Review into the ATO's employer obligations audits

The Inspector-General of Taxation (IGT), Mr Ali Noroozi, welcomes the release of his report into the Australian Taxation Office’s (ATO) employer obligations audits

“Employers are critical to economic growth and the welfare of Australians by paying wages and entitlements to their employees as well as remitting taxes and super on their behalf,” Mr Noroozi said.

“In this report, we have sought to ease the compliance burden particularly for small businesses whilst ensuring obligations to employees are met,” he said.

A key concern has been the classification of workers as either ‘employees’ or ‘contractors’.  Any misclassification may result in unexpected liabilities for employers going back a number of years or result in employees missing out on their entitlements.

“Key recommendations in the report seek to provide improved tools for making the correct worker classification as early as possible and, where more certainty is required, a binding certification process through which the ATO confirms worker status upfront,” Mr Noroozi said.

A previous IGT review had considered super underpayments and this review builds on it by recommending further improvements including through new tools such as Single Touch Payroll.

This review also considers other aspects of the tax system that employers considered burdensome such as compliance with the fringe benefits tax (FBT).

“My objective has been to reduce the overall employers’ compliance costs particularly in connection with FBT.  Accordingly, I have recommended a review of the FBT regime which I am pleased to say the Government is considering,” he said.

The IGT has also proposed that the Government consider expanding the Taxable Payment Reporting System (TPRS) to the engagement of contractors across all industries and ultimately for reporting to be automated.

“It is also pleasing that the Government has acted on my recommendation in the recent Federal Budget and has extended the use of TPRS to contractors in the courier and cleaning industries,” said Mr Noroozi.

Overall, eleven recommendations have been made. Two were made for the Government’s consideration whilst nine were directed to the ATO who have agreed in full or in part with seven. 

“If appropriately implemented, I believe the package of integrated recommendations in this report will result in significant improvements for employers, workers and the ATO,” Mr Noroozi said.

24 May 2017
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