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Tax Professionals Conversations – Online services for agents, Single Touch Payroll and the future of the tax profession – transcript

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VLAD DUGANDZIC: Good afternoon, and welcome to all of our tax practitioners joining us our live webcast today. My name is Vlad Dugandzic and I will be your host as we discuss a few topics which will be revolving around online services for agents, Single Touch Payroll, and of course the future of the tax profession.

As always, in order for these webcasts to work it's really important to have an expert panel, and today we have a brilliant panel. When you look at it we have perhaps the three most popular or most famous Assistant Commissioners within the ATO. I’ll introduce them in a moment, but my mum always said to me make sure that you’re very respectful.

So I’m going to introduce Kathryn Harris first. Kathryn Harris is a registered tax agent, first-time here today Kathryn, and you’re TrustOne's Tax Partner. You’re recognised as one of the top 50 women in accounting and recognised internationally as a top influencer in accounting. A published author and taxation expert, Kathryn is passionate about accounting, numbers, superannuation, all things tax. As I’m sure all accountants are.

Pretty impressive Kathyrn, but did you know, with Kathryn, she actually used to be a trombone player? And her citizenship, plus her four children – they’re Canadian.

KATHRYN HARRIS:

Yep

VLAD DUGANDZIC:

So there’s no politics for you.

KATHRYN HARRIS:

No politics, no federal politics anyway

VLAD DUGANDZIC:

Kathryn, sincerely, thank you, welcome. And I hope you enjoy this webcast.

KATHRYN HARRIS:

Thanks.

VLAD DUGANDZIC:

We’ll start from the other end, we’ve got Andrew Watson, Assistant Commissioner, with Tax


Professional Digital Services. Andrew’s got 20 years’ experience in the ATO he is responsible for supporting the transition of tax practitioners of lodging tax returns from ELS to PLS, and of course, Online services for agents Welcome Andrew.

ANDREW WATSON: Thanks mate.

Next, we’ve got John Shepherd, Assistant Commissioner with Single Touch Payroll, and he’s been leading it for the past few years now here at the ATO. John has held a number of senior roles in the ATO, particularly leading significant change programs and projects that seek to improve the client experience. John tells me he is a budding tennis player as well, even though his name doesn’t end in ‘itch’, and that he plays on Thursday nights, and his claim to fame is that he beat Todd Woodbridge, so that’s pretty impressive, and it wasn't in doubles to, which is his forte but nice work, John, and welcome.

And last but not least, we have Colin Walker, and he is the Agent Services, Support and Experience, Assistant Commissioner. So he looks after the relationship between the ATO and Tax professionals. He has worked in the tax profession in many roles, both locally and internationally, for over 40 years now, and has extensive experience in public administration and project management. He told me about his first car and it was called a Simca, so he’s a budding mechanic, and he had one of them and 26 in the backyard to keep this one car running. Welcome.

COLIN WALKER:

Thanks Vlad

For all of you joining us today, as always, we will have the live-chat facility, so I encourage you guys to post your questions on the live chat-facility as they go. A great by-product of these webcasts that we’ve had is many of you will answer each other's questions, particularly when it comes to something that maybe a little bit technical.

I encourage you to get into that. If we don't have time to answer any questions, we will look to answer them in future webcasts. Aside from that, we will go for about one hour and we hope you enjoy the webcast. There will be a live recording of this later, so please make sure you share this with your colleagues and if there is something you missed, have another look at it.

Before we hand over to Andrew, which we will start off with Online services, but recently there's been a lot of scams, all of these robo scams that have been happening, and what they have been doing, they’ve have been spoofing ATO phone numbers. Colin, I’ll get you to talk a bit about this and what to do. I understand they have actually been using your personal mobile number, so they’re getting messages coming from Colin Walker demanding money. Is that right?

COLIN WALKER: Something like that Vlad, and very unfortunately, yes I’ve had a large number. Look the answer for your clients is just tell them that we will never ring up and demand immediate payment, and demand that you go to an ATM machine or anything of that nature. We also will never send out a sheriff or something of that nature, with a badge, to arrest you. Those things just don't

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happen.

The important thing is tell your clients, delete those kinds of messages, don't pass on any information, and to come to you - you know their situation. If by some chance they have passed out some information and they are worried about that, they should call our scam hotline, which is 1800 008 540 and then we’ll work out what we can do to protect that information. Always go to their agent.

VLAD DUGANDZIC: It's not isolated to the ATO. Scams is a Worldwide problem. Kathryn, you've got a lot of clients, what is your experience? Have you actually experienced any?

KATHRYN HARRIS: We had one last week, she felt very threatened and she went and withdrew the money to buy the steam cards, whatever they were. And then had a moment of thought, and thought it doesn’t sound right and rang us. It was quite a threatening call, and they actually knew the name of our firm and said they were in our offices, that’s what they claimed.

She thought there was some authority behind it. At the end of the day, they prey on fear, they prey on people being a little bit frightened of the ATO, which isn't necessary. And again we tell our clients to always ring us, we’re happy to have a look and clarify anything.

VLAD DUGANDZIC: And the fear of the ATO, I know that you’ll all agree, there is nothing to be afraid of with us, as long as everyone is doing the right thing.

COLIN WALKER: Soft and cuddly, Vlad

VLAD DUGANDZIC: Yeah, that’s it. So Colin, last time we had the webcast there were a lot of disasters and typically in Australia in December, January and February, it’s always disaster ridden and there’s been some cyclones since. Is there something you want to remind our practitioners about when it comes to disaster relief, what the ATO does and what they should know?

COLIN WALKER: Yeah, look Vlad, it's very important for us to ensure that you don't have to worry about those kinds of disasters. From a tax perspective, we will always do something; whether it’s deferrals, we will put things aside and look after your debt situation throughout those periods. That‘s for both the agent and the clients.

We know there is a continuing problem in the North Queensland area. We’ve got a list of postcodes on the website that talk about this and give you a picture of those areas we are still providing assistance to. As well, there are deferrals through to 31 May sitting in place for that.

If, by some chance, one of your clients whose in that area has not got a new deferred date on those lodgments, please contact us. There will be a couple, there always are, that seem to slip through. We will always work on the basis that it's important that you think about your families and think about getting over those problems, and we’ll put things in place to fix things up.

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There’s a piece on the website under natural disasters which will talk about and explain what happens.

VLAD DUGANDZIC: Yeah good and thanks for that and I think we should put that on the live-chat facility, those links and details. It's important to know.

Andrew, Online services. After the successful transition, ELS to PLS, you seem to be the man with digital stuff, and Online services now. Did you know that the person that’s successfully doing this, his first job, he actually didn't pay tax? So Andrew flipped burgers at a McDonald's in Tokyo. Is that right?

ANDREW WATSON: Yeah, that’s right. Not a tax haven, Japan’s not a registered tax haven, because I was only 17, I didn't have to pay tax as a foreigner, working part-time in McDonalds.

VLAD DUGANDZIC: But seriously, Online services, I understand it's been pretty successful. There's been a lot of good feedback. Can you give us an update on where things are at and how things are tracking?

ANDREW WATSON: We’re really happy with how things are tracking. All tax and BAS agents, if they had access to the portals they now have access to Online services for agents. From the start of April, if you go to log into the Tax or BAS agent portal, you’ll be taken to a landing page or log in page that gives you both options, to either of the portals or Online services for agents.

Since we've made that change, we've seen a big increase in logins to Online services for agents, and it looks like last week, roughly one-third of the agents who came in to use our direct services went to Online services for agents. Out of all the traffic, so that's pretty good.

There are two-thirds who use the portals; that's fine, they’re still there. The pleasing thing is we see a number of people who came in and used Online services for agents, and that's where they've stayed - they haven't had a need or felt a need to go back to the portals.

We are still in what we are calling a ‘public-beta mode’. Beta is a fancy word for a live environment, but it still needs, in technical terms, a bit of a spit and polish. We’re actively looking for feedback from the users. We want to know what their experience is like. We know that, even though we did a lot of comprehensive testing, that I’ve spoken about before, with a lot of agents through last year. There’s up to 160,000 agents and their employees use our portals each year, so we know there are lots of unique circumstances that will still come out.

While we’re in this beta environment, we are actively looking for things we can tweak to make it better before we say we’ve got a final product for Tax and BAS agents. We’re really pleased with how things are going, and I would encourage those who haven't had a look yet to jump in, because you will find the functionality in the portals, plus a lot more information and other functions in there. So I encourage you to go in there and I encourage you to provide feedback through a link on the bottom of each page.

VLAD DUGANDZIC:

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Yeah, and just on that feedback Andrew, I understand there have been thousands of bits of feedback on how to improve the system. What has that feedback been showing?

ANDREW WATSON: So far, over 2500 individual items of feedback. It's fantastic, because what it means is that we can look for commonalities. So, something that is one-off may not look that big. But we’ve got numbers, so we can see that 60 agents from various parts of the country are all saying. “This is bugging me,” or, “It's not working right,” that’s the stuff we are looking to get attention on.

We see the feedback falling into three different categories. Some is around those little buggy things, things we are looking to fix. There’s some really good suggestions of, “This is good - it would be great if you could do that little bit more.” So, some improvement ideas. We won't be picking up those ideas in the beta-mode, but they will influence how we evolve this platform.

What’s been really good, and it’s really good feedback for our team, is we have had over 10% of the feedback is people taking the time to compliment and say they like the service. While that doesn’t sound like a huge number, from the point of view when you see feedback on something, and particularly when you’re the Tax Office seeking feedback on something we’re doing, it's a really encouraging sign. It's great to get that feedback and recognising that, a lot of the things we started working with on agents about four years ago, things in the portals and things in the future, in a lot of cases we’ve hit the mark.

If you haven't had a look at it yet, I encourage you to jump in and have a look. We will keep working on it gradually, with some more releases through to Tax time. By the time we get to the end of June, we will have all the functionality built in, plus we've had opportunity to address a lot of the bugs that we keep chipping away at, every couple of weeks.

VLAD DUGANDZIC: That’s terrific. I was going to encourage everybody to post questions on the live-chat facility, but the questions have exploded already. So thank you for that, that’s wonderful. So Andrew, a question from Mattie, “With regards to the portals, how much notice, if any, will you give us when the portal will close down?”

ANDREW WATSON: Look, we’ll give you plenty of notice. The way we are stepping through this, we have gone from December 2017 we started with six users and limited set of functionality. Throughout 2017, we expanded that out to over 1,500 agents, as we built out the functionality. We are now in the public beta, where everyone has access to it. Things are tracking well, but we have more work to do, around that.

The portals will still stay there, but what you will see is over time, our investment is in the new platform, so we won't be making upgrades to the portals. We expect the portals at tax time to be there as a back-up, there’s no intention to close things off in the short term, and we will give plenty of notice.

One of the things we are looking at, it's not just the feedback and the positive feedback, it's the usage rates. It’s also the feedback around the issues, are things we are fixing. We will inform and give plenty of notice before we do close the Tax and BAS agent portals. We will close them at some point, that's part of the transition, but at the moment the plan is we will go from finish

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this beta process until the product is what we want it to be, run both systems in parallel. As we see the final system is working as we intend it to, as we get feedback from Tax and BAS agents we will then announce what point we will close that.

I don't want to give a date now. We’ll start and do that when it's right, and when we've seen enough people vote with their feet that the new system is working and they’re starting to see some of the benefits of it, plus they’ve had time to adapt to the change. There are different things in there which everyone will need to get their heads around, compared with how things were done in the portals.

VLAD DUGANDZIC: It is interesting what you said about positive feedback. Even now we are getting positive feedback on the chat facility, so nice work. Kathryn, I’m going to bring you in, can I just ask you, first-hand experience, what do you think of Online services for agents?

KATHRYN HARRIS: I love it. We were one of the test sites, only me, I was the only one in the office. So everyone was a bit jealous. The functionality is fantastic. We’ve actually found, not only are the productivity increases but the information you can get out of the new Online services is much better than what was in the old portal. For example, being able to see client's superannuation; we actually had a client find $25,000 in superannuation he didn't even know he had, because we could actually see it. It is a huge thing, for everyday people who are maybe not digitally savvy; to be able to have an agents that can help them is great. Like everything has change involved in it and it takes a bit of adjustment, but if I have to go back to use the old portal - unfortunately, sometimes you have to go back - it is kind of 'grit your teeth and bear it'. I much prefer the new system.

VLAD DUGANDZIC: Thanks for that Kathryn.

Andrew, a couple more questions, a bit more technical but I will ask you, regarding deceased clients and the old portal you could actually access, and the Online services you can't. Is that right?

ANDREW WATSON: When a client is deceased, the account goes into lockdown, and it is around needing the authority from the trustee, of the estate of the deceased person, to continue to transact. That is something different and overall one of the things we’ve had feedback on. Part of the extra visibility of accounts and more information, and there is visibility of clients that may no longer be your clients, but your attached to at a level, might be not at the client role but at a particular tax account type you are linked to. For some agents, it means they look at their client list and there’s a whole heap on there.

So we are looking at what a solution would be to deal with that. Some of it could be, yes, you can remove the link, and in other cases like a deceased client or if it’s a company that has gone into liquidation, a situation where the ATO locks down the account, we will need to do something at our end, on instruction from the agent.

It's a bit of a ‘watch this space’ around that issue, around how we will resolve that, but we will be

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in communication with agents in the coming weeks, around how they can work through some of these issues, where they have got clients who are now visible on their accounts list, the link has been there for a long time, it just wasn't visible with the portals.

VLAD DUGANDZIC: Andrew last one for now, and Jo is asking, “With PLS, can you get a report of tax returns not yet lodged? I can only get a list of all of my clients.”

ANDREW WATSON: Depending on your software, one of the income tax reports provides that information. We might then get one of our people to link in and chat about it. The final part of ELS that was closed at the end of March was the reports, so some of the software has transitioned fairly recently across into the new PLS version of some of those reports. So we will post a response in the chat facility around that.

VLAD DUGANDZIC: Tricky, so that should be coming Jo.

Colin, last webcast, you talked about Online services, and you have been heavily involved in this, which you described as ‘Nirvana’. Have you got anything else to add about Online services?

COLIN WALKER: Sure Vlad, ‘Nirvana’ is very much considering where it came from and the difficulties over the last few years, as agents were grappling with issues around their portal services. Nirvana was to produce something such as this, that takes all those nasty pieces away. So really important, really good. From my perspective, if you have been in there and haven't tried it, I encourage you to get in there and start using new Online services.

As Kathryn said, it’s a much better environment; there are things you can't do in the old world, in portals, that you can do in this new world. You can even do debt arrangements, you don’t need to ring us up. Within certain boundary lines and up to $100,000 you can organise a debt arrangement online, print out your own letter, sent the letter off to your client - it is all arranged. It's all done.

So it is well worth getting in there. There are some amazing support services in there. Each page has a little icon that allows you to get help. There is a good user manual on the website, and there are five videos at the moment sitting on the website under Online services for agents.

So, I encourage people, take the opportunity now, get used to it, , utilise it now, learn about it now so by the time the old portals are turned off, eventually, you will know what is going on and you will enjoy your life.

ANDREW WATSON: I was confused, I thought your Nirvana comment last time , I thought they were about a grunge band from Seattle.

(Laughter)

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COLIN WALKER:

Now you’re dating me again.

VLAD DUGANDZIC: There were a few other questions that have come in previously regarding Online services, and Andrew one of the questions was; ‘Will the ATO be providing an online fillable PDF taxable payment report this financial year?’

ANDREW WATSON: The plan is, for the start of Tax time from 1 July, through Online services for agents, there will be an ability to lodge the TPAR directly through electronically. The answer is yes, watch this space. Apart from ironing out some bugs, there is some new and some of the portal functionality coming through. One piece, before the end of June, is the ability to choose the delivery method for an activity statement. That’s not far from being released. It’s available in the portal, it is about the only thing we have still left to put into Online services from there. You’ll continue to see a few little things that pop in, and as they are released we will communicate with agents to let them know they’re available.

VLAD DUGANDZIC: So that’s functionality that you’re talking about, so you’re looking at capability, in regards to client lists being available in real time - how close to real time are we with client lists?

ANDREW WATSON: So, if that question is around if you add a new client?

VLAD DUGANDZIC: Yeah

ANDREW WATSON: One of the features that we get a lot of good feedback on in online services is the ability to search your client by name. What we call predictive search, where once you start to type three or more letters, it filters your client list, looking for any of your clients; individuals, companies, trusts that contain those three letters. If you add a new client, the way that predictive search works, it takes about 15 minutes before that client becomes available through your name search. So if you add a new client and you want to go start doing into something within that 15 minutes, on your name search straight away, you’ll need to remember the old method of typing in a TFN or ABN to navigate to them. So they’re adding to your client list instantly, it’s just about 15 minutes before it comes onto your name search list.

VLAD DUGANDZIC: Ok, and then further to this I guess, for new agents looking at getting into online services, perhaps they’re concerned about the compatibility with regards to systems, what have we got there that’s available to them to check what the requirements are and compatibility.

ANDREW WATSON: So from the login page there is a checker, if you want, that’s the technical term for it, that compatibility checker. If you click on that it gets some information from your machine and your

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browser and your internet speed just to check to see if your setup meets what we see as the minimum requirements to give you a good experience. Now if you’ve got an internet speed that is a little slower, than what we say is needed for a good experience, it will still work; but that is the reason why some responses might be slow. Over the course of our testing, and we had over 1500 agents by the end of 2018, we had agents all over Australia, and we intentionally got some people with quite slow internet speeds and some people who were on ridiculously quick internet speeds.

It's not onerous one, you don't need to be on the NBN or anything like that, but that compatibility checker, it’s a good thing if you are finding things are a bit slow or you’re not sure if it’s a problem with the ATO system or what. That is a quick way to check, again; browser, internet speed, and does it look like your computer is operating, got the setup; that will enable you to get the best experience of online services.

VLAD DUGANDZIC: Jo had a question asking if there were videos, and I know Colin you touched on that. So the best site to go to that?

ANDREW WATSON: Ato.gov.au/online services for agents. That’s one word. As Colin said there’s a variety there. Kind of like a webinar one, screenshots with one of our people talking you through some of the key functions. It really gives you a visual of how of this works, they are about 5 to 10-minute videos, and in the same spot you have some of the detailed instruction if that’s how your prefer to learn. As Colin said, on the right-hand side of every screen is a ‘question mark in a circle’ icon. Help comes in on the right-hand side of the screen if you click on that, but it's all relevant to the page that you're on. Rather than needing to scroll through lots of information.

So it all depends how you like to learn. But we tried to give a variety of different methods to access the information to help.

VLAD DUGANDZIC: Excellent, John, you have been waiting there patiently, and I appreciate that. So it is time, let's get on to Single Touch Payroll. And Single Touch Payroll has been really popular, and I know even at the Open forums, there have been a lot of questions coming. With regard to Single Touch Payroll, essentially it means that all employers be reporting their Pay As You Go, withholding salary and wages, their super, to the ATO every time they run their payrolls.

So legislation passed, so that’s now for all employers; after it was just for 19 or 20 and above, last year 1 July. It’s also received Royal assent. Interestingly I’ve got here, over 81,000 employers have already transitioned to Single Touch Payroll, including 33,000 small employers. Which is great. They represent 5.7 million employees, so they’re really large numbers.

John, could give us an overview of Single Touch Payroll? Before we get into a few other questions.

JOHN SHEPHERD: Thanks Vlad. This is the longest I haven’t spoken for quite a while actually, you’ve held me there quietly. I do like to remind people just why we are doing Single Touch Payroll. So just briefly, it

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is about reporting through natural business processes, and those natural business processes are your payroll process and system, where you use a system to do that. Overtime, we are looking to streamline employers’ reporting obligations, particularly to government, as we use that data to meet other obligations.

Certainly one I’ll talk about a bit more about is the payment summaries in a little while, the removal of that obligation, and what we can do in future around the pre-fill of that data, for example in the BAS and using it for other things.

You’ve seen in the budget the other night, obviously we had an election called this morning but certainly the incumbent government’s budget, they were planning to extend Single Touch Payroll, and particularly look at data to support the welfare system to try to reduce the amount of times that agencies go back to employers to get information on income. Single Touch Payroll will be the source of employees’ income, that can be used for a range of different things, to make it easier for employers over time.

That’s certainly a key aim. From an individual's perspective, there is clearly a message here about superannuation compliance and making sure people get the right amounts of super A superannuation guarantee gap of 2.8 billion a year. That’s what we estimate people are being duded by non-payment or late payment of super. Again, that’s an estimate because we don't have a reliable source of the liability amounts that an employer owes.

There are many good things, from an employee perspective, and over time we hope to also be able to help them prevent end of year tax debts and surprises that they get now - for example, perhaps not having enough tax withheld, or they’ve got a higher education loan. Just a few things there, and clearly the big one that a lot of employers seek is just a level playing field, making sure people are paying their fair share.

VLAD DUGANDZIC: Yeah, a level playing field is something we use with a lot of practitioners as well. John, what do you think will be different for tax time this year?

JOHN SHEPHERD: There is a big change here, you mentioned our numbers so far, and we’re really pleased with that 5.7 million employees we’re at, and it’s running really hot at the moment. We’re getting about 700 or 800 employers onboarding to STP each day.

VLAD DUGANDZIC: Wow

So those numbers are growing quickly, we’re anticipating over 100,000 employers will be in STP by June, which means they won't need to be providing payment summaries. And they’ll be on behalf of around 9 million employees by then. So a lot’s going to happen over the next few months, and we've seen a surge in the last few weeks heading us to that forecast.

So a couple of key messages for tax time on that, As I mentioned, the payment summaries are not required by an employer to be given to their employees. Now that’s a big change, so the requirement for employers as they finalise their STP data this year by the 31 July and communicate that change to their employees. And we’re going to support them with that, we’ll

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give them a range of material shortly, and out to agents as well so they can communicate that change to their employees. From an employee perspective, and I know agents will have clients in both camps, our messages there is ;this is a new way of getting your payment summary’. So rather than your employer giving – and I know that everyone still calls it a group certificate, I’m probably not going to change that. It’s been 19 years and people still call it a Group Certificate. But what people will do that are in the STP system is go to one place to get their payment summaries, even if they have two or three employers. They’ll go into myGov, into ATO online services, can print a copy of their payment summary if they want. But importantly, if they’re doing their tax return, or they’re using an agent, the pre-fill will still be available. The prefill will instead come from the, Single Touch Payroll data.

The message for agents there is to make sure any employees or individuals they have, wait for that data to be finalised; it will be available, and they can see their information being reported. But they should wait until it is finalised before they complete their tax returns completed.

ANDREW WATSON: I was just going to jump because I had the other day a sneak preview of what the pre-fill reports are going to look like for agents for online services, and the same pre-fill reports will still be available through the portals, and that information then will also be passed through PLS software. So more and more software providers are building, since last tax time have built, pre-fill within the software.

It’s looking at it when that data is finalised on the pre-fill report, it looks and feels like the payment summary information did, mapped against different labels etc. If it’s that unfinalised, data, the data’s there, you can see the totals have been, the tax withheld, as of that date, but it’s not mapped against the different labels. So that bit of caution around the unfinalised data should be pretty visible for agents through the pre-fill reports.

VLAD DUGANDZIC: John, what about for small employers?

JOHN SHEPHERD: That’s the popular topic at the moment, you mentions the recent passage of the law to bring all employers in this year from 1 July. We did get Royal assent on that bill a just few weeks ago. At the same time, we released a statement from the Commissioner, which is on our website, talking about our flexible, reasonable and pragmatic approach to that. We know that 1 July is not far away, and certainly that statement outlined our approach on a range of fronts to that transition.

The first of those is that employers have until 30 September to start their reporting, so there’s a few months built in, without needing to apply for additional time. So that’ll give people just a bit of extra time and certainly allow agents to work with our clients to help them identify their options.

There was also in that statement was our approach to penalties. Similarly there will be no penalties in the first 12 months, similar to what we've done in the last 12 months for larger employers. That’s just acknowledging this is a change, and we want people to help them get it right and not to have people be afraid there will be a penalty if they make a mistake.

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Our approach to deferrals and exemptions is quite flexible. We’ve actually released some forms in the business portal, in the taxation portal, and in the new online services, they’re in there now. So you can actually go in there, and on behalf of your clients, you can apply for a deferral, and in most cases you will get an immediate response. If you meet one of our exemption categories, things like, no internet, you can put those exemptions through that online form and get an immediate response.

That approach will be quite flexible and will acknowledge the different starting points people have got. A hot really topic has been, will we support submission of these reports through the portals or the new online services, and the answer is ‘no’. Not through there, and not through the clearinghouse. You will have to have an STP-enabled solution.

Again, with the micros, we have put in place some special transition options. One of which is we have worked with the industry to create a register of low-cost solutions. Those low cost solutions need to be quick and easy to use. $10 or less per month, and on the register we already have free options. But importantly, there will be a variety of solutions, not just payroll.

There will also be portal-like options, and we expect some apps as well, lightweight options for those who only have a couple of employees and don't want to take on a payroll product, notwithstanding the benefits payroll will bring. That register is available now at ATO.gov.au/STP solutions. So if you want to go have a look at it, it links through to about 25, I think, solutions at the moment. Not all are available at the moment, I think there’s about half a dozen available. But a lot more to come before June as part of that.

Just might mention a couple of quick ones around the transition options; particularly relevant to agents is we have created one around quarterly reporting for agents that they can do, for the first two years, for clients who are quite, particularly clients that are paper-based and who rely heavily on the agent to do things like BAS.

When they come to do their quarterly BAS, not on the BAS, but they will be able to submit their STP reports on behalf of their client at that quarterly period, and they’ll be able do that, again, through some solutions on the register, there are some practitioner solutions there, and there’s also the option of course of working with your employer to get them onto a low-cost solution, and helping them out for the first couple of years before you set them free to do their own payday reporting.

The last category that gets a lot of questions is around closely held payees – so immediate family members or directors of the business who don't draw a regular wage and don't have a payroll process to report under.

We’ve done at lot of consultation on this, and we've come up with a quarterly reporting requirement, with still that final report at the end of the year, which is the tax agent’s exemption, when they come to do their tax returns. Important, we’re giving everyone an extra year. If they like it, they can put in an exemption for closely held payees for that first 12 months and then move to that quarterly regime. That's where we've got to, with closely held.

VLAD DUGANDZIC: Okay, just quickly, two quick questions. Mark is asking you, on the low-cost solutions, he has

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identified 22 suppliers there. Are you suggesting that every tax practice should do their own evaluation of these low-cost suppliers?

JOHN SHEPHERD: There’s a couple of options, one of the things we have had feedback on is a bit more categorisation on that register. So we’re looking at that right at the moment whether we can categorise that a bit better into the payroll options versus the portals and the apps, to make it clearer. There are lots of industry people recommending different products from that, but it's hard for us to recommend an individual product. But we are looking to build not just the categorisation, but some help products that might help people filter and go through that register and choose suitable options for certain situations.

One we get asked a lot about is Excel. ‘My client uses Excel, what would you recommend they jump across to?’ And that's where you should bring our colleague in, about what she recommends?

KATHRYN HARRIS: From an industry point of view, I think this is one of the biggest changes we've had since GST. There is an awful lot of chat about how this will work. But from looking at an employer, your obligations for being an employer are much deeper than just providing a Group Certificate at the end of the year. And you really need a decent payroll system to be meeting those obligations. So I think it's a no-brainer. Excel has to go. It's the cost of doing business; you need to move to an electronic payroll system.

ANDREW WATSON: Do you think Kathryn, with your clients, you gave a bit of a knowing smile when John said Excel spreadsheets. Do you think there be pain points for some of your clients that operate that way?

KATHRYN HARRIS: I think there will be. Some of them who do payroll on their own probably don't do it well. And STP is such a big change, and the fact they have to lodge each payday, and going back to make changes if they get it wrong. I think it's one of those things where people have to start to accept they are running a business, and one of the costs is having someone help you do these things. I don't fix my toilet.

So I do think businesses have to change their mindset around it and I think they have to realise, like I said, a lot of them don’t understand their obligations around providing payslips, calculating leave - there's more to it than just reporting the tax withheld, and the superannuation, there’s a lot of obligations that employers probably aren’t getting right. And an electronic solution just makes it so much easier.

JOHN SHEPHERD: I think that's right. Not everyone though is going to make it. And we’ve kind of acknowledged that on day one. And we know the agents have got a big job, and we get feedback that trying to hit everyone in the next few months is just overwhelming.

KATHRYN HARRIS: It’s a nightmare; it’s not going to happen.

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JOHN SHEPHERD:

So a lot of the options we’ve looked at is how do you spread this out just a little bit and give those options around deferrals. The quarterly option is a good one for those who need the most help. To actually bring them into payday reporting when you think they’re ready to do that as well.

KATHRYN HARRIS: And the closely held has been a big worry. Especially in our practice, lot in our businesses are mum and dad businesses, where we determine the wages every quarter. So that’s good to know.

VLAD DUGANDZIC: Kathryn are they the ones coming to you asking you questions on STP?

KATHRYN HARRIS: We have been proactive, because we don't want a flood of panicked clients come July because we don’t have time. That July to September for us is nuts. We have been proactive about sending out letters and recommending BAS agents. We have a couple of BAS agents we work closely with and recommend them as an option to do payroll review, before switching on STP, or taking over their payroll for them, if we think that’s a better option.

VLAD DUGANDZIC: Andrew, on STP for online services, what’s that going to look like?

ANDREW WATSON: As John said, there won't be a solution where an employer or an agent on behalf of an employer can submit STP information. What it looks like for an agent through online services is when they go in at the client level for individual taxpayers, they will see in pretty much real time through the year how much they've been paid, what is the tax withheld, and how much super has been deducted by the employer, or how much super the employer has reported.

Where this marries up with information we are gathering from super funds, is that they can also see what’s been deposited, what super funds they’ve, got, what are the balances, and how much has been deposited in there. It’s really a bit of start of a change where you will have visibility for your clients throughout the year of what's coming in and what's gone into the super funds.

Yes, when the payment need to be made, for an employer, there is always that lag, or often that lag. But there will be greater visibility for agents to look at that, and as appropriate, that visibility around superannuation in particular with a lot of the super rules, it gives opportunities to be able to answer questions and give advice to clients throughout the year, as well as seeing whether they are getting their super guarantee entitlements all the way through.

KATHRYN HARRIS: It’s not just superannuation, just general tax planning for clients, the fact you can log into the online services for agents, and if client is working for an STP-enabled employer, you can see the year-to-date wages. So if they come in saying ‘what’s the effect if I buy a rental property that’s negatively geared’ You’ve got the information in front of you. SO it’s quite good from that

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point of view.

VLAD DUGANDZIC: You can tell it's been codesigned with agents! John, there is already a lot of data that has been coming in. So have you had any opportunity to analyse it and see what that data is telling us at this stage?

JOHN SHEPHERD: That work has started. Clearly it is a lot of data. Some days, I know, at the moment, every Wednesday, which seems to be the big reporting day, linked to pay days, we’re getting 1 million employer records every Wednesday so the numbers are staggering. Our approach has been to learn from other implementations around the world, in particular the UK, did this four or five years ago. The key learning with that is not to over-engineer our interactions, with that sort of volume. Don't go back to the employer and question every anomaly we see.

So we are in a learning phase at the moment, and some careful reach outs to people to test what we think we’re seeing. As we learn from that, we will look to extend some of those interactions and models we will need to use. As we said, we are being quite careful. There is also a lot to learn about payroll processes. This is different to a form coming in that has been checked and balanced by an agent, like a BAS or income tax return. What we’re getting is data straight from the software, what the employers’ paying people.

So that will change, we know there’s adjustments made to that, corrections made. That flow-through of corrections for SDP, importantly, happens in the next pay period, so we need to be good at predicting what will self-correct, and not pull up anomalies. So yes there’s lots ‘f learning there so far, but we are really pleased with how we;; it has been going.

VLAD DUGANDZIC: Excellent, and, Colin, you do a lot of open forums, what has the general feel been like when you have been doing them, in regards to STP?

COLIN WALKER: STP is the number-one topic of discussion; number two is online services for agents. STP, I think the biggest change from the agent prespective is not only bringing on board the small employers, but how they cope with the situation that the payment summaries will no longer be there. So when people come in early in the tax time season, and they want their tax return done, it will be very important for agents to remember to use their pre-fill.

We already have a situation where a number of agents, and it’s a reasonable proportion, don't pre-fill at times. That’s not a good situation. The other thing of course is for once, Agents will need to consider talking to their clients about using their myGov account, and taking out myGov accounts so they can see the data themselves going through.

I know there’s going to be will be resistance there, because that immediately raises the myGov inbox problem again. As Andrew said, in the online services environment, that is changing. We are working on a solution to the myGov inbox issue that is called ‘preferencing’, and we talked about it before, that is coming sometime this year. So at least we’re getting to that situation where you will be able to say to your clients, go into myGov, have a look at your own information throughout the year, and you will still be able to see the same information. Little bit

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of a hiccup in the middle, but eventually that’ll sort itself out.

JOHN SHEPHERD: Also a positive there Colin is, for people who struggle sometimes to get a payment summary year end. Or care having it or the agents trying to get a hold of it, will be there, it will be online, you’ll have your information reported through STP. And much better - having one place to go to access that data, is a good change I think.

COLIN WALKER: I agree, I think it’s a great change.

VLAD DUGANDZIC: What about preferencing for you, Kathryn, a good initiative, do you think?

KATHRYN HARRIS: I think it’s a good initiative, we already have systems in our practice to deal with correspondence that goes to myGov. Because it is what is is and it’s the way of the future. The most difficult thing is clients setup a myGov account, link it to the ATO for some other purpose then completely forget about it. And then go ‘why is the ATO asking me for money, I have no notification?’ Because it’s gone to myGov and they haven't checked. I have no issues with that.

VLAD DUGANDZIC: Yeah, okay.

KATHRYN HARRIS:

The only thing I would say, it's important the ATO make it clear to tax payers, that potentially things won’t be finalised until July 31. So when they rock up on July 7, to get their tax done, they need to understand the systems’ just are not finished until the end of the month.

ANDREW WATSON: It's a good thing we are kind of understanding of, so we can give good advice to agents around what is the change going to be. We have had a lot of years, particularly the large employers, but all employers, they haven't had to lodge until July 14. But we have plenty that have sent it in quickly after the last payday end of the financial year. Which means we’ve had a lot of good information available.

JOHN SHEPHERD: That's something like 25% in the first week come in. We expect to see the same through STP.

ANDREW WATSON: So that’s around some of the changes of the terminology, but it’s around that awareness of has that been finalised? Is it ready to go?

KATHRYN HARRIS:

Yep, that’s right.

JOHN SHEPHERD:

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We’ll also send a message that goes out that all STP data is all finalised, so if you’ve got two or three employers, and one might be finalised it’ll say wait for the others, and once they’re finished it’ll say “They’re all ready to go, good to do your tax return.”

VLAD DUGANDZIC: Excellent. Alright guys, we’re heading towards the end, and I wouldn't mind moving to the future of the tax profession. Colin, I’ve got a question here from Colin… You didn't send it to yourself did you?

COLIN WALKER: I hope not.

VLAD DUGANDZIC:

No, well I know you wanted to give us an update on the Inspector-General of Taxation's report into the future of the tax profession, and Colin is asking about that as well, what do you think about that? What does the ATO think about the future of the tax profession?

COLIN WALKER: The Inspector-General's report was released last week, and it contains a range of recommendations, as well as a picture of what the Inspector-General felt will be the future. That was gained from examining other countries' experiences, from looking at the information that came to us via the agents, by the professional associations and the like.

I suppose, from another prespective a really good thing is that a number of the recommendations the Inspector-General made, we have already put into place in various forms, and we are well and truly on track for other parts of it being adopted.

Some of the recommendations that were made are basically out of date now, and everybody has moved on. But certainly, the report is a base for us. It is part of the material we are going to use to work with the professional associations, the other people interested in this space – the professionals themselves, tax and BAS agents, the education institutions - to consider what’s the happen in the future. What is our role, as an organisation? What’s the role of agents? How does that change? What is the role of the educational institutions in bringing forward the new group of people who are going to become agents?

And examining, from there, what does the ATO need to do to support agents going into the future? One thing that is really clear from both the IGoT review and all of the others papers that have been done within the profession, and that is the profession is not dying. The profession is going to continue to grow and develop. It is going to change, there's no doubt it is going to change, and it is going to be very strongly based around a digital environment.

Data and analytics will be very strong components, and the Inspector-General made that quite clear. So, a positive report that is out there, we are certainly taking that on board, and we are certainly going to be combining that with the numerous papers that have been done by large organisations, by educators and the like, into what is that future, how do we adapt to that future. And we will be building that into that into our work.

ANDREW WATSON:

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That's really interesting, Colin, that report. Because the Commissioner asked the Inspector-General to do that report, as most of you’d be aware most Inspector-General reports are self-initiated, or it’s the Minister who has asked the Inspector-General to look into something in the Tax system or the Tax Office has done. But this is one where Chris Jordan went to him and said, "I would like some advice, some views, some other thinking into what the future looks like, and what’s the ATO's role, what can we do?"

So from that point of view, and again looking at the recommendations; some good ideas, some things we're already doing, which is affirming, and then there are some other things in the Commissioner's response, which, you know, except the point maybe that’s not the way the Tax Office wants to go. Or a couple of the responses where, you know, what’s our role versus the tax profession as a professional group of people, to take on board themselves and control some of their own destiny.

So Colin is more involved than I was, but it was really quite a different approach than the usual Inspector-General reviews, which are more dealing with an identified issue, than this one, where our Commissioner actually asked them to do some of that research on that for us and give us some advice.

VLAD DUGANDZIC: Kathryn, as a very accomplished tax professional and author, what are your thoughts of the future of the tax profession?

KATHRYN HARRIS: I don't think compliance is dead. There's a lot of noise about needing to get into business advisory because compliance is dead AI is going to take over the world, and that compliance is dead. I think our tax laws are incredibly complex, and at that higher end where there’s complexity tax professionals are always going to be needed. And that is probably where the focus should be. I am a firm believer that our returns should go. The rest of the profession will shoot me.

But I think that professionals are very important to our tax system, I think that without a good, solid base of tax professionals who are ethical and well educated, behave properly, that is the cornerstone of our tax system. That is what helps hold it together and keep it working properly.

COLIN WALKER: I think Chris Jordan strongly supports that view too. All of his speeches over the last five years have indicated the importance to us of the tax practitioner community, how they influence compliance by the taxpayers. But as well as that, the very large portion of the taxpaying community that use a tax professional to support them, both in the business world and in the individual world.

So look, I agree. The world is changing, but is not the end the world. An interesting thing, as I mentioned before Vlad at another one of these hook-ups, is that we have continued to analyse and try to understand the demographics of the tax and BAS agent population. And we’ve be able to really unpick quite well the tax agent side; we're into the BAS agent side now. Of the some 28,000 registered agents who are active in this field; there are actually187,000 or thereabouts people who provide tax services, working under supervision for those agents.

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When you pick underneath that, you find predominantly they are in the 26 to 40 age bracket. A 50-50 balance between male and female.

That really challenges us to rethink, as we go forward, how do we communicate, how do we engage, how do we support that growing demographic?

It's not reducing, it's growing. So change is happening. The profession is changing. We need to keep up with that as well.

VLAD DUGANDZIC: Thanks, Colin.

Look, guys, we are coming to the end. John and Kathryn, being you are not regular panellists, I will ask you to give me a 20 second sum up about what the key messages you would like to tell practitioners. No longer than that, we’re almost out of time. As you think about that, just a few bits and pieces for you guys to know about. Tomorrow there is going to be a Tax Practitioners Board webcast , so it’ll be run by Treasury, they’ll talking about the review into the Tax Agent Services Act and the review into the administration of the Tax Practitioners Board. You can tune in at 2 o’clock AEST and if you're interested in how you are regulated, you should tune in and find out how you can provide input. So once again, they’ll have a live chat facility you can add things in there.

Upcoming tax professional conversation webcast. So look guys, we always need to know what it is you want us to talk about. Whatever topics you think you would like to hear about from our panellists of experts, please let us know.

Open forums coming up - have a look at the open forums that are coming around. We do about 45 of these around Australia. Sometimes we separate it between tax agents and BAS agents, so if you go to www.ato.gov.au/openforums. Or if you just go to the supporting services section of the website you’ll be able to find them out there.

And just a special call out to those in Maroochydore and those up in Mount Gravatt, I got the opportunity to speak to you directly, and I think we ended up with well over 400 across those events. So that’s really great numbers, so thank you for that. The ATO podcast channel, Tax inVoice we have released 11 episodes so please subscribe to that. You can find Tax invoice on iTunes, Apple podcasts, Stitcher, and Spotify. Or go to ATO.gov.au/podcast.

But you guys, really quickly, what’s the last bit that you just want to tell? So, John I’ll start with you.

JOHN SHEPHERD: Be alert, not alarmed I would say, in terms of the change to tax time this year. Agents do play a key role, and here will be lots of information, we’ll do some webinars and things, especially around that. But we’ll manage that change.

The other one is around the small employer implementation, there are lots of options, and there will be lots of good material coming out. We get this is a transition so, you know, this will take

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http://www.ato.gov.au/openforums


some time for everyone to get across like all big change. But please keep asking us your questions, please keep actually giving us feedback about ways we can support you.

VLAD DUGANDZIC: Terrific, and Kathryn?

KATHRYN HARRIS: Get onto the online services for agents. I don't think you will look back, once you swap portals. STP is coming, and you need to get your head around it and your clients motivated about preparing for it, and compliance will live on. Long live compliance!

VLAD DUGANDZIC: You truly do love tax, don't you! Alright, that does bring us to the end. And hour does go by very quickly when you’re having such fun, right? I really want to thank Andrew, John, Kathryn and Colin, our panelists, as always, for the insights and your opinions, and your knowledge, and sharing that with the whole tax practitioner community. Thank you to all of our live audience. Remember, this has been recorded, so you can share this with your peers, or like I said earlier, you can have a look again because you enjoyed it so much.

Keep the conversation going in the ATO community, and keep posting questions. And like we said, anything that hasn't been answered, we will endeavour to get back to in future webcasts, to actually answer that. The recording’s going to be linked there and we are also going to send out a survey, so we would appreciate it if you would have a moment to answer that survey, so that we can continually improve the product that we have developed specifically for you.

Aside from that, I would just like to raise it, particularly for the Victorians and the New South Wales, even for the Western Australians, that the Brisbane Lions are on top of the ladder, so I just wanted to let you all know that they are on fire, they are young, they are keen, and we expect to see them at the Grand Final!

ANDREW WATSON: So what month is it now though?

VLAD DUGANDZIC:

Beware the mighty Lions, is all I'm going to say Andrew!

But guys, sincerely, have a safe and Happy Easter, and we look forward to the next webcast. Goodbye.

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