Last month the Australian Tax Office delivered a blunt message at a Sydney conference – the world for tax practitioners is about to be turned upside down. The pill was sugar-coated by a lively agenda focused on managing and adapting to change but the message was nonetheless blunt and delivered to a slightly bewildered audience on the second day of the conference.
Within two years, there is an expectation that the way businesses interact with the ATO – and by extension, the way they communicate with their agents, and the role those agents play on behalf of their clients – will be totally re-engineered.
The focus will be on real-time reporting, and new online accounting software will transmit data directly to the ATO every time a sale or a purchase is made, every time a payroll transaction goes through, every time an employee is hired or fired.
The days of businesses storing data internally, passing it to their tax or BAS agent to be synthesised into business activity statements or tax returns which are then transmitted to the ATO by the agent are coming to an end.
Instead, data will flow directly to the Tax Office, allowing the pre-filling of forms by the ATO based on exactly the same data transmitted by the business. In short, the systems used by businesses will talk directly to the systems used by the ATO, with data flowing between the two automatically as transactions occur.
MyTax, the new streamlined internet tax return service for individuals with simple tax affairs, has just gone live and is expected to be used by up to 1.4 million self-preparers. If it is a success, expect that number to increase and for taxpayers now using agents to jump ship to the new service. MyGov – the online portal for government services – is growing apace now that the ATO has joined the party.
From now on, all self-preparers – whether using e-tax or MyTax – must log into the ATO system through MyGov. From next year, a new digital mailbox will be launched which will allow the ATO to correspond digitally with all taxpayers registered with MyGov, foreshadowing an end to the use of paper as a communication tool.
The current tools used by agents in their interaction with the ATO – notably ELS and the Portal – are on their way out and will be replaced by a new iteration of Standard Business Reporting (SBR). This will place pressure on software providers to quickly develop systems which meet the needs of both business and the ATO.
For tax and BAS agents, it means that their role as intermediaries between clients and the ATO could be rendered redundant. Where to from here then? Well, assuming all this can be done within the ambitious timeframe (and things didn’t get off to a good start when the deputy commissioner charged with managing the process resigned from the ATO two days after the conference), the focus for practitioners who are adaptable to change will have to be on business advice and not tax compliance.
Making sure that businesses are inputting the correct information, that their systems are appropriate, guiding them through the process, pointing out how their business can be more efficiently run and helping them to plan their tax affairs so as to minimise their risk: these are the areas that canny practitioners need to develop.
It was unspoken at the conference but the inference was clear. Not all practitioners are equipped to make the change – one or two at the conference had only just moved beyond lodging paper returns – and for those the future is bleak. The ATO is telling practitioners they must adapt or die.
This post, by Mark Chapman head of tax products and services at the not-for-profit Taxpayers Australia Association, first appeared on the Taxpayers Australia Association blog.
I cannot see clients accepting their financial information being automatically transferred to the ATO without a tax or BAS agent reviewing first.
I agree that the industry is changing and if you are not embracing cloud accounting you are kidding yourself, but this notion will require a fundamental change in the mindset of clients. Experience tells me that clients simply do not trust the ATO and are afraid of providing the incorrect information.
Most clients are good at what they do, but when it comes to tax and compliance, they want a trusted adviser to give them peace of mind. This is true for all businesses, small and simple through to the more complex.
As a business owner I agree wholeheartedly with James
It doesn’t matter whether one is willing to accept it or not. Information transfer takes place often without end-user knowledge, let alone consent.
If you look at all the huffing and puffing the ATO makes and then try talking with them on the phone, you will soon get the idea this is not something they have the intellectual capacity to implement effectively.
As for real time data transmission – that would have to run through fibre optics and what happens when one of them go down or isn’t available like out back of woop woop?
At the end of all this concept it still ends up in a bottle neck as it has to come back to human beings to sort out the problems and deal with the business sector or general public and make decisions. Looking at it from a math point of view, if there are 15 million pieces of information per day at 1 piece per tax payer for example x 7 days a week x 52 weeks per year then that is just for 1 entry, Imagine having that times 20 or 30 per day. The system wont handle it and the correlating wont really be capable of managing it but it still goes back to the weakest link in the chain – the human that has to deal with the results.
I agree.
One only needs to consider the current ATO pre-filling and data-matching error rates for individual taxpayers, let alone the complexity that a business operating via a multi-tiered group of related entities might represent.
I had an hour long “interaction” with an ATO auditor recently who could not grasp the difference between a sale on “accruals” basis versus “cash basis”.
I am all for increased use of technology and automated reporting, but the ATO’s understanding of what tax agents actually do for their clients, is extremely limited and very misunderstood.
There is, I think, a great big difference between ‘them’ taking all kinds of data from everywhere and me having to log into government computerrs.
My computer is the weakest link in the chain because I am not an IT specialist. Every wall one man can build, another man can tear down, which means passwords to funds, crooks, hostile or friendly governments.
If I am forced to have a connection from my computer to anything financial, they – the ATO – must confirm that they accept liability for the case of financial loss on my part. We are responsible for our actions, they are responsible for the structures that they force people into. They are not going to accept liability to the limit of my funds, so their sophisticated plans to create more unemployment will probably not happen.
As soon as online transactions, links to my funds, go through my computer, my funds are at risk. If they did implement this system, we’d stop our little artistic business as we are generally retired anyway.
If all transactional data is transferred realtime, I fail to see how a taxpayer could furnish incorrect data unless the transactions themselves are a sham.
You have to be kidding… What about the cash transactions… what about the transfers between accounts? what about the non-business payments & receipts. There is so much room for massive error that without an accountant looking over it BEFORE it goes to the ATO, the figures would usually be meaningless and unusable.
Well! Two computers in my business! One to do all my daliy activities on, and send down to my accountant, who will assess, then send it back to me to send to ato! Costly! Yes, customer’s will end up paying for it!
The ATO has the same belief, Alan.
At the heart of all business reporting is the language of double entry accounting. About 1 in 50 ATO employees would actually have any practical experience in reading, let alone understanding, the idiosyncrasy of this language.
I have seen ATO auditors flounder on the most basic of transactions when it comes to distinguishing timing of derivation, for example. And if business tax reporting is so dumbly simple, why do we need 10,000 words of primary legislation, coupled with 100+ years of common law precendents just to define the principles of capital versus revenue?
“IF all transactional data is transferred realtime,”. That sounds so easy when you say it fast.
Someone needs to create or update thousands of existing business applications to be network aware.
To function in real time, which they may not do today.
To connect & communicate with the ATO in a highly secure fashion.
To audit those apps for vulnerability to attack. (most, currently hidden behind many layers of firewalls, would need to be exposed to the internet.)
To correct & clean their data. It is extremely common to find data duplicates & other errors in most organisations. In one public company as we implemented a BI system we found 80% of their data were duplicates.
Alternatively business could swap to new s/w. That involves evaluation, planning, migration, change control & staff retraining. All with zero or negative ROI. But a big opportunity cost due to lost innovation in the areas of their businesses core competencies.
The cost of compliance is MASSIVE, significantly greater than the Y2K effort a few years ago.
For the banks & some internet based businesses this may be fairly cheap, say $20K – $60K. But for larger businesses it could easily run to millions.
I think ATO’s move can be good for the accounting employment market especially at the qualified end. Instead of businesses trusting external advisers, perhaps they should employ competent and qualified accountants instead of bookkeepers. Mind you some experienced bookkeepers are very good
well said, there bro !
And just who is going to be ‘POLICING THE ATO,THEN ?” Before anything more is done or made to enforce this change, who is going to know to if they ( The ATO ) won’t openly go all out in ATTACKING some business or whomever it maybe (?) in a corrupt manner then…
A classic example would be i alike of ( # In theory speaking sense of it all ]
Say, ‘BHP or Gina Rhinehart wants to eliminate their opposition FMG/ATLAS, or even BC IRON, them small based miners that also compete against them (?) they would be such a easy target ( bullet holes inserted here
I was submitting my BAS returns electronically and gave as every second month there was an issue and as I work away could not contact them other than on weekends. Also, have yet to find an email address for them EVER!
So they will need to lift their game before this is a reality…….
Given how poorly both the ATO portals and the my.gov.au sites currently perform there will have to be a huge leap forward in infrastructure before this even becomes remotely viable. The time frames are completely unrealistic.
Nah, there is NO NEED OF THAT BEING DONE EVER !
” For thy almighty ‘ATO’ is never ever wrong. About anything they do, you can bloody ask them ! ”
Over the many years I’ve been alive, I’ve got to hear about many a had been business that’s gone to the wall or arse up. By the incompetence of them that work within the ATO offices AUSTRALIA wide !
I was also in attendance at this conference and am well across the ATO developments in their own technology and also the view of the technology that business and Agents will use in the future.
SBR and everything else touted will be the next steps in the Journey to a better interaction (lodgement, confirmation, reporting and management) of your own or your clients tax affairs.
If you like it is everything we want in a Portal but one that is working and on steroids. Next generation. Our accounting software and our Agent practice management software better integrating with the ATO and other government bodies. However these quotes from the article:
“the world for tax practitioners is about to be turned upside down”
“Within two years…. totally re-engineered”
“…new accounting systems will transmit data directly to the ATO every time a sale..is made”
“The days of …. passing it (data) to their tax or BAS agent…into business activity statements or tax returns….are coming to an end”
etc
is a view of the far flung future (in my opinion)
There is much law that would need to be changed and much much technology development at the ATO end before this model of the future will happen.
Taxpayers and their Agents would be in a very different mode of interaction with the ATO before they would open up their books for everyday review by the ATO.
So is Mark right about the changing world
ABSOLUTELY
Some practitioners more so than others
Is the general direction of the journey right?
Absolutely
But no time soon.
Take a look too at what the UK’s Tax Office is planning – https://www.gov.uk/government/policies/making-it-easier-for-hmrc-customers-to-deal-with-their-taxes
As an individual harassed , threatened and ripped off by the ATO they will never get me to comply with this direction .An expert firewall is mandatory .
My tax agent just mostly checks or redoes what I do and remits it in my returns. Effectivley they are acting as a ATO employee to vet my work and charging me a large sum. It’s a travesty the ATO is allowed to cause this in the first place. Business advice? Both the ATO and my agent need business advice.
It’s not the ATOs job to do your paper work correctly
So have the gonads to lodge your own returns, Drew.
Drew, some agents do charge unnecessarily high fees. I am a retired agent and was working in commercial accounting. I was amazed at the fees charged for redoing and stuffing up what I had done. When I spoke to the Principal there were changes made, but at additional cost. You can imagine the Directors of the company I was working for were not happy with the excessive fees for work which was not required.
I can see many issues occurring if the ATO try to go ahead with this change too quickly. The staff don’t understand half of what an agent does, and agents get into all sorts of trouble if they make an error. This mentality of the ATO taking everything on board doesn’t compute… I can only imagine how many jobs will be offshore and in the end will end up costing the Australian tax payer more and more….
Cash will continue to be the problem for the ATO, many small business hand all their transactions to the agent to enter to a package, but only supply information they want included. Bigger business will have it tougher, especially if the bank data is sent to the ATO as well…
My comment of the week posting by Sholto (thanks for the credit) generated some further discussion on a linked in thread. I thought I would copy in a further comment I made, here;
I think we are a long way away from the tax office being able to use, with any degree of effectiveness, the ability to have open access to business data.
We have a complicated business world and a complicated compliance world.
Business people maybe using their software and creating primary data but it isnt until, someone who understands what that data should look like or whether it is right, checks it and reviews it and says that it will be meaningful data for the ATO. It is only after that review that the data should be used as a basis for working out any tax consequence.
Is the taxman, with open access to data, the right person to work out when the data is ready for them to either accept or get upset about?
Not without a major change to the australian business environment. Not unless income tax is made signifcantly simpler. Not until the ATO understands fully each and every business person.
In effect not until every business person understands the full tax act and records their business transactions to indicate the correct tax result at the time of that transaction all the time every time. not until the taxman understand everything about the business and is prepared to spend the time working out what the business records really mean.
What am I saying?
This will not happen without Agents sitting in the middle of business and the taxman to make sure the information is right.
So how do we make this happen? We have a system of Agents who provide tax expertise to the business owners (who DO NOT want to do this themselves)!
As good as software is getting, isn’t software only a program that does what the programmer tells it to do with the information that somebody else has put into the program. Then the questions are; does the programmer know what the law is and apply it generally correctly? specifically corrrectly? and does the person who puts that data into the program know what the programmer was expecting?
Does the report that the programmer has designed actually have the correct interpretation of the data, or the same definitions of the data required as the person who wants to use the report? There are still far too many cases that the program does it one way that might be right, but also sometimes the programmer didnt tell the program the right way to do something with the data that was put in nor processed it properly, nor reported in the way somebody thought it should be reported. And dont think a “standard chart” argument fixes that……
Thanks Matthew. It sounds like the ATO’s idea of nirvana will run into the messy reality of business. That’s got to be good news for accountants and bookkeepers.
The flow of data from employer to ATO has already begun with the introduction of SuperStream requirements that will be transitioned over time.
ASIC are adopting similar processes in the way they capture data and they intend to use the data to better regulate particularly in their enforcement processes.
Superstream is a laugh. My boss sends information through superstream but never actually pays the super. One employee hasn’t had any super paid for 18 months. We would complain but we live in a small town and if we lose our jobs we would never get employment again
Anne
I would suggest that this will catch up with your employer sooner rather than later – superstream may be a little slow being delivered but the cost of non compliance will force employers into compliance.
Increased compliance using technology is good for everyone.
I didn’t go to the conference but I don’t trust the ATO and their staff and I think big corporate giants are thieves.
Looking back on past tax reforms this will be another big blow for small to medium businesses.
The allmighty ATO will force an undeveloped and illconceived system on to these enterprises, causing them more extra work. They will also have to burden the extra cost of sorting the mess out the ATO creates.
I wonder if they automaticly transfer money straight away back to my account they owe me.
When GST was introduced, the gouvernment and ATO prommissed this would make the system easier.
We know now that all has become far more complicated and expensive for businesses.
Great point about the GST, Karl. Didn’t really work out any easier!
An automated system will probably create a whole new service line for accountants fixing up errors in ATO auto-processing…
How could it be the ATOs error when all that is being processed is information supplied to them. There is no human intervention on the ATO side, so all data received, is data entered by the business owner.
Any error would be their fault, and not the receiving organisation i.e. the ATO.
This comment is a typical mis-informed customer comment.
You said it yourself, its “auto-processing” so how could anyone other than the person entering the data be at fault?
The problem is Billbo, that not every business person entering the data understands tax law. If the ATO then uses the data that is entered by the business person to collate BAS’s and tax returns, I can guarantee that in 95% of cases, the BAS’s and tax returns will not be correct. The elephant in the room is of course, what about all of the balance day adjustments and correcting journals that accountants process each quarter and year to shape the raw data into something viable to be reported to the ATO?
You would effectively need every business person or bookkeeper to have the same understanding as a qualified accountant before the process being discussed in this article would actually work. What ratio of plumbers or builders is going to understand tax and accounting as well as a CPA with 10 years experience?
I laughed when I read this, as a tax agent I still have to fax most documents to the ATO as they don’t allow emails with attachments, the portal is great when it’s actually working, and does the ATO know how painful it is when computers crash because of software clashes? when I call I have to wait while their computer unfreezes and re boots, hardly cutting edge technology on their side. Running this technology on outdated equipment and slow internet connections will leave many walking away from compliance in utter frustration. Technology is moving at a fast pace, but it is no where near being able to do what the ATO thinks it can. If there is an ATO employee out there reading this, what OS do you use? I have a sneaking suspicion it is windows XP.
OS was updated to Windows 8 in early 2014. Staff are no less frustrated, and in the main, do their very best for clients and tax agents to resolve issues. Staff below managerial level are under enormous pressure and work very hard, and are often not appreciated. Faxing documents to the ATO is via a dedicated fax number, but it comes through to the tax officer it is an email. This is done to protect the security/privacy of the information being provided. Too many hackers out there.
Yep, I was given a fax number the other day as “the only method accepted” by the ATO for a particular form of correspondence.
I told them that “we are not that antiquated to still have fax machines.”
Love all comments here but think most are wide of the mark and show an expected conflict of interest by most. I think that tax agents and accountants could evolve into conduits filters through which businesses will comply with ATO requirements AND making sure correct data is submitted. The ATO doesn’t need to ‘know’ about it, the business data is simply filtered for correctness by the agents BEFORE it reaches the ATO!
But this is probably all speculation, a lot of water has to flow under the bridge before this new ATO vision becomes reality, and lets face it, a technological solution to thwart/modify this ATO dream this will no doubt become available at some point.
Besides, despite the ATO’s timeframe it’s unlikely that this will become a reality within two years as forecasted. Also there is the question of whether the ATO can legally prevent a business to consult third parties (agents/accountants etc.) BEFORE submitting data to it.
Yes for sure my clients will transmit every single time every transaction – especially small business owners who are fantastic at their work but not so in accounting.
The thought also that big brother is watching my every move will encourage more and more people into cash economy – I hate the surveillance society we have become.
Also is ato going to pay for customers for this new technology they will need – becuase struggling small business are rolling around in money.
Unbelievable. Calling George…..
If The Tax office wants control of my business this way then please come in, bring your accountants, division managers, sales staff etc and manage YOUR business and pay me MY wages and super for working for you.
Lets see how much overseas investment comes our way.
An interesting idea, but I do wonder how it will work in real time considering the number of SMS messages we get in a week telling us that the ATO Tax Agents Portal is down … and then the number of times when we are able to log on, the whole thing drops out.
I have been in the Tax Profession for 25 years and I agree that the ATO’s Tax Agents Portal (TAP) needs vast improvement before the ATO should even think about these new ideas. You could say that the ATO is still in childhood and has a lot to learn including making the TAP fully operational 24 hours per day and 7days per week. Their current rating is 1 out of 10.
I have a name for the brave new world described in this article…..why don’t we call it “Fantasyland”?
There is a massive chasm between the Tax Office’s talk and their walk. The Tax Agent’s portal is down every weekend….how can any business run like that? Who is responsible for their poor service?
The mantra of the Tax Office appears to be “Ready. Fire. Aim.”
The Tax Agent’s Portal is a joke. During a dispute with the ATO, I was told by an ATO representative, “you can’t rely on the figures in the TAP”!
Re the new plans, I’m guessing no one in the ATO actually understands how many small businesses operate, in that many collate their business expenses on a quarterly basis, when the BAS is due, or often after the BAS is due!
So from a timing perspective the ATO’s goal would require a quantum shift habits for many small business operators. A shift which is unlikely to occur any time soon.
If the ATO starts to access the information in cloud based accounting systems such as Sassu and Xero, there may be a reduction in businesses using these products and moving to systems which the ATO can’t access directly.
At the very least some companies may avoid generating invoices through a cloud based system.
As an IT Systems Integrator that has worked for various government agencies over the past 15 years, I can say with 100% certainty that there is no chance that this “real-time reporting” will happen in the near future.
Real-time reporting from other government bodies (why not), from the Banks (possible), Tax Agents (maybe, but where will the data come from as most small businesses will only report quarterly or at the end of the financial year + a few months) from businesses (not likely as there are just too many variables).
This is yet another example of a bad idea from an agency that seems to be a bad idea factory, the cost to do this would be astronomical! To both the ATO and the business community.
Here’s a good idea and this one is free. Make taxation simpler for business so we can concentrate on what we do. If you make it easier, we’ll make more money and pay more tax.
WIN / WIN.
There is a good reason for all this to happen. As with most bureaucratic institutions those that work there need to be seen as being productive. Certainly, its fair to say that in today’s IT industry here are promising new trends being developed and trailed. These changes will eventually be adapted in various segments of the industry and the ATO is only one of them. In theory so many new systems are possible. In practice they like most new platforms will experience teething problems that will need to be addressed in time. Our tax system is way too complicated and at times can be hard to navigate for even the simplest tax matters.The problem is, how much of this type of interference will effect their clients is yet to be evaluated. Nothing will be 100% ok certainly not these changes. But it does make logical sense to looking into these changes now. It does make logical sense that the system will need to be streamlined and simple to use. If not there will still be the good old system that I am certain will still play a significant role in collecting taxes and keeping the ATO functioning. The most important issue for the ATO should be collecting taxes from those companies, Since the onset of the Global Financial Crisis, Australian companies have been paying around 27 cents per dollar of profit compared to the statutory rate of 30 cents per dollar, Treasury said. Google was reported to have paid $74,176 in tax off $201 million in revenue – a figure later disputed by the company, which claimed its tax bill was closer to $781,471. Resources tycoon Clive Palmer, leader of Palmer United Party, has not paid the Australian Taxation Office any income tax for his three companies in the past six financial years. In fact, it is the ATO that has paid Palmer’s companies a total of $1.66 million since 2008, as well as $45 million a separate windfall payment when one of his companies paid too much capital gains tax in 2007. I am certain there may instances that certain companies are working towards minimizing their tax liabilities and that reasonable but the system has to be fair to all, not just a few. OECD research shows taxes on wages in Australia are the eighth lowest in the advanced world, with only seven much smaller countries offering lower tax rates. Based on single workers earning the average national wage, taxes account for 27.2% of employment income in Australia compared to the developed nation average of 35.6%. So really, we are not doing do badly but we need the simplify the system for all would be a positive start in the right direction and certainly cost effective for all.
I can agree with most of the comments made by ‘JM’ however, I’d like to clarify that the tiny island of Singapore with its space age economy and development, both socially and economically, the government there (all highly qualified professionals too I would add), has a massive growth principle.
PAYE is 15% and yes, they have GST @ 10% but they do not have the raft of dozens of taxes aka ‘Duty’ Excise charges, Land Taxes, Stamp Duties and at least 60 other forms of taxation.
All the above, unless you have a mammoth business, i.e Casino, Mining, etc when those with such wealth appear to be either ignored or in fact are even paid refunds by what passes for government in this nation.
The planned changes will take many years to ‘ kick in, e.g.MYKI, Westgate Bridge and more recently, the many changes to the Vic Roads Pantomime show.Ever increasing problems with what are really fundamentals of economic growth in most developed countries, here it appears to create knee jerk reactions in Australia where too many layers of control by governments are in charge . Harking back to Gt Britain in the late forties is about the pace of Australia today, it’s time to wake up.
As a small business owner. I do wish that the Australian Government would do more to make sure that the following areas are looked into at length. So that business can concentrate to growth their business and hence be able to contribute more. So it will be a Win Win situation!
1/ Make changes to the current Tax systems to make it much simpler.
2/ Make it compulsory for business owners/operators to attend Tax Compliance Education Seminars regularly to make sure that they do understand their obligations and Penalties for failing to comply intentionally.
3/ Build a very friendly transparent healthy relationship between the ato and business and the business environment.
4/ Very often business owners leave it to their accountants to worry about Tax Compliances as they are too busy running their business so the conducts of these professionals are very important. The Government should make sure that accounting professionals should conduct themselves professionally.
5/ The ATO should really need to take time to understand each and every single business/ its operations- the day to day task of running business hence make recommendations to improve .. to make it more efficient. Culture differences- customs and language barrier should also be taken into consideration.
6/Government /ATO are also there to help and support business.
Voice of a migrant to this beautiful country! Together we will advance Australia’s Fair!!!
Love this country!
At 83 I need the good help of my tax agent. I give all records etc-she does the figures and that’s it….Remember that old saying–“IF IT AIN”T BROKE DON”T FIX IT”
This is what happens when we allow public servants in Treasury to have children. We end up with Public Servants who have no idea what reality means. We have a Tax Portal that does not want to work as well as Tax Staff that do not want to work. We the Tax Agents have been lumbered with all of the data entry & lodgements to comply with. My question is has anyone in the ATO had a reality check before even thinking about introducing such an event. So much for cutting RED TAPE, this will strangle small businesses. Imagine a brick layer or concreter being told of these changes and how they have to comply?
I would be curious to know if such a approach has been used anywhere else in the world? Definitely not any from the G20; definitely not from any of our country’s customers. It is hard to tell then if it would work. Perhaps a suitable trial may be for G2G (government to government) transactions for a definitive event (like the Commonwealth Games at the Gold Coast) or a trial for industries who voluntarily want to test the new system (eg hairdressers in Tasmania). Some empirical data and analysis would be a good start to assuage fears from industry professionals like tax agents and for interested taxpayers rather than a bold but hollow announcement from an ATO representative at an accounting convention
Hi Grant, in Norway the government sends automatic tax returns to employees and no response is considered acceptance. See this story with a link to the full speech at the bottom.
Except this isn’t Norway, the tax laws are different, and Australians have a very healthy skepticism about the intentions of government.
And of course there is quite a large difference between an employees tax return being automatically generated, and using un-checked data entered by a plumber to compile BAS’s and tax returns. The error rate would be something to behold.
I cannot do without my tax agent, the tax laws are too numerous and complex for any individual to absorb them. This, of course, puts the ATO in the box seat as they can ambush you with all sorts of demands for extra tax, and even retrospective assessments. If you challenge them, and only those with deep pockets can afford to, then the disputed amount accumulates interest at the 14% General Interest Charge rate – for years sometimes.
As a post above says, the tax laws need to be made simpler, and fairer. But this will never happen, as the ATO has a vested interest in keeping things as complex and cloudy as possible to justify their own existence.
Like all government agencies, the ATO administer law, they dont make it.
If it is cloudy and complex, this is due to your elected officials that voe yes on the bills introduced to parliament.
and do you think the minister for taxation creatively draws up his own draft tax bills or do you think he calls on the advice of ……. “THE ATO”
The only way this plan can ever happen is if the ATO maintains an appropriate accounting software package on its supercomputer that allows everyone to set up their accounts on that system. In other words, businesses would no longer need to have their own accounting software packages on their file servers, but would simply log into the ATO file server to record all their transactions. But it isn’t going to happen. This plan is wishful thinking on the part of the ATO. What the ATO should be doing instead, is advising the government on how to completely simplify the tax system in Australia, which quite frankly, is a bloody disgrace! Now that is something that can be and should be done.
This time i will agree with those people who always talked about privacy rights. If all information is directly sent to the ATO where lies our right to protect our privacy, it is not about not lodging anything that needs to be lodged, but where is pur right to choose when and where we want to lodge or use to lodge the tax returns. It will be somethind decided by the ATO. Taking away our rights to choose.
I am a degree qualified CPA in public practice. I work remotely from any country in the world I happen to be in.
Clients staff who are not qualified just simply do not know what they are doing in their accounts, whether online or not.
I will not spend my days fixing this mess in a format accessible by the ATO, whether online or not, so good luck to the ATO with this ie dealing with all the secretaries in businesses, rather than tax agents, because we wont….
mmm, Lets see, maybe I can become a GP with no tertiary training – clearly all I need is a computer!
A lot of hot air requiring major changes to legislation and software, along with the assumption that the legislation is simple and the whole country has a stable internet connection (neither are true).
The ATO’s focus is always going to be on compliance with a revenue bias.
Plus they’d want to be careful alienating the only group of professionals who make their job easy for them.
One year of working to regulation and lodging paper returns just prior to the due date might remind them to be a bit more appreciative.
For all the ATO’s sabre rattling it won’t happen, Somebody mentioned the ATO does not have the capacity to implement, they will try and they will cock it up. The ATO is so out of touch with reality as was evidenced by one of the Assistant Commissioners who stated that there has never been any trouble with the Agent Portal, it was the agents themselves that were having the trouble not the ATO. and on this I will agree, we are having trouble and that is getting the ATO to agree there was a problem. That this is going on as a rushed implementation leads us to believe that the cock up will be of monumental proportions. the 5 P’s (Poor Planning leads to Piss Poor Performance).2 years should be pushed to 4 years and a trial period of 1 year at least
i found it will be a burden for small business, if there are any issues have to call ato, what happen, the other side will ask u to dial 1 for what, dial 2 for what, ……..etc. then the other side say it is currently very busy and ask u to wait. u just wait, wait, wait…………..till the other side ask u to call lately and hung up.
I too am a tax accountant. I can see where the ATO is going on this. If you lodge your bas’s on line it would be a simple step through the cloud to lodge your accounts. All you need to do is set up authority for a another entity to see your accounts. You do your stuff your accountant checks it on line, once its ok you give permission to the ato to view it. Xero has this capacity. As far as the portal is concerned it is slow when tax deadlines are usually due so you work around that and log on at another time. Brain H. I can see where you are coming from. Does your firm not have junior or intermediate staff. there is difference between tax compliance and tax consulting.
I was asked by a ATO “specialist” why the nett profit in my company ( 28,000.00) was allocated to the director as a director’s annual fee, based on FY performance., prior to tax lodgement. If that llustrates a lack of knowledge by a ATO employee in basic accountancy , that fact sums up the opposition to the proposed changes in reporting transactions.
Who elected the ATO to govern us?
I found this article to be very thought provoking, and amused by some of the responses. I feel it generates so many more questions.
AI – S Hawkins summed it up.
Will we will not be able think for ourselves in the future? Already our daily lives and business are dependent on technology, governments/organisations will continue to seek in controlling technology to the nth degree and our daily lives by the minute, control how much money we make /spend, even more so in the future. There will only be rich people/organisations with smart machines.
New moon to race to. Maybe there will be a one world (supercomputer) government after all to control and monitor the world resources, morality and sociality. I think of the food chain diagrams taught in primary school. We as humans continue to attempt to climb higher up the chain even over other humans. All with the underlying MO ‘for the greater good of MANkind…’
How do they/will they factor in human error, soon there will be no tolerance for human error.
There is already discrimination by insurance companies (that use their electronic data) for certain genetic traits.
Technology -love it or hate it. It entertains us, it controls us, it helps us and uses us against us…
I smirk as I think “I would love to be there in the future when they need to pull the plug or maybe it will be too late for that”.
;)kW
Frightening – being dictated to by some bureaucrat – reminds me of a famous book called 1984
“There was of course no way of knowing whether you were being watched at any given moment. How often, or on what system, the Thought Police plugged in on any individual wire was guesswork. It was even conceivable that they watched everybody all the time. But at any rate they could plug in your wire whenever they wanted to. You had to live—did live, from habit that became instinct—in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinised.” 1984 George Orwell
I am not sure of Mark Chapman’s background but I think there is a bit more journalist than day to day accountant / bookkeeper. I think we will eventually see the demise of the current roles of the bookkeepers and accountants but not within two years. Also I do not think it will be at the behest of the ATO. When you set up Intuit Quickbooks it checks how many similar businesses are operating around you and compiles their chart of accounts to suggest an ideal chart for your business. I am just reporting this; I am not advocating it. They are also trying to automatically code the transactions so that from the very start, the businesses transactions will be correct according to how everyone else is coding them up. As one correspondent said, they are paying lots of money for the accountant and the tax office (and quite frankly, probably a bookkeeper) to check their figures. These are all “dead” overheads that a business owner will quite rightfully try to minimise. I found this whole exercise quite interesting in a different way – I think there were some exaggerations and wild claims but the reaction of the respondents was indicative of the industry of accounting and bookkeeping and, quite frankly, why it is in trouble.
No system is ever going to be perfect, human mistakes see to that. What we need is simplified tax rules, accessible accurate information, and common sense!
If I could get help about a mistake, or something clearly explained without 5minutes of punitive rhetoric from a phone call, I would happily disclose my information knowing I won’t be branded a crook for not understanding something tax agents can’t fet their heads around! Why should I pay fines or interest for honest confusion, when paying the correct a mount should be what it is all about?
So sick,of being threatened in every piece of paperwork I recieve about any tax activity. Tell me the facts, answer my questions and go chase a real tax evader…apple anyone?
And to those who tell me to get it right, I try to, you don’t know my circumstances, nor is it your business.
When decent people are not frightened to expose their information for fear of an ignorant egotistical auditor at the front door bullying and standing over them, the tax might just roll in a whole lot better!
I want amd try to be honest, but that won’t be believed by jaded, cynical tax officials, much the same could be said for Cemtrelink. Allow people to right mistakes without never ending threats and rude arrogant behaviour and people like me would be so relieved to get on with things.
i cannot understand why oh why they don’t make it simple to get revenue by just dropping income tax completely and introducing a consumption tax ( GST ) at a rate that is equal to the revenue gained from income tax ??.
People also need to realise that the ATO is not part of the Australian Government, despite being called Australian Taxation Office. It is a private organisation. This means all your personal and business financial data is held by a non Government entity.
Interesting how these commissioners keep resigning.
Because the burden of tax, as expressed as a percentage of income, will be higher for people on lower incomes.
Also, there are a number of tax offsets (aka “Rebates”) which could no longer assist those on lower incomes.
Interesting article and more interesting comments.
It seems there are a couple of streams here although I see no comments from technology providers. As a “cloud” provider I think this should and will happen for both business transactions and payroll transactions.
It astounds me that business people in this country still think its OK not to understand the way GST works and that “trusted” professionals are still not willing to accept and embrace technology.
The facts are that a realtime transaction recording platform would not be difficult to either deliver nor would it be difficult to make high availability. the difficult thing will be what the ATO does with the data and the other services it delivers that are associated with the data – these are very different things.
I for one applaud the ATO for what its doing in this space and look forward to working with them to make it happen in the payroll space.
Gotta love technology !
I still have to see a reply to one poster who asked whether this had been done in any other country. If not, why not?
I would be very interested to hear from a senior banker. Will they accept the financials prepared by SBR software that has not been checked by a tax agent/ Member of a Professional Body? Business loans, home loans, agri-business loans, overdrafts, credit cards………
If not and financials are to be prepared by suitable qualified professionals, what happens when we do the financials and (without guessing) our net profit is dramitically different to the SBR software almost 100% of the time. Do we report this to the ATO? Does the bank have a duty of care to deny the loan application? Wow, now that sounds like a lot of amendments!!!!!!!
And also, I thought no-doc loans when out the window years ago!!
This might be interesting reading for some…..could be part of the selling off of Australia,,,,,
http://www.larryhannigan.com/australian_tax_office_is_an_illegal_entity.htm….this is interesting reading ,,,, seems we may have been duped for quite some time. But , if true ,, might explain the confusion we have with today’s government running for cover every time a serious issue evolves that they are supposed to address.
Starting from 1 July 2013 (or it might have been 2012), every entity involved in making payments within the building industry was required to lodge with the ATO details of every payment made.
How was the data to be lodged? – by paper of course, so that an army of DPO’s at the ATO would have to re-input the data.
I would love to know how much of this data has been actually used in audits.
The ATO can’t get the Portal right, for goodness sake – despite the lies they tell about its stability.
Like my old mate Arthur Daley used to say – “It’ll never ‘appen”
truly fantastic- the ato could perhaps work on more straightforward matters for the time being
eg -over 3 weeks ago[2/2/15] after a non receipt by post of my ABN lodgement form i rang the ATO & requested a replacement-a replacement no was given to me & i was informed this could take 10 days.as of now[2/3/15]it has not been received.
ato–give us a break!
If Australia’s tax requirements had not become so complicated, there would not have been a need for tax agents in the first place. With regard to what the ATO now proposes, I’ll have to see it to believe it!
Ha ha, it’s 2016 and I’m still laughing.
Radical change… still ahead! 🙂