3.1 Many stakeholders raised a range of concerns with the ATO's engagement or consultation arrangements with tax practitioners. Some stakeholders also raised specific concerns with the ATO's communication with practitioners and their clients.
3.2 Stakeholders were of the view that the recent reduction in the number of ATO external consultative arrangements has diminished the ATO's ability to receive a range of input and feedback on issues of concern impacting on its ability to develop practical solutions.
3.3 Stakeholders also expressed concern that the ATO did not appropriately consider or respond to issues raised by tax practitioners. In particular, they believe that the ATO has:
- focused on providing information to tax practitioners rather than discussing the relevant issues and developing potential solutions jointly;
- not consulted tax practitioners with sufficient knowledge of practical issues especially difficulties faced by small businesses and individual taxpayers;
- not facilitated direct access to its decision makers; and
- not communicated its consideration of the issues raised by tax practitioners or provided explanations for any ATO action (or inaction) taken as a result.
3.4 In order to better understand these concerns, it is important to appreciate the various arrangements that the ATO uses to engage with tax practitioners.
3.5 Positive and effective engagement with tax practitioners offers significant benefits to tax practitioners, the ATO and the tax system more broadly. The OECD has asserted that:
A strategy of positive engagement with tax advisers offers potentially significant benefits to all parties in the tax system. In particular, it can add to revenue bodies' understanding of tax advisers and the role they play in the tax system, as well as understanding of their clients and broader developments in the economy. This, in turn, should result in improved risk and compliance strategies and better-focused information requests and dialogue with taxpayers, resulting in reduced compliance costs for all.
…For revenue bodies, the principal benefit is greater understanding of how tax advisers go about their business, what drives their business practices, how they can be equitably influenced and, most importantly, what impact they have on the decisions made by their clients in relation to tax.90
3.6 The ATO has therefore, in the past five years, facilitated a number engagement arrangements for tax practitioners to communicate and provide input and feedback to the ATO, including, but not limited to:
- external consultative arrangements;
- Relationship Manager Programs;
- support and assistance visits;
- the Key Agent Program;
- telephone service;
- the ATO Portals; and
- the ATO website.
3.7 The first four engagement arrangements listed above are described in more detail in the sections that follow. The last three arrangements are separately explored in Chapter 4.
3.8 The ATO has a number of external consultative arrangements which provide a platform for the ATO to engage with the community, including tax practitioners, on significant issues.
3.9 In January 2013, the Commissioner of Taxation (Commissioner) commissioned an internal review of the above arrangements which, at that time, consisted of a total of 68 consultative forums with 1,494 members and 229 meetings over a 12 month period.91
3.10 More specifically, these consultative forums included a network of 8 peak 'external forums' and 60 other 'consultative groups', including 15 listed as subgroups of the National Tax Liaison Group (NTLG), 8 listed as subgroups of the ATO Tax Practitioner Forum (ATPF) and 7 as RTPWGs.92 As part of this internal review, the ATO also engaged an external consultant to:
- identify best practice consultation models;
- review the effectiveness of ATO consultative arrangements and identify the positive aspects or shortcomings of current approaches; and
- review the role of private sector representative bodies in guiding the ATO to improve informed and timely decision making.93
3.11 In drawing on the principles for consultation best practice used by international and domestic bodies,94 the external consultant tested the ATO's existing arrangements by reference to a number of effectiveness criteria which included whether the stakeholders, the expectations and the means of consulting were appropriate and whether the outcomes were recorded effectively.95
3.12 A number of observations were made in the resultant external consultant's report, including:
- for some of the peak forums, information sharing by the ATO had become the primary purpose of the meeting, with little added to the agenda by stakeholders (other than topics on which they were seeking an ATO response);96
- a number of the peak forums had very large memberships, which could result in less opportunity for dynamic engagement on relevant issues;97 and
- most peak forums did not produce outcomes that were clearly recorded, assigned a realistic timeline or allocated responsibility to an appropriate person for attending to the matter.98
3.13 In drawing on the work of the external consultant, the ATO's internal review concluded that:
The current approach to the ATO's consultative arrangements is diverse and disparate. There is no holistic view of the intelligence derived from all the forums and other consultative arrangements providing a systemic view of the contribution consultation makes to the administration of the taxation and superannuation systems. There is however, co-ordination across some sectors of consultation and engagement such as in the case of tax practitioners. As a consequence, in some instances, there may be gaps in consultation that cannot be identified and overlaps or duplication that occurred which cannot be rectified. There have been some overlaps and duplications identified with our current consultative arrangements. For example, the ATO Tax Practitioner Forum has identified the Accounting Working Group as a duplication of activity.99
3.14 The ATO's internal review recommended that the ATO change its framework for external consultative arrangements and establish eight formal consultative committees 'that focus at the highest level on stewardship of the tax and superannuation systems,' comprising four 'liaison groups' and four 'advisory groups.'100 These liaison groups would focus on strategy and relationships through an 'audience lens' while the advisory groups would focus on the system in operation by product or program.101This review also recommended the establishment of a Consultation Hub to co-ordinate all consultation between the ATO and the community, as well as providing a centralised repository of issues raised and outcomes.102
3.15 The ATO implemented this framework, with effect from 1 July 2013, which is illustrated in Appendix 4.
3.16 In explaining the basis for the changed framework, the Commissioner publicly highlighted that these new arrangements are to focus on outcomes rather than a process of holding regular meetings:
[The previous arrangements] did become a bit of a process – the meetings were held quarterly, there was an agenda, the people would get there and tick off the items – whereas I am much more focussed on the shorter term: 'Here are the issues that we have today and need some help on. Who are the best people around in Australia for this issue to help us work our way through it?' …You do it for more like four months, and then it stops – and then there is the outcome. So it is much more focussed.103
3.17 For tax practitioners, the relevant changes to the external consultative arrangements included the transition of the seven RTPWGs to the one Open Regional Forum (later expanded to the Open Forum104) and the ATPF to the ATPAG. The full list of consultation forums that the ATO now convenes for tax practitioners are set out below:
- the NTLG;
- the ATPAG;
- special purpose working groups, such as the LWG;
- stakeholder relationship and management groups, such as the BAS Agent Association Group (BASAAG); and
- the Open Forum.
3.18 Each of the above forums will be explored in the next section.
3.19 Public support has been expressed for the changes, particularly the removal of duplicated consultative forums by some, including the Tax Institute and the Council of Small Business Organisations of Australia.105 Some, however, have stated that the loss of ongoing consultation committees, such as the RTPWGs, has reduced ATO engagement:
The Institute of Chartered Accountants Australia cited the discontinued Fringe Benefit Tax (FBT) subcommittee as an example of the loss of ongoing specialty consultation and observed that some regional tax practitioners have had fewer opportunities to engage with the ATO since the new consultation arrangements were introduced.106
3.20 In acknowledging tax practitioner feedback that the reduction to the external consultative arrangements may have been excessive, the Commissioner has suggested that the effectiveness of the new arrangements should be assessed after a sufficient amount of time has elapsed:
Changes to our consultation arrangements have been a major shift for many and some feedback has suggested that we have gone too far. I think we need to let them play out this year to see if they work and we will refine them if necessary. The bottom line is that I am committed to effective consultation and it will be more on a project basis rather than via static, longstanding committees.107
3.21 Accordingly, the ATO has stated that it intends to undertake a post implementation review of the new external consultative arrangements in the first quarter of 2015 and use the outcomes of the review to better align the consultation process with external stakeholder expectations.108
National Tax Liaison Group (NTLG)
3.22 The NTLG is the ATO's peak consultative 'liaison' group on tax matters and 'focuses on significant matters in the national interest and supports key relationships reflecting the broader community.'109 Furthermore, the NTLG charter states that:
…the NTLG identifies significant issues and drives improvements in relation to the following aspects of the tax system:
- tax law interpretation, administration, design and policy (including technical issues)
- confidence in and compliance with the tax system
- ATO service delivery.
The NTLG will also maintain an oversight function over the ATO's other tax-focussed stewardship committees in order to identify systemic issues and drive systemic improvements.110
3.23 The NTLG is chaired by the Commissioner and members include key ATO decision makers, senior Treasury officials, representatives of major tax, law and accounting professional bodies and some industry associations.111
ATO Tax Practitioner Advisory Group (ATPAG)
3.25 The ATPAG (which replaced the ATPF) is an 'advisory' group and focuses on 'system in operation':
The ATO Tax Practitioner Advisory Group (ATPAG) will focus on the 'system in operation'; address strategic issues and manage key relationships and focus on issues of a national interest. The ATPAG will deal with high level, significant issues in the national interest.114
3.26 The ATPAG membership comprises tax practitioners, representatives of the major tax, law and accounting professional bodies and senior members of the ATO. Members are expected to address issues that are systemic and strategic in nature, i.e., not specific to individual clients.115 Tax practitioner members have a three-year tenure while other members such as representatives of professional bodies have ongoing tenure.116
3.27 Meetings are convened when required and in addition, out of session meetings may be held in various formats (phone conference, video conference) between meetings.117 Minutes from face-to-face meetings are published on the ATO website.118
Special purpose working groups
3.28 Special purpose working groups are convened to focus on particular issues that have been referred for specific attention. Prior to 1 July 2013, these were sub-groups of the ATPF that regularly met to focus on key issues or areas.
3.29 There were no LWG meetings between 30 August 2013 and 11 August 2014. This had led stakeholders to believe that the LWG, along with the RTPWGs, had been disbanded as a result of the January 2013 ATO internal review into their consultative arrangements. The LWG is now being convened regularly and the ATO has confirmed that it intends to continue LWG meetings into the future.
3.30 According to the ATO, the LWG was established to:
- develop and design the tax agent lodgment program that reflects changing workloads, priorities, legislation and revenue requirements;
- monitor and analyse tax agent lodgment performance and identifying solutions where trends indicate that achievement of the lodgment program is at risk;
- identify and examine systemic issues with a broader impact on lodgment or related functions over a longer term;
- input into the development of support mechanisms, particularly the Tax Agent Portal; and
- promote a shared understanding of the current program structure.119
3.31 The LWG acts in an advisory capacity and therefore assists the ATO in its decision making. Members also make recommendations on particular ATO products, services and administrative approaches.120 For instance, LWG members were heavily involved in the design of the new Lodgment Program framework which includes the 85% Lodgment Rule.
3.32 Members are expected to have a detailed understanding of the practical issues facing tax practitioners, and/or a detailed understanding of the ATO's administrative arrangements impacting on tax practitioners. Similar to the ATPAG, tax practitioner members have a three-year tenure, subject to the chair's121 discretion while professional association members have an ongoing tenure.122 Minutes from meetings are published on the ATO website.123
3.33 During the review, the ATO also established a Future Tax Industry Limited Life Working Group (renamed to The Future of the Tax Profession Working Group (FTP)), another special purpose working group, to discuss specific work in relation to:
- the 85 per cent tax practitioner lodgment program, the reliability and stability of the Portals and the ongoing consultation process with the industry;
- the transition of services from the Electronic Lodgment Service (ELS) to Standard Business Reporting (SBR) from now to 2016; and
- what the industry might look like in 2020 and what that means to practitioners and their practices.124
3.34 Membership of the FTP comprises tax practitioners, representatives of the major accounting software companies, tax, law and accounting professional associations and senior members of the ATO. Minutes from meetings are published on the ATO website.125
3.35 The FTP was subsequently split into two separate groups, one focusing on short term ('2015–16') issues and the other on long term ('2020') issues.126 Both these groups are co-chaired by members of the professional associations.
Stakeholder relationship and management groups
3.36 The ATO's stakeholder relationship and management groups focus on maintaining relationships with key areas of the community and business. Currently, the ATO only convenes one such group directly related to tax practitioners, namely, the BASAAG.
3.37 According to the BASAAG charter, this group is designed to promote an 'open and frank exchange of views between the ATO, BAS agent professional bodies and other relevant stakeholders.'127 Meetings are scheduled as required and are primarily used to consult with members on specific matters. Out of session meetings may also be held in various formats (for example, phone conference or video conference) between meetings.128 Minutes from face-to-face meetings are published on the ATO website.129
3.38 The seven RTPWGs transitioned to the Open Forum in 2013. Although originally named the Open Regional Forum, in October 2014, the ATO expanded the Forum to a number of metropolitan and suburban areas around Australia and renamed it the Open Forum to take into consideration the expanded demographic.130
3.39 The Open Forum is intended to:
- provide opportunity for regional tax practitioners to have an open two-way dialogue with the ATO on matters that are impacting them, strengthen the ATO's relationship with them and tailor the engagement to ensure relevance to their specific needs;
- use the knowledge and know-how of regional practitioners to inform strategies, processes and communications; and
- allow the ATO to share information on matters of key importance to regional tax practitioners.131
3.40 Importantly, the ATO considers the Open Forum affords 'opportunities for regional practitioners to provide their views on systems and processes, and discuss their ideas and interact directly with the ATO and [its] senior staff of projects and areas that directly affect their work'.132
3.41 According to the ATO's website, the Open Forum is convened as required in different areas of Australia. During the 2014 calendar year, the ATO convened thirty-four Open Forums in twenty-five locations, including:
- Cairns - 12 February 2014;
- Ballarat - 13 March 2014;
- Coffs Harbour - 10 April 2014;
- Darwin - 21 May 2014;
- Albany - 25 June 2014;
- Mt Gambier - 13 August 2014; and
- Rockhampton - 10 September 2014.
3.42 By way of comparison, the previous RTPWGs were held periodically in various states across the country, including New South Wales, North Queensland, South-East Queensland, South Australia / Northern Territory, Tasmania, Victoria and Western Australia.
3.43 The RTPWGs had similar aims to the current Open Forum. For example, the New South Wales RTPWG charter contained the following objectives:
- enable a broad range of tax practitioners to have input into the administration of the Australian tax system by their practical perspectives on systemic issues;
- enhance communication between regional tax practitioners and the ATO on decision making and planning;
- provide an opportunity to identify, discuss and jointly resolve significant tax administration issues that cannot be handled by local tax agent service areas or other ATO problem resolution mechanisms;
- exchange information about future issues and events relating to the administration of the Australian tax system; and
- provide greater visibility of the ATO in the tax practitioner community.133
3.44 RTPWGs were chaired by senior tax officers and members consisted of a mixture of tax practitioners and representatives of professional associations. Members were also encouraged to limit their tenure on the RTPWGs to approximately three years. Membership was reviewed annually and each review considered the capacity of the members to achieve the purpose of the group.134
3.45 Each of the seven RTPWGs had regular quarterly scheduled meetings, two meetings by teleconference and two face-to-face. A summary report of the common and unique issues raised through the groups was also prepared and provided at each ATPF meeting. Minutes from teleconferences and face-to-face meetings are published on the ATO website.135
3.46 Unlike the RTPWGs, the Open Forum is not formally chaired and there is no set membership. Moreover, the ATO has stated that the Open Forum does not have a charter which outlines its function and operating requirements.136 Furthermore, the Open Forum does not re-visit the same region during the year. However, similarly to the RTPWGs, 'follow up' messages presented during the Forum are published on the ATO website. In some of these publications, the ATO also documents the feedback and concerns that tax practitioners have raised.137
3.47 Another key distinguishing feature of the Open Forum is that it is open to a broader range of tax practitioners (capped to a maximum number)138 than the RTPWG which, as mentioned above, had explicit requirements for its membership.
3.48 The ATO has conducted an evaluation of the Open Forum which included the following key findings:
- overwhelming support for the forums to continue and a stated intention to attend future forums, particularly for those who were not professional association members.
- consider delivering separate tax and BAS agent sessions.
- the main reasons for attending a forum were to interact with the ATO, for professional development and information updates. Attendees felt the forums demonstrated how the ATO is becoming more open, transparent and willing to listen.
- provide more time for dialogue between tax practitioners and ATO speakers, especially for raising questions and issues.
- increase promotion and awareness of Open Forums through our website and other channels as most found out about the Open Forums from the email invitation.139
Relationship Manager Program
3.49 The Relationship Manager Program began in 2003 and offered all tax practitioners, representing 100 clients or more, a dedicated team of ATO officers as a point of contact.140 The program also provided a field visit for each tax practitioner within the first year of its operation.141
3.50 According to the ATO, the Relationship Manager Program was an escalation point and was not a first point of contact for tax practitioners nor was it a replacement for ATO telephony and website services. The ATO has stated whilst Relationship Managers were not experts in any area of ATO operations, they would take ownership of the tax practitioner's problem and became the conduit to ensure that their concerns were addressed.142
3.52 Prior to the program being discontinued, an external tax agent services survey was conducted for the ATO in 2011. A number of reasons may be inferred from the results of the survey as to why the Relationship Manager Program was discontinued. For instance, most surveyed tax practitioners had received a visit from a Relationship Manager but just over half of these had not seen one for 18 months or more.145 Those from smaller practices were significantly less likely to have been visited by a Relationship Manager.146
3.53 Furthermore, although those who had seen a Relationship Manager found it useful, their view of this usefulness was trending downward over time.147 The focus of the tax practitioner's last visit from a Relationship Manager was also found to be about providing statistics on the practice's business performance, or was about administrative issues.148
3.54 Notwithstanding the above results, almost half (45 per cent) reported that it was important to have access to a Relationship Manager. The result of the survey of the previous year was similar in this regard.149 Over 37 per cent of tax practitioners had tried contacting their Relationship Manager and most of these (90 per cent) indicated that they had received a visit from their Relationship Manager.150 However, 40 per cent of respondents found it somewhat difficult to contact a Relationship Manager, which was a significant increase from the 19 per cent result in the previous year.151
3.55 The ATO's support and assistance visits are another form of engagement which is only made available when issues cannot be addressed through other channels. For example, when there are significant issues impacting a tax practitioner's practice, such as retirements, restructures, natural disasters, death or serious illness.152 This service was recently replaced with the 'Complex issue resolution service'. According to the ATO, the 'Complex issue resolution service' deals with complex administrative issues or technical interpretation queries.153
Key Agent Program
3.56 The ATO identifies 'Key Agents' as those tax practitioners that are high consequence, such as a large practice whose clients have a low likelihood of compliance risk and those that have influence within the practitioner community.154
3.57 These 'Key Agents' are specifically targeted for consultation to identify and resolve issues within the tax system. According to the ATO's website, the ATO will:
…consult and collaborate with Key Agents to gain an understanding of their practices, and address issues in the tax system that impact their ability to support willing and proper participation of their clients, and identify Best Practice approaches.
…consult with Key Agents on the kind of relationship they want; some possible elements to the relationship model may include;
- maintaining an awareness of the activities of Key Agents
- working closely with the Key Agent to address the issues effectively, as they arise
- appointing a Key Agent Manager to a Key Agent as the point of contact between the Key Agent and the ATO
- encouraging other lines and risk owners to engage the Key Agent Managers, in their interactions with a key agent
- working with other risk owners to employ differentiated strategies that acknowledge the positive role that Key Agents play in the tax and superannuation system
- consulting with Key Agents on a range of systems and administrative issues.155
Other engagement arrangements
3.58 The ATO also utilises other arrangements to facilitate engagement with the tax practitioner community. Such engagements include the 'tax professionals community' online forum. It is an interactive and online channel hosted on the ATO's website for tax practitioners to discuss a limited range of topics raised by the ATO.
3.59 Some stakeholders have acknowledged that, prior to the ATO's January 2013 review of its external consultative arrangements, there may have been too many forums and a degree of rationalisation may have been warranted. Such rationalisation, if implemented appropriately, would bring about efficiencies and cost reduction for the ATO, tax practitioners and the general community. However, it is important to ensure that adequate channels are maintained for ATO-tax practitioner engagement given the interconnectedness of their roles and the benefits to be derived from their co-operation.
3.60 At first glance, the reduction of consultative forums from 68 to just 8 seems to be quite a deep cut that may have adverse effects particularly on the ATO-tax practitioner engagement and the broader relationship. However, the Commissioner's willingness to review the arrangement and make any necessary changes seems to be a sound strategy. For example, the LWG had been reinstated after a year. Whilst, reinstatement of all forums may defeat the purpose of the rationalisation, it is expected that those that are necessary would be reinstated and/or alternative channels for engagement with tax practitioners would be provided.
3.61 The decision to transition the RTPWGs to the Open Forum, for instance, should be considered further as part of the Commissioner's review to assess whether it has had any adverse impacts on ATO-tax practitioner engagement or relationship. The IGT is of the view that, whilst the Open Forum may have extended the engagement to a broader range of tax practitioners, not all the positive features of the RTPWGs have been maintained. For example, a summary report of the common and unique issues raised through the groups was prepared and provided at each ATPF meeting.156 Furthermore, RTPWGs were convened more regularly than Open Forum meetings and in the same regions allowing for the following up of issues.
3.62 Furthermore, in feedback received regarding the ATO's Open Forum, stakeholders indicated that more time for dialogue between tax practitioners and the ATO was needed, especially for raising questions and issues. It was also noted that one of the main reasons for attending a forum was to interact with the ATO.
3.63 The above observations are consistent with those of the ATO's external consultant who reported that for some of the peak forums, “meetings tend to be structured affairs in which presentations are made – the 'messages' are delivered – and some questions raised. There is often little opportunity for dynamic discussion, especially where the group is a large one.”157 The external consultant's report also observed that information sharing by the ATO has become the primary purpose, with little added to the agenda by stakeholders.158
3.64 The IGT is of the view that, where the ATO presents information without consulting or seeking tax practitioner feedback, ATO initiatives do not benefit from their input and they may become disenfranchised which may ultimately be reflected in the compliance behaviour of their clients. It is therefore critical that consultative forums provide a two-way communication. The ATO already has a number of other avenues for disseminating information such as its newsletters, website and social media.
3.65 The IGT also believes that opening up participation, particularly special purpose working groups, to a broader range and number of tax practitioners would enhance the quality of the input, consideration and outcomes. This could be achieved by harnessing existing or new technology, particularly since many tax practitioners are unable to attend ATO consultations. Such technology could include the ATO's new 'tax professionals community' online forum. However, as the ATO currently controls the subjects for discussion on this forum, participation is limited to those issues.
3.66 Online forums would allow the ATO to generate discussion on materials prior to consultations being convened. Such discussions have the benefits of transparency and self-moderation. For example, one tax practitioner's issues may be resolved by another tax practitioner, or greater insights into the underlying causes and practicable solutions may be synthesised by various tax practitioners sharing their experiences. Such discussions would also provide a greater understanding of the practical issues and impacts of potential solutions.
3.67 It is acknowledged that enhancing the current consultative arrangements will come at a cost and that a cost/benefit analysis should be conducted to achieve the optimum result.
3.68 In addition to the numbers of engagement opportunities available to tax practitioners, effective engagement requires participants with diverse skills and experience to match the nature of issues considered and the objectives sought to be achieved.
3.69 The Board of Taxation has commented that 'effective consultation involves bringing together different perspectives to develop more focused policy direction and to generate creative and effective solutions to implementation of problems.'159
3.70 The IGT considers that for external consultative arrangements with an overarching focus on issues of broader or overriding concern, such as the NTLG and ATPAG, participation by the range of relevant tax practitioner representative bodies is appropriate as they reflect the views of the general tax practitioner community and filter those issues of overriding priority. Such arrangements also allow the ATO and tax profession as a whole to prioritise matters of comparative urgency and allocate responsibility of more detailed consideration and response to relevant special purpose working groups.
3.71 In the case of special purpose working groups, the IGT believes that extending their memberships to tax practitioners affected by the specific issue under consideration would:
- provide the ATO with a broad range of views and perspectives including commercial considerations; and
- generate practical solutions that appropriately balance the interest of all parties.
3.72 To assist in identifying such people, the ATO's external consultant has observed that members of specialist forums (such as special purpose working groups) could be drawn from lists of pre-qualified experts appointed by the ATO, based on recommendations made by relevant peak stakeholder bodies and others identified by the ATO as having relevant expert knowledge and experience.160
3.73 For the ongoing overarching forums, such as the ATPAG, the IGT supports the findings of the ATO's external consultant that there should be appropriate turnover in those who participate to provide fresh perspectives and realise further improvements.161 Consistent with this approach, the IGT believes that membership appointments should be for fixed terms but with an option to renew.162
Direct engagement with tax practitioners
3.74 Generally, direct engagement between tax practitioners and ATO senior officers is quite limited. The majority of a tax practitioner's day-to-day engagements with the ATO occur through call centre operators who may have little understanding of the practitioner's business and little influence in resolving underlying issues. Accordingly, the IGT supports the ATO's approach of having senior ATO executives attend many of its external consultative arrangements.
3.75 Stakeholders have commented that the ATO's former Relationship Manager Program was an effective way for tax practitioners to engage with the ATO to resolve issues. Some stakeholders suggested that some Relationship Managers did not have sufficient influence within the ATO or specialised knowledge to directly address tax practitioner concerns. However, they were at least a point of contact, could take ownership of the tax practitioner's problem and became the conduit to ensure that practitioners' concerns were at least with the appropriate ATO staff.
3.76 Although the Relationship Manager Program was disbanded in 2012, the ATO provides a Key Agent Program for a limited number of tax practitioners. This program offers a consistent point of contact and a close working relationship to address issues effectively. Whilst this program has been generally supported, some submissions to this review have suggested that excluding smaller practitioners from this process has created a perception that the ATO favours larger practitioners, especially where the ATO's engagement with smaller practices is focussed on enforcement or compliance and not one of support and assistance.
3.77 It may be too resource intensive to expect every tax practitioner to be allocated a dedicated ATO officer with the appropriate level of expertise and influence within the ATO. However, the IGT is of the view that through the use of technology, discussions between tax practitioners and appropriate ATO officers can take place. For example, the ATO's 'tax professionals community' online forum could be expanded to allow tax practitioners to raise issues which may be considered by appropriate ATO officers. It would be preferable for such officers to have a general understanding of tax practitioners' businesses, a certain level of authority to marshal resources within the ATO and adequate tax technical expertise as well as knowledge of relevant ATO policies, processes and practices.
Transparency and ATO accountability
3.78 Merely improving opportunities to raise issues does not of itself improve confidence that the issues have been considered and actioned by the ATO.
3.79 Submissions to this review have identified that external consultative arrangements lacked adequate processes for capturing and addressing issues raised. In particular, some stakeholders mentioned that since January 2014, any formal agenda setting process that had previously allowed members to raise issues for discussion has been discontinued.
3.80 Participants to the ATPAG mentioned that issues are currently raised on an ad-hoc basis which has led to inconsistency in how the ATO handles the issues (ranging from a separate consultation being held to an issue not being addressed) and a lack of confidence in whether an issue that was raised would be addressed.
3.81 Furthermore, while some external consultative arrangements, such as the ATPAG provide minutes, the level of information captured is not consistent across all external consultative arrangements. For instance, in the FTP meetings, only high level messages and information disseminated during the meeting is outlined in the minutes.
3.82 The IGT is of the view that the ATO's current process of agenda setting and record keeping requires some improvement. Such improvements could be considered as part the ATO's review of the new arrangements set to take place this year. Furthermore, the IGT believes that all issues raised by tax practitioners, whether in consultative forums, online discussion forums or elsewhere, should be recorded, along with the ATO's consideration of the issues, in a central register which would be publicly available on the ATO website. In addition to being a useful tool for tax practitioners and ATO officers, such a register would demonstrate the ATO's accountability and transparency and further foster tax practitioners' confidence in the tax system and the ATO as a fair and competent administrator.
3.83 The ATO already publishes a register of issues relating to the care and maintenance of the tax system, which was the result of a Board of Taxation recommendation in its Improving Australia's tax consultation system report.163 The ATO also logs technical, compliance or administrative matters under consideration on its website. However, this list only outlines the broader matter being consulted and not the specific irritants which would elicit valuable insight from tax practitioners.164
3.84 In some external consultation forums, such as the ATPAG, the ATO already provides tables of issues raised in its published minutes. However, as many tax practitioners are unlikely to review minutes to every external consultation, a central register would provide easy access to all issues that were raised and where available, their resolution. Such a register could also be referred to during consultations, thereby reducing duplicated efforts and alleviating concerns that issues were not considered or addressed.
The IGT recommends that the ATO:
- in reviewing current consultative arrangements, consider reinstating or enhancing some of the specialised or regional forums including improvement of the agenda setting and minute taking processes;
- harness existing or new technologies to expand its current consultative activities to include more tax practitioners with a broader range of expertise;
- allow tax practitioners to raise issues for consideration by appropriate ATO officers through its website; and
- record all issues raised by tax practitioners, whether in consultative forums, online discussion forums or elsewhere, along with the ATO's consideration of the issues, in a central register which is made publicly available on its website.
In relation to 3.1 (a) - Agree in part
We will not reinstate the regional tax practitioner working groups but will continue to engage with the broader practitioner community via consultative groups, open forums and targeted consultation activities. We will continue to enhance the open forums based on stakeholder feedback and improve the agenda setting process in the stewardship, relationship and special purpose working groups.
In relation to 3.1 (b) - Agree
In relation to 3.1 (c) - Agree
The ATO already has existing channels on the website (together with other communication channels) where members of the community including tax practitioners can raise matters for consultation.
Other issues may be resolved by the Complex Issues Resolution service.
We also include the systemic issues as they arise as part of our web based material. Further, issues can be escalated to Secretariats of the practitioner consultative groups directly or via the professional associations.
In relation to 3.1 (d) - Agree
3.85 Stakeholders have expressed concerns that the ATO was, at times, sending important letters directly to clients without the tax practitioner's knowledge and in contravention of the client's instructions and ATO guidelines. Such situations caused anxiety and confusion amongst clients because they expected the tax practitioner to deal with the ATO. It also led clients to doubt the professional competence of tax practitioners and required the practitioner to allay their client's concerns before dealing with the ATO. Although the ATO's communications protocol allows officers to send correspondence directly to the clients where the subject of the correspondence is 'high risk',165 tax practitioners believe many letters did not relate to high risk matters and queried whether the guidelines166 were being followed by officers.
3.86 Stakeholders also believe that the ATO should make more use of modern technology in communicating with them and phase out some of its more outdated methods. For instance, registering for the ELS requires tax practitioners to send a facsimile message (fax) containing an ATO form, which may be inconvenient and increases the risk of transmission errors.167 Tax practitioners also mentioned that making simple administrative changes such as updating BAS reporting from monthly to quarterly required a written letter to be sent to the ATO and could not be done electronically via the ATO Portals.
3.87 Stakeholders have further asserted that communication between the ATO and tax practitioners could be improved if a greater use of email was adopted, such as confirming the details of phone conversations in writing. For example, they believe that transparency and efficiency would be enhanced if emails were used to immediately confirm agreed terms of payment arrangements. Currently, some tax practitioners check such terms have been correctly recorded when they are officially sent by post days later.
3.88 Furthermore, stakeholders noted that many ATO letters were poorly designed and were not adequately tested. They observed such letters used confusing terminology, contained broad information requests or had an inappropriate tenor implying taxpayer non-compliance.168 Furthermore, stakeholders observed that the ATO, on occasion, sends irrelevant or incorrect information to clients causing tax practitioners unnecessary work and additional costs that cannot be recovered.
3.89 The ATO uses a number of communication methods which include post, email, telephone, short message service (SMS) and fax. In some instances, the ATO also provides online interactions such as the ATO Portals and the PAYG withholding variation application.169 However, in other instances, such as registering for the ELS, tax practitioners are provided with one form of communication method only, that being facsimile.170
3.90 In some instances, the ATO provides tax practitioners with an option to determine where clients' communications are sent—either to the tax practitioner on behalf of the client or directly to the client. This currently occurs for activity statements171 and related mail, where for example, a tax practitioner could decide that BASs are sent to them, while instalment activity statements (IAS) could be sent to the client.172
3.91 During this review, the ATO also introduced a 'client correspondence list' feature in the ATO Portals which provides tax practitioners with online access to ATO correspondence issued to clients.173
ATO communication guidelines
3.92 On its website, the ATO publishes guidelines for contacting tax practitioners and their clients. These guidelines apply to all correspondence the ATO initiates. The guidelines sets out a number of correspondence or instances where the ATO may contact the taxpayer directly without informing the registered agent:
- educational letters for taxpayers;
- marketing, research or user testing letters;
- a previous letter to the agent had not resulted in the action required;
- where legal documents or other notices are required by law to be served personally on a taxpayer;
- where there is dialogue with a large business and administrative arrangements, such as key client managers and client-based teams, are in place;
- where a tax practitioner has formally notified their preferences for where their client's correspondence is to be sent;
- where the tax practitioner has not dealt with the ATO on behalf of the taxpayer for a long period; and
- where the taxpayer is suspected of being seriously non-compliant such as when the taxpayer is suspected of being involved in fraudulent activities or tax evasion.174
3.93 However, in all circumstances, including the above, the ATO asserts that when written correspondence is issued directly to clients, the tax practitioner is informed at least one week before the letter is sent.175
3.94 Positive and effective communication with tax practitioners is critical in ensuring a productive working relationship between the ATO, tax practitioners and their clients. As indicated by stakeholders, communication which is incorrect, inefficient, unnecessary or has inappropriate tone, results in uncertainty, anxiety and unrecoverable costs.
3.95 In previous reviews, the IGT has observed that ATO correspondences with individual taxpayers have improved where the ATO obtains feedback on recipients' understanding and impressions through user-testing.176 Accordingly, the IGT supports more user-testing of ATO correspondence.
3.96 The IGT has also previously recommended that the ATO have regard to the findings of behavioural insights research in developing its correspondence and communication strategies. This would involve considering whether the proposed letters would generate the intended response as well as seeking to minimise compliance costs and unnecessary action for tax practitioners and their clients.177 The ATO has begun to adopt such an approach.
3.97 In the recent Debt Collection review, the IGT noted that the ATO has sought to update its debt letters and scripting to incorporate behavioural economics principles and associated design improvements to positively influence voluntary compliance.178 The IGT is of the view that this approach should be more broadly adopted and, in particular, applied to correspondence to tax practitioners.
3.98 In relation to increasing the efficiency of ATO communication, the IGT supports the further use of modern technology. While the ATO already uses various modern modes of communication, such as email, SMS and online interactions, their use could be increased across the board to replace remaining outdated methods. However, the IGT acknowledges that in some interactions, certain communication methods may not be appropriate without additional safeguards. An example of the latter would be correspondence containing taxpayer Tax File Numbers (TFN) being sent via email.
3.99 The ATO has published guidelines for communicating with clients of tax practitioners in addition to, or instead of, with tax practitioners. These guidelines seem to be broadly appropriate. The IGT acknowledges that there may be instances where the ATO may need to contact clients directly or it would be undesirable to give notice to tax practitioners of direct contact with clients. However, such circumstances are expected to be rare and should not form part of the ATO's general practice.
3.100 Whilst the above guidelines may be appropriate, there is room to improve adherence to these guidelines by relevant ATO officers as reflected in stakeholder experience. The ATO has already sought to address the lack of such adherence by introducing a new ATO Portal feature that provides tax practitioners with online access to correspondences issued to clients.
3.101 The ATO has also begun to provide tax practitioners with the flexibility to electronically determine, i.e., via the ATO Portals, where clients' correspondences are delivered. The IGT endorses this initiative and believes there is merit in expanding it to include all tax practitioner related correspondence. However, the ATO's ability for such expansion has been restricted partly due to systems' limitation. Furthermore, some taxpayers may be able to make such determination by themselves through the previously mentioned MyGov platform.
3.102 The IGT believes there is also merit in having an ongoing dialogue with tax practitioners on the way the ATO communicates with them. The IGT acknowledges that it may not be possible for the ATO to accommodate every permutation of the working dynamics between the tax practitioner, their clients and the ATO. However, where there is a broad consensus, further improvements may be realised.
The IGT recommends that the ATO:
- increase the use of modern modes of communication and, where appropriate, phase out outdated methods;
- user-tests all new standardised correspondences to tax practitioners to evaluate their effectiveness in generating the intended behavioural response as well as seeking to minimise compliance costs and unnecessary action for them; and
- allow tax practitioners to electronically access their clients' communications where the latter have authorised such access.
In relation to 3.2 (a) – Agree
This is already occurring through the Digital Outbound Release process.
In relation to 3.2 (b) - Agree
This has been undertaken in the past where practical.
In relation to 3.2 (c) - Agree
The ATO is required to use MyGov for individuals as part of the whole of Government protocol. For other clients there is preferencing available.
Agents within a tax practice with the appropriate access to the Tax Agent Portal will have access to the client correspondence list for clients with a MyGov inbox. This in turn will allow electronic access to the correspondence.
90 OECD, 'Tax intermediaries', above n 2, p 14.
91 ATO, 'Review of ATO consultative arrangements: Report of the ATO Review Panel' (Internal ATO Document, 20 May 2013) p 4 and 8.
92 The Centre for Strategy and Governance, Review of ATO Consultative Arrangements (2013) p 14.
93 Above n 92, p 2; Above n 91, p 5.
94 OECD, OECD: Open Government, Fostering Dialogue with Civil Society (2003); The Board of Taxation 2007 report to the Treasurer: Improving Australia's Tax Consultation System; Department of Finance and Deregulation, Australian Government Consultation Requirements, July 2012.
95 Above n 92.
96 Ibid, p 13.
97 Ibid, p 18.
98 Ibid, p 25.
99 Above n 91, p 8.
100 Above n 91, p 10.
102 Above n 91, p 20.
103 House of Representatives Standing Committee on Tax and Revenue, 2013 Annual Report of the ATO Second Report, p 25.
105 Above n 103, pp 24-25.
107 Chris Jordan, Reinventing the ATO – building trust in Australia's tax administration, ATAX 11th International Tax Administration Conference, Sydney, 14 April 2014.
108 Above n 103, p 26.
110 Above n 109.
114 ATO, ATO Tax Practitioner Advisory Group (ATPAG) – charter(11 February 2015).
121 Deputy Commissioner, Tax Practitioner, Lodgment Strategy and Compliance Support.
122 Above n 119.
123 ATO, Key messages - ATO Tax Practitioner Advisory Group (ATPAG) (6 February 2015).
124 ATO, The Future Tax Industry Limited Life Working Group - key messages, September 2014(16 October 2014).
129 ATO, Key messages – Tax practitioner forums – BAS Agent Association Group (3 April 2015).
131 ATO, 'Open Forum delivery plan', above n 130; ATO, 'Tax Practitioner Engagement' (Internal ATO Document).
132 ATO, 'Tax Practitioner Engagement' (internal ATO Document).
133 ATO, New South Wales Regional Tax Practitioner Working Group charter (22 June 2009).
136 ATO communication dated 4 March 2015.
137 For example, Bathurst Open Regional Forum - 5 December 2012; Coffs Harbour Open Regional Forum – 10 April 2014 - follow up; Albury Open Regional Forum – 30 October 2013 – follow up; Riverland (Berri) Open Regional Forum – 4 December 2013 – follow up; Mt Gambier Open Regional Forum - 13 August 2014 - Follow Up; Darwin Open Regional Forum – 21 May 2014 – follow up.
138 ATO, 'Open Forum delivery plan', above n 130.
139 ATO, 'Open Forum delivery plan', above n 130.
143 ATO communication to the IGT, 26 February 2015.
145 Chant Link and Associates, 2011 Tax Agent Services Survey (2011) p 6.
146 Ibid, p 91.
147 Ibid, p 6.
148 Above n 145, p 93.
149 Ibid, p 96.
150 Ibid, p 94.
151 Ibid, p 95.
154 ATO, New South Wales Regional Tax Practitioner Working Group minutes, March 2013 (11 September 2013).
155 Above n 154.
157 Above n 92, p 13.
159 Board of Taxation, Government Consultation with the Community on the Development of Taxation legislation (2002).
160 Above n 92, p 14.
161 Ibid, p 19.
163 Board of Taxation, Improving Australia's tax consultation system: A Report to the Treasurer (2007) Recommendation 12.
168 The Tax Institute, Submission to Inquiry into the Annual Report of the Australian Taxation Office 2014 (16 March 2015).
169 ATO, PAYG withholding variation application (e-variation) (1 May 2014).
171 Activity statements include GST, PAYG instalments, PAYG withholding, FBT instalments, luxury car tax and wine equalisation tax.
174 Above n 165.
176 IGT, Review into the Australian Taxation Office's compliance approach to individual taxpayers – superannuation excess contributions tax (2014), p 59; IGT, Review into the Australian Taxation Office's compliance approach to individual taxpayers – income tax return integrity program (2014) p 41.
177 IGT, 'Income tax refund integrity', Ibid, p 62; IGT, 'Excess contribution tax', Ibid, p 60; IGT, Review into the Australian Taxation Office's compliance approach to individual taxpayers – use of data matching (2014) p 56.
178 IGT, Debt collection (in progress).