Background

In 2012–13, over 8 million individual taxpayers (70 per cent of all individual taxpayers) and 2 million business taxpayers (90 per cent of all businesses) collectively engaged approximately 55,000 registered tax practitioners to assist them to comply with the tax laws and interact with the Australian Taxation Office (ATO) on their behalf.340 It is, therefore,
self-evident that tax practitioners play a crucial role in the Australian tax system.

The situation is similar in other countries. Indeed, the Organisation for Economic Co-operation and Development (OECD) has acknowledged that tax practitioners341 'play a vital role in all tax systems'.342 Not only do tax practitioners help taxpayers understand and comply with their tax obligations, they also assist revenue authorities to improve compliance strategies and better focus dialogue with taxpayers which results in reduced costs for all.343 Importantly, the ATO appreciates that positive engagement with tax practitioners offers significant benefits to each party in this important tripartite relationship.344

The ATO currently supports tax practitioners in various ways including through the Tax and Business Activity Statement (BAS) Agent Portals (the ATO Portals), the ATO website, the Registered Agent Phone Line (the Phone Line), concessional lodgment due dates and consultation forums. Such support is an integral part of tax practitioners' businesses as they provide access to important tax information which is needed to assist their clients fulfil their tax obligations.

The ATO has previously experienced challenges in maintaining some of its services and support, resulting in strained relationships amongst the ATO, tax practitioners and taxpayers.345 In this respect, ATO surveys have shown that the level of tax practitioner satisfaction with ATO service has fallen from 72 per cent in 2007 to 62 per cent in 2012 (with a low of 51 per cent in 2011).346 Furthermore, tax practitioners' perceptions of overall ATO performance is substantially lower than those of others in the community.347 As a result, the ATO developed an action plan in 2012 which was aimed at improving its tax practitioner support and engagement.348

During recent consultations on the Inspector-General of Taxation's (IGT) 2014 work program, tax practitioners and their representative bodies have raised a number of areas of concern which are summarised as follows:

  • ATO-tax practitioner relationship — Stakeholders believe that the relationship could be much improved if the objective and challenges of each party was fully appreciated by the other. For example, tax practitioners feel that the ATO does not appropriately differentiate between the various types of tax practitioners, their workloads or business models. As a result, they believe that mutually beneficial outcomes for the ATO, tax practitioners and their clients were not being realised.
  • A number of other concerns have been raised in previous IGT reviews.349 Some of these were examined in the Review into improving the self-assessment system where the IGT recommended that the ATO should consult with tax practitioners to achieve a more constructive relationship, particularly in relation to the ATO's use and application of the ATO's Tax Practitioners' Risk Differentiation Framework.350
  • ATO-tax practitioner engagement — The ATO's current formal and informal means for tax practitioners to raise, discuss and resolve concerns were considered to be inadequate by stakeholders. In particular, they viewed the recent cessation of the Relationship Management Program and the Lodgment Working Group as diminishing the ATO's ability to understand operational issues faced by tax practitioners and to develop practical solutions to address such issues. Tax practitioners have called for greater involvement in the design of the ATO's engagement strategies, services and support as well as an improved means to resolve concerns with ATO services and support.
  • Tax practitioners have also noted that certain ATO communications and inaccurate ATO information imposed significant unbillable work, damaged relationships with their clients and caused unnecessary delays. Examples included ATO letters sent to tax practitioners' clients without their knowledge.
  • ATO's tax practitioner services351 — Stakeholders have expressed concern that, at times, ATO services, such as the Portals, lacked full functionality and reliability which imposed irrecoverable costs on tax practitioners. Concern was also raised with the integration of ATO services with third party software as well as the ATO's plans to improve its services in future by migrating to automated regulatory reporting — Standard Business Reporting.352 The accessibility to other ATO services, such as ATO delays in answering the Phone Line, as well as the consistency of advice given to tax practitioners were also raised as areas requiring improvement. In addition, some legal practitioners have called for improved access to the ATO's services for tax practitioners when assisting their clients.
  • ATO's lodgment program — Tax practitioners believe that the design and operation of the current lodgment program does not appropriately take into account factors such as work performed on other tax and non tax-related matters, correcting inaccurate ATO information and delays caused by factors outside tax practitioners' control. The

    85 per cent on-time lodgment requirement has been specifically raised as a concern as it is perceived to be encouraging inappropriate behaviours such as turning away taxpayers with outstanding prior year returns and not providing sufficient time to ensure that the high quality of returns is not compromised. Furthermore, the ATO's response to tax practitioners who failed to fulfil the requirement was said to be inappropriate and disproportionate.

The IGT intends to further consider the above concerns and build on the work of previous reviews to identify improvements. This review will be conducted pursuant to subsection 8(1) of the Inspector-General of Taxation Act 2003 (IGT Act). The following terms of reference and guidelines are provided to assist with the preparation of your submissions.

Terms of reference

The IGT review into the ATO's services and support for tax practitioners will focus on:

ATO-tax practitioner relationship

  1. The relationship between the ATO and tax practitioners including each parties' understanding of their respective objectives and challenges to achieve mutually beneficial outcomes for both parties as well as taxpayers.
  2. The ATO's use and application of the Risk Differentiation Framework to tax practitioners.

ATO-tax practitioner engagement

  1. The adequacy of the ATO's formal and informal engagements (including those that have ceased, e.g. the Relationship Manager Program and the Lodgment Working Group) to:
    1. provide input into the design of the ATO's services and support for tax practitioners; and
    2. discuss and resolve tax practitioner concerns.
  2. The appropriateness of ATO communications with tax practitioners and their clients.

ATO's tax practitioner services (e.g. the Portals, ATO website and the Phone Line)

  1. The functionality, reliability and accessibility of the ATO's tax practitioner services including the integration of those services with third party software.
  2. The ATO's plans to improve its tax practitioner services in the future including the migration to automated regulatory reporting systems (e.g. Standard Business Reporting).
  3. The accuracy of ATO information relied upon and the means to correct that information.

ATO's lodgment program

  1. The design, operation and impacts of the ATO's lodgment program, including:
    1. how the ATO takes into account differences in tax practitioner circumstances and delays caused by factors outside of tax practitioners' control, such as disruptions with ATO electronic and online services;
    2. the ATO's approach to tax practitioners who do not meet the on-time lodgment requirements; and
  2. the program's effect on overall taxpayer compliance with lodgment and reporting obligations.
  3. The IGT may also examine other relevant concerns or potential improvements identified and raised by stakeholders during the course of the review.

Submission guidelines

The IGT envisages that your submission will set out your experiences and views on the ATO's services and support for tax practitioners.

It is important to provide detailed accounts of your experience and views of the ATO's services and support, particularly those that have had an impact on you as a tax practitioner or your business. We are seeking examples of ATO service and support that have contributed to positive outcomes as well as negative impacts.

In addition to your experiences, we are also seeking your views on potential improvements. The following questions are designed to assist you in your submission.

ATO-tax practitioner relationship

  1. What do you believe is the role of tax practitioners in the tax system? How could the ATO and tax practitioners work together to improve the tax system?
  2. Do you believe the ATO appropriately differentiates between different types of tax practitioners, their workloads or business models? Please explain your views.
  3. What are your views on how the ATO determines a tax practitioner's risk profile (such as the ATO's use of the Risk Differentiation Framework)? Please explain your views.

ATO-tax practitioner engagement

  1. Do you consider the ATO's overall engagement with the tax profession is appropriate or effective? Please explain your views.
  2. Have you had any experience with ATO relationship managers in the past? Did they play a valuable role? Should they be used in the future or replaced by an alternative?
  3. Have you been involved with an ATO consultation forum? Please describe your experience. Have you noticed an increase or decrease in the number of these forums? If so, have you noticed a change in their effectiveness to resolve concerns? You may wish to refer to examples in explaining your views.
  4. Have you raised any issues with the ATO through other channels? If so, describe your experience and explain why you consider your interactions were effective or otherwise.
  5. What are your views on the ATO's communications with you and your clients? What aspects of these communications do you consider effective and what aspects do you consider could be improved? Please explain the reasons for your views and suggestions.

ATO's tax practitioner services (e.g. the Portals, ATO website and the Phone Line)

  1. What are the key ATO services that you use to perform your work as a tax practitioner? What are the features or functions that make these ATO services important to your business?
  2. What has been your experience in accessing and using these services? If you have not been able to access services, what effect did this have on your business and what action did you take? How did the ATO assist you in minimising disruption to your business?
  3. What improvements could be made to the ATO's services to better assist you to perform your role and reduce your costs? Please explain your suggestions.
  4. Are you aware of Standard Business Reporting? If so, what do you believe are the benefits or impacts in adopting such a system? Do you consider that improvements could be made? Please explain your views and suggestions.
  5. What is the general quality of ATO information provided to you? If you have encountered inaccurate ATO information, please describe your experience in resolving these inaccuracies and the impacts on you, your business or your clients.

ATO's lodgment program

  1. Do you understand how the ATO's lodgment program operates? If not, what information should the ATO make available?
  2. Describe your experience in complying with the lodgment program requirements and any events or disruptions that have affected your ability to meet these requirements. Do you believe the ATO's lodgment program has improved your lodgment performance? What effect has it had on taxpayer lodgment performance?
  3. If you did not meet the 85 per cent on-time lodgment requirement, please describe what caused this to happen and what were the consequences. How did the ATO seek to understand your circumstances and what options were made available to you?
  4. How could the ATO improve or change its lodgment program to reduce adverse impacts and encourage taxpayer compliance? Please provide reasons for your suggestions.
  5. Please outline any other areas of concerns you may have or any potential improvements with the ATO's services and support. You may wish to cite international experiences or comparisons which you believe would lead to improvements.

Lodgment

The closing date for submissions is 18 July 2014. Submissions can be sent by:

Post to:
Inspector-General of Taxation

GPO Box 551

SYDNEY NSW 2001

Email to:
taxpractitioners@igt.gov.au

Confidentiality

Submissions provided to the IGT are maintained in strict confidence (unless you specify otherwise). This means that the identity of the taxpayer, the identity of the adviser and any information contained in such submissions will not be made available to any other person, including the ATO. Sections 23, 26 and 37 of the IGT Act safeguard the confidentiality and secrecy of such information provided to the IGT — for example, the IGT cannot disclose the information as a result of a Freedom of Information (FOI) request, or as a result of a court order generally. Furthermore, if such information is the subject of client legal privilege (also referred to as legal professional privilege), disclosing that information to the IGT will not result in a waiver of that privilege.


340 Tax Practitioners Board, Annual Report 2012-12 (2013) p ii; ATO, Compliance in focus 2013-14, Tax professionals, 19 December 2013.

341 Also referred to as 'tax intermediaries'. The term 'tax practitioner' in this IGT document broadly encompasses the range of individuals and groups whose profession or occupation involves working on taxation matters for clients, including tax agents, bookkeepers, lawyers and accountants.

342 OECD, Study into the Role of Tax Intermediaries (OECD Publishing, 2008) p 5.

343 ibid, pp 5 and 44.

344 id; ATO, Tax Practitioner Action Plan 2011-15 (2012).

345 IGT, Review into the Australian Taxation Office's Change Program (2011) chs 3 and 4.

346 ATO, Action Plan, above n 346; Note that the 2012 survey results are the latest results available.

347 Commissioner of Taxation, Annual Report 2011-12 (2012) pp 19-21.

348 ATO, Action Plan, above n 346.

349 Above n 347, Recommendations 2 – 6; IGT, Review into improving the self assessment system (2013) Recommendation 3.6; IGT, Review into aspects of the Australian Taxation Office's use of compliance risk assessment tools (2014) Recommendation 7.1.

350 IGT, Self assessment system, above n 10, Recommendation 3.6.

351 For example, the Tax and BAS Agent Portals, ATO website and the Registered Agent Phone Line.

352 Such as the transition from Electronic Lodgment Service to Standard Business Reporting; Geoff Leeper, 'Time for action: the ATO's electronic service strategy and Standard Business Reporting' (Speech delivered at the Advance Professional Solutions Annual Client Conference, Queenstown, New Zealand,
16 November 2013).