ATO Reviews Tax Administration Progress

by Mary Swire, Tax-News.com, Hong Kong

15 April 2010

During a recent speech to the Association of Taxation and Management Accountants, Australia’s Tax Commissioner, Michael D’Ascenzo, reviewed some of the tax administration improvements being put in place by the Australian Taxation Office (ATO).

The ATO, he said, was in the midst of the most critical stage of its major systems upgrade, known as the ‘change programme’. This current update of its income tax processing systems is the largest IT deployment the ATO has ever undertaken. However, as the new system is bedded in, he appreciated that there have been issues for some tax agents around client refunds and processing of income tax returns.

Whilst he apologised for the inconvenience, he said that “some disruption was unavoidable given the scale of our endeavour” and that the ATO has “always sought to mitigate the adverse impacts expected during this transitional period.” He disclosed that the ATO had begun to transfer 27m taxpayer records, 32.5m accounts and 282m forms to the new system.

In addition, he added, there is a new regulatory framework for tax professionals. The new regime, administered by the Tax Agent Services Board, has a wider scope of operation than the previous system. It replaces the six state boards with one national body, independent from the ATO, to provide a consistent registration and regulatory regime for tax and business activity statement (BAS) agents across Australia.

The ATO is also providing greater protection for taxpayers through the introduction of safe harbour provisions. “These are essentially consumer protection measures for the benefit of taxpayers,” he said, “but also provide an incentive for taxpayers to use tax agents.”

“Safe harbour means that, under certain circumstances, taxpayers who engage a registered tax or BAS agent are not liable for administrative penalties that ordinarily apply for making a false and misleading statement resulting in a shortfall amount or for late lodgement, although the requirement to exercise reasonable care remains unchanged.”

He further indicated that “standard business reporting (SBR) is on track to start from July 2010 and is aimed at helping cut red tape. SBR will simplify business-to-government reporting by pre-filling forms; removing unnecessary duplication of information; adopting common, consistent language; and providing an electronic interface to agencies directly from accounting software.”

“To allow reports to be sent direct from accounting systems, SBR has a single sign-on credential – AUSkey,” he continued. “This single credential will allow you to interact with multiple government agencies, rather than having to maintain different PIN, passwords or digital certificates for each agency.”

Finally, he stressed the help and assistance available from the ATO for small business facing financial pressures from the economic crisis - including guidance on better record keeping, personalised lodgement and payment arrangements, remission of penalties and interest in appropriate cases and the release of debts in cases of genuine hardship.

As at the beginning of March this year, he disclosed that nearly 200,000 payment arrangements worth over AUD4.5bn (USD4.2bn), and nearly 5,000 deferrals of activity statement due dates, had been granted. The ATO has appointed key relationship managers to various industry and business organisations, including the Council of Small Business of Australia and the Australian Chamber of Commerce and Industry. The small business assistance programme is currently working with over 280 external organisations, with an estimated membership of 1.4m small businesses.

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