• Communication and Content Working Group
• Debts on hold

Attendees

Guest attendees

Apologies list