OSfA’s modernity scrutinised amid 100 feature update backlog

This review comes off the back of the ombudsman’s earlier review of the ATO’s registered agent phone line, which found that agents wanted digital channels that complement business software and reduce the volume of calls.

“In this increasingly digital environment, the way registered agents administer tax and superannuation obligations has fundamentally changed, and the systems supporting those interactions must evolve as well,” the latest review said.

“Agents can usually complete a task but often need to do unnecessary work because OSfA does not support the task as well as they need. They frequently need to take extra steps, switch between channels, repeat tasks or rely on workarounds to achieve the same outcome. This pattern was evident across the issues examined in the review.”

The ombudsman noted that the administrative burden that outdated ATO online services impose impacts efficiency and productivity for workers.

Speaking with Accountants Daily, Institute of Public Accountants tax and superannuation adviser Letty Chen said: “When agents have to manually redact TFNs, make numerous phone calls to the ATO, or spend time chasing invisible client correspondence, that’s not just an inconvenience. It is a productivity drain felt across thousands of practices and millions of taxpayers.

“Practitioners don’t need another list of known issues. They need a clear commitment to delivery and accountability for outcomes.”

The review revealed that 100 changes to OSfA await action in the ATO’s system improvement backlog. The ombudsman noted that some of these have been on the list since before 2022.

“Our review found there are limitations to what agents can complete online, which creates inefficiencies, frustrations and often long or multiple phone calls to the ATO,” Owen said.

“We know the ATO has already begun work to improve its online services, with a new working group of agents and expanded capability planned in its future ICT strategy.

“Enhancements to current digital tools will deliver benefits for the tax community, and the millions of people they serve, and help to relieve pressure on ATO systems and staff.”

The ATO has accepted all three recommendations made by the Tax Ombudsman to improve OSfA self-service, prioritise agent needs, and to modernise ATO digital communication, particularly Practice Mail.

“Practice Mail is a web portal designed as a channel for agents to send requests to the ATO, not to support ongoing two-way communication with agents. It no longer meets the needs of agents who require more immediate two-way communications and broader functionality,” the report said.

“Agents want modern digital services to help them complete routine tasks online and resolve tax matters quickly without wasting their time and clients’ money. There is also a win for the ATO in increasing online transactions and reducing call volumes and manual workarounds,” Owen said.

“Agents are operating in a digital economy but are often dealing with communication tools that belong to a different era. Practice Mail was never designed to support the kind of contemporary ongoing two-way interaction that practitioners now need,” Chen said.

“Practitioners do not want to spend precious time calling the registered agent phone line, but they are left with no choice when OSfA does not have the necessary functionality and Practice Mail is not fit for purpose.”

Further, the ombudsman noted that the review has created an additional administrative burden as agents report the need to request information that the ATO holds digitally, and ATO staff have to manually prepare reports that should have been readily accessible online.

Structural barriers

The ombudsman noted that there are structural barriers to the prioritisation of improvements to the OSfA system.

“The ATO prioritises ideas based on factors such as the impact on agents, legal and regulatory requirements, business priorities, service delivery needs, security requirements, technical issues, funding availability and implementation costs,” the review said.

Thus, the ombudsman recommended that the ATO “address the structural risk that the operational needs of agents are underweighted in their current change prioritisation process for system changes or investment” and “develop a transparent process for communicating prioritisation decisions and providing feedback to agents and their professional bodies on improvement proposals”.

In a statement provided to Accountants Daily, an ATO spokesperson said: “We acknowledge the report’s findings and the opportunities identified to enhance self-service capabilities, improve transparency around prioritisation decisions, and strengthen digital engagement channels for agents.

“Registered agents play an important role in the administration of Australia’s tax and superannuation systems, and we recognise the challenges they can experience when digital services do not fully meet their operational needs.”

Chen said that it is encouraging that the ATO has agreed to all recommendations.

“The ATO must now move quickly from acknowledgment to implementation,” Chen said.

“This report vindicates what IPA’s tax practitioner members have been telling us for years: OSfA functionality has not kept up with the needs of modern practices. Agents increasingly rely on digital services to manage their clients’ affairs, yet many are still forced into inefficient workarounds, manual processes and unnecessary calls to the ATO. Without speedy intervention, these administrative roadblocks will just get worse in the upcoming era of complex CGT and trust taxation changes.

“This is not just an issue for tax agents. When practitioners spend valuable time navigating system limitations, those costs ultimately flow through to clients. Better digital services will mean lower administrative costs, faster issue resolution and better outcomes for clients.”