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IGTO report shows the ATO should have tried less burdensome anti-fraud measures before putting taxpayers and their agents through the process, the bodies say.
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Accounting bodies slam ATO’s use of client linking to tackle fraud woes
01 May 2024
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10 minute read
The ATO should have stepped up basic fraud prevention measures before resorting to a “burdensome” client-agent linking process that forces busy tax agents to do the heavy lifting, professional bodies say.
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CA ANZ, CPA Australia and the Institute of Public Accountants (IPA) said the recommendations contained in the Inspector-General of Taxation and Taxation Ombudsman’s report into the ATO’s management of tax identity fraud showed there were other “relatively easy” steps to keep fraudsters at bay.
The IGTO’s interim report, released on Wednesday, recommended the ATO to improve its administration of taxpayer banking details and refunds as well as tighten lodgment and processing controls.
It said stakeholders were concerned over how fraudsters accessed taxpayers’ accounts, registered for ABNs/GST, changed contact and banking details and lodged returns, and it criticised the ATO’s lack of support and slow action on TaxID fraud claims.
CA ANZ senior tax advocate Susan Franks said the report vindicated member concerns over the ATO’s failure to implement basic security controls before resorting to slugging practitioners with a new client-agent linking process.
“Many members have been questioning whether low hanging fruit, such as checking whether changes to bank account details were authorised, have been appropriately implemented by the ATO, before putting tax agents through the extremely administratively burdensome process of client agent linking,” she said.
“This interim report by the IGTO vindicates CA ANZ member concerns about security controls around tax refunds and has found that greater authorisation checks should be included in ATO systems.”
“Substantial amounts of money flow in and out of the ATO and there is an expectation that ATO systems at least meet the security practices that are utilised by major financial institutions.”
IPA general manager Tony Greco said fraudsters were exploiting several vulnerabilities in the ATO’s systems that could have been addressed “relatively easily”.
“Government agencies need to be proactive in managing these risks rather than reactive,” he said.
Ram Subramanian, interim head of policy at CPA Australia, acknowledged fraud prevention was “at the heart of the ATO’s changes to its client-agent linking services” but said it was “regrettably causing huge headaches for members and clients”.
“The challenge of creating practical online services that are workable and meet the public’s expectations for user-friendliness, while also maintaining the highest standards of modern fraud protection is huge, but one which must be overcome,” he said.
The revised client-agent linking (CAL) system became mandatory for all ABN holders except sole traders in November in a bid to tighten fraud controls by making businesses responsible for linking their myGovID app to their ABN before nominating an agent on the ATO’s “Online Services for Business” portal.
But tax professionals have derided the multi-step process as a “cumbersome”, administrative “nightmare” that is akin to “running into a brick wall”, particularly for taxpayers who lack technological literacy or myGovID credentials.
In response to growing frustrations from the tax community, the ATO has in recent weeks updated its in-system guidance to reduce the number of “inadvertent errors” occurring during the linking process.
However, the updates did not address the difficulty of obtaining myGovIDs, reliance on outdated data on the Australian Business Register, lack of notification to tax agents of client nominations or time spent on the phone with the ATO to troubleshoot linking problems.
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