The Tax Institute makes additional move towards slashing red tape

“This Review should serve as a useful tool for assessing current policies and practices, ensuring that they align with the overarching goals of economic growth and stability,” TTI said. 

Within the most recent submission, TTI commented on issues in the administration of superannuation for entertainers, the transfers of employees between related entities, and client-agent linking. 

According to TTI, there was a significant degree of ambiguity and a widespread lack of understanding concerning the operation of subsection 12(8) of the Superannuation Guarantee Administration Act 1992 (SGAA). 

It was noted section 12 of the SGAA extended for superannuation guarantee purposes the meaning of employee to certain categories of individuals, with subsection 12(8) deeming a person who was paid to perform music, entertainment, sport, or similar activities to be an employee of the person liable to make the payment. 

“Feedback from our members highlights a prevalent misunderstanding among taxpayers, and the challenges for practitioners in providing advice about superannuation guarantee obligations for payments to performers, presenters, and entertainers, with many unaware or uncertain of their responsibilities in this area,” TTI said. 

“This is becoming increasingly relevant as the ‘gig economy’ expands, and more organisations engage service providers online, where they involve some degree of creativity, such as social media engagement, advertising and content creation.”

From this, TTI noted this meant more organisations were engaging individuals in circumstances where it was becoming increasingly unclear whether subsection 12(8) applied, which it asked the ATO for more guidance on. 

TTI also said it was concerned that a measure ostensibly introduced as a benefit to the entertainment industry may dissuade businesses from engaging performers because of the red tape surrounding compliance and the severity of consequences if the engaging entity gets it wrong. 

“To address this uncertainty, we recommend that either a legislative amendment be made to clarify the operation of subsection 12(8) of the SGAA, or that the ATO provides clear guidance on the interpretation of this section, including in circumstances that are relevant to the modern online economy,” it said.

Another suggestion proposed by TTI to help reduce red tape was the introduction and implementation of a mechanism that enables employers to transfer existing information or allows employees to consent to the sharing of their details with a new group employer. 

This was suggested on the basis that the administrative burden for employees and employers when starting a new job or moving positions could become overwhelming for both smaller, under-resourced businesses and larger businesses with high staff transfer volumes. 

“Such a change would not only alleviate unnecessary administrative burdens involved in employee transfers for employers, but also save employees considerable time in recompleting forms,” TTI said. 

Its final suggestion within the submission stemmed from consistent member feedback TTI received about a continued significant lack of support in the client-agent linking process. 

According to this member feedback, when issues arose, the only identified workaround involved taxpayers contacting the ATO directly by email, which resulted in manual updates by the ATO without notification necessarily being provided to the taxpayer or agent who requested the change. 

“This lack of, or inconsistent, communication, exacerbated by a cumbersome contact approach, means that tax agents are often unaware when a client nomination has been processed, creating inefficiencies and highlighting the need for improved notification systems, such as updates via OSfA, to inform agents of new nominations,” TTI said. 

“The Tax Institute considers that there should be more streamlined and efficient methods in place for agents to engage with the ATO as part of the client-agent linking process.

“This would ensure that there is timely communication and notification of changes for tax agents when client nominations have been processed.”

Additionally, TTI said unnecessary time and effort taken to ensure a client had validly engaged an agent was less time and effort that an agent could spend addressing their tax and business needs and added costs, which were difficult to recover. 

As this submission followed a recent one made in October, TTI emphasised it was committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. 

“In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all,” it said.