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Frustrating reality of ATO overlooked in audit report

Tax

Favourable scorecard fails to align with the day-to-day experience of tax agents.

By John Jeffreys 13 minute read

It’s unlikely many tax practitioners will read the Auditor-General’s report, tabled in Parliament on 15 August, about the ATO’s engagement with tax practitioners. But its findings will be of interest to most of them.

My comments are from the lens of my interactions with tax agents (of which I am one). However, my experience has been as an adviser to tax agents and also as the tax counsel of a professional body whose members comprised tax agents.

REPORT SUMMARY

The Australian National Audit Office made several findings and recommendations.

Findings

  1. The ATO is largely effective in implementing its tax practitioner engagement activities.
  2. The ATO has a partly effective strategic framework for engaging with tax practitioners.
  3. The ATO has a largely effective approach to consulting tax practitioners to inform the development of its strategy, services and support.
  4. The ATO provides largely effective services and support for tax practitioners.

Recommendations

  1. In finalising its overarching tax practitioner engagement strategy, the ATO more clearly links its strategies to its tax practitioner engagement objectives and better communicate its strategic engagement approach with practitioners.
  2. The ATO develop a performance framework that provides a basis for assessing its performance in engaging with tax practitioners to achieve efficient and effective taxation and superannuation systems.
  3. The ATO document selection criteria to support transparency, consistency and diversity in selection of tax practitioners for standing and special purpose consultation groups.
  4. The ATO consult with tax practitioners to better understand their concerns regarding the registered agent phone line and use this feedback to guide the development of future service offerings.

The above statements are taken verbatim from the report. The ATO has agreed with all of the recommendations of the ANAO.

COMMENTS

First, I must defer to and recognise the much better access to information that the ANAO has compared to my many anecdotal conversations with tax agents. I have no doubt that the ANAO applied itself assiduously to this report and produced non-biased findings and recommendations.

I must also recognise that it is a glowing comment on our democracy and political system that a department such as the ANAO is permitted to undertake an investigation like this and report to Parliament without fear or favour.

However, I can’t help feeling that many tax agents may feel disappointed with the overall findings of the ANAO. I have heard so many angry tax agents who are frustrated with the ATO and the professional bodies that represent them. They are frustrated with the professional bodies because they don’t believe those bodies represent them properly in ATO consultation forums with regard to the “nitty-gritty” workings of the tax system.

There are a lot of problems that tax agents experience every day and there seems to be no path to fixing these things. Tax agents continually engage in workarounds with software and make telephone calls to the ATO to correct errors and deal with a myriad of issues that come through the ATO pipeline.

A staggering statistic

There is a statistic quoted in the ANAO report that I think is both telling and staggering. In the year ended 30 June 2021 there were 1.5 million telephone calls made to the ATO by tax agents. By my rough calculations, that is about one telephone call for every 10 taxpayers dealt with by tax agents. From my understanding of dealing with many tax agents, these calls are generally about something that the tax agent cannot fix through Online services for agents.

I consider this to be a very significant statement of how the system that tax agents use to deal with the tax system and with the ATO is not working efficiently. Why do tax agents need to make a call to the ATO for one in 10 clients? Remember that tax agents have other online methods of communicating with the ATO. This means that the number of inquiries being directed at the ATO from tax agents is statistically huge. If the system was operating efficiently, this would not be necessary.

Appreciate reality

I take no pleasure in saying that many tax agents are frustrated. I take no pleasure in criticising the ATO. I, and all other tax agents, have things that are far better and more productive to do. Nevertheless, I simply want to point out my experience as the average tax agent and the findings of the ANAO don’t seem to align with my experience. Further, the recommendations of the ANAO don’t give me any confidence that the problems tax agents experience are going to be fixed any time soon.

The consultation process

The ANAO made the comment: “Tax practitioner consultations reviewed by the ANAO are broadly consistent with the Australian Public Service standards for engagement.”

That may be so but that does not mean they are effective.

I know that the ATO prides itself on the range of consultations that it does conduct with tax practitioners, and I do think it should be proud of the effort, cost and time it puts into this process. I also know that the ATO views these consultation processes seriously and sees them as important.

However, my experience has been that the grassroots problems of practitioners with ATO systems and personnel are not being heard to any great extent. Tax agents are frustrated because there seems to be no path to solving the never-ending issues they experience. The consultative forums are not achieving a solution to these problems.

A ‘no-brainer’

Here is an undeniable truth: the tax system would collapse if it were not for the tax agents and the system that is dependent on those agents to administer. Why is this so? It is because the Australian tax system is far more complex than most people can deal with. It takes highly trained people who (compulsorily) spend many hours every year continually learning about the system to be able to explain it to taxpayers and operate it on behalf of those taxpayers.

The government needs revenue. The ATO is owed a massive amount of (undisputed) money by taxpayers who have not paid on time. It seems to me to be a “no brainer” for the government to pour resources into the people who are best able to help raise revenue and to collect money. These are the tax agents!

Tax agents line the critical path to the government collecting taxation money from the population. Pouring resources into making the tasks of tax agents as easy and as efficient as possible will repay the government multiple times over.

Build almost fail-proof systems. Ensure tax agents can get any question answered effectively (this frequently doesn’t happen). Make sure that any change to the software of Online services for agents is rigorously tested so that it is fit for purpose and doesn’t fail.

Ensure all ATO systems are online and functioning properly almost 100 per cent of the time. And so forth.

In my opinion a senior ATO officer (Second Commissioner or Deputy Commissioner) should be appointed with the sole responsibility of ensuring that the tax agent system works as best as it can. There would be a very significant pay-off for the country if this were to be done.

John Jeffreys is a Melbourne tax agent.

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