The Inspector-General of Taxation’s (IGT) review into the Australian Taxation Office’s (ATO) services and support for tax agents and business activity statement agents (collectively referred to as tax practitioners) was undertaken in response to concerns raised by the latter and their representative bodies. These concerns related to access and adequacy of ATO support and services and the resulting strained relationship between tax practitioners and the ATO.
Maintaining a positive relationship between the ATO and tax practitioners is critical to the functioning of the self assessment system as the latter assists approximately 70 per cent of individual and 90 per cent of business taxpayers to comply with their tax obligations. Tax practitioners are also an invaluable source of knowledge and practical experience which may be drawn upon to develop more effective and efficient tax laws and administrative practice.
A key underlying cause of the strain on the ATO-tax practitioner relationship has been the reliability and functionality of the ATO Portals — gateways through which tax practitioners can use a range of ATO services. The ATO Portals have been described as an indispensable tool of trade and ‘the most useful tools that the ATO has ever provided’. However, in recent years, their unreliability has been a major source of tax practitioner concern and frustration as they believe it has resulted in productivity loss, missed deadlines, irrecoverable costs as well as damage to their reputation and relationship with their clients.
The ATO has acknowledged the concerns with the ATO Portals and believes that it will address the majority of tax practitioner concerns in the long term by migrating to a ‘more functional software platform and flexible online system.’ However, such a migration causes further uneasiness for tax practitioners because of their previous experience with the ATO’s deployment of new technology. In this regard, the IGT takes comfort from the ATO’s approach to maintaining the current ATO Portals and operating them in parallel with the new system.
At the closing stages of this review, the ATO advised that it estimates the migration to occur within the next two years. During this time, the ATO will not seek to implement key improvements sought by tax practitioners to the current ATO Portals but will limit enhancements to maintenance and stability assurance. Therefore, it is likely that some of the tax practitioner concerns and frustration may persist in the short term.
In addition to the above migration, the ATO is also part of the whole of government transition to Standard Business Reporting (SBR) — a standard approach to online or digital record-keeping to simplify business reporting obligations. The success of SBR relies, in large part, on the adoption of SBR-enabled software by tax practitioners and taxpayers. Therefore, rather than alienating tax practitioners by messaging such as ‘evolve or die’, the IGT believes that the ATO should work closely with them, as well as software developers, to optimise the user experience of resulting SBR enabled software and provide practical guidance to assist with the transition to SBR more broadly.
Another source of concern for tax practitioners has been the accuracy of ATO information and ATO communications which they believe has, in some instances, generated unnecessary follow up work and costs for them. The IGT has recommended improved communication by user-testing standardised correspondence to ensure that the tone and content are effective in generating the intended behavioural response and minimising unnecessary contact.
Tax practitioners have also raised concerns with the delays and quality of support provided on the ATO’s website and telephone services. In this regard, the IGT has recommended improved ATO telephony services by maintaining shorter wait times, having technically proficient staff to answer calls, simplifying the proof of identity processes and improving the ATO’s website by taking into account tax practitioners’ needs.
Concerns have also been raised in respect of the ATO’s Lodgment Program and associated communication which left an impression that the ATO did not sufficiently recognise tax practitioners’ role in facilitating taxpayer compliance and did not appreciate individual practitioners’ circumstances. A key cause for concern focused on the ATO’s requirement for 85% of tax practitioner clients’ returns to be lodged on time or risk losing access to concessional lodgment timeframes. The ATO has acknowledged shortcomings with its initial communications in this regard and has subsequently clarified its approach publicly by conveying that action would only be considered where the percentage of on-time lodgments is significantly lower than 85%. However, concerns have persisted with the transparency and basis for the ATO’s calculations of percentage thresholds for action. The IGT has, therefore, recommended that ATO communications on lodgement performance enable tax practitioners to independently verify the accuracy of ATO calculations and that tax practitioner business models and individual practitioner circumstances be taken into account when considering late lodgment requests.
Tax practitioners have also raised concerns with the rationalisation of the ATO’s consultation arrangements, which was seen by some practitioners as reducing the opportunities for them to engage and raise issues with the ATO. The IGT has recommended a number of improvements in the way the ATO engages with tax practitioners. Similar concerns with the ATO’s consultative arrangements have also been raised in other IGT reviews. The new arrangements will need to be bedded down and are likely to benefit from further enhancements as time progresses. However, should concerns persist, the IGT may consider undertaking a broader review of the ATO’s consultation arrangements in future.
Overall the IGT has made eight recommendations, with which the ATO has agreed fully or partially. The IGT believes that the appropriate implementation of the recommendations in this review will result in an improved ATO-tax practitioner relationship which, in turn, will have a positive effect on the administration of the tax system.