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.