Accountants optimistic after “critical” meeting with ATO over small business tax agent overhaul

Professional accounting groups are optimistic the Australian Taxation Office (ATO) will continue to refine its new tax agent-linking system, after industry representatives said its six-step registration process could pose a significant challenge to small business clients.

Representatives of CPA Australia, the Institute of Public Accountants, and other industry leaders met with ATO officials on Thursday to discuss the tax office’s new client-to-agent process, a digital upgrade to existing verification systems.

Modernising the client-to-agent linking process will add another layer of security to the tax system, says the ATO, which claims to receive more than 3 million cyber attack attempts each month.

The ATO also hopes to close vulnerabilities in the existing agent-client authorisation process, which could devastate small businesses if exploited.

Under the current system, accountants can enlist clients and act on their behalf without their knowing; if criminals gain access to a tax agent’s details, they could theoretically act on a small business’ behalf to fraudulently siphon a tax return to their own bank account.

The new process leans heavily on the government’s identity verification tools to ensure tax agents are genuinely acting on behalf of their clients.

Under the updated scheme, “taxpayers will retain full control over who has access to the data the ATO holds about them and will actively need to give permission to an agent to link to their tax account before the agent can access it,” an ATO spokesperson told SmartCompany.

Business leaders must establish a MyGovID, link that identification to their Tax File Number, and manually register with their preferred tax agent through the ATO’s online business portal.

The roll-out is currently contained to major business and multinationals.

But accounting bodies fear that process could pose significant technical challenges to small business owners who rely on their agents to navigate the complex world of tax compliance and regulation.

The fact it is built on the MyGovID system — the central component to the troubled Director ID Number program — is another concern for accounting groups, whose members may act on behalf of small business clients with limited digital literacy.

“Whilst we acknowledge the solution will introduce additional steps to the process, it is a small impost that helps secure the tax system for all Australians,” the ATO spokesperson said.

Accountants chart path forward as ATO welcomes input

Tony Greco, senior tax adviser at the IPA, said the accounting profession understands the need to boost security in the client-to-agent linking process.

“We fully understand that they are real threats,” Greco told SmartCompany on Friday.

Nevertheless, Thursday’s meeting challenged what accounting group see as “draconian” obligations for small business clients, he said.

“All the bodies were pretty much aligned by saying that this current proposal is fraught with administrative complexity, and you’ve got to ask yourself whether this is appropriate for this marketplace.”

The meeting was “critical to ensure the ATO was fully aware of the true impact of the changes,” said Elinor Kasapidis, senior manager tax policy for CPA Australia.

“We want to find solutions to ensure businesses and the public have the best possible systems,” she added.

Alternative proposals, including different ways of using secure government authorisation channels, were discussed at the meeting.

Greco says the discussions took place in good faith and is confident accounting groups will secure amendments to the plan before it expands further.

“There are other options, and we are optimistic that we can we can come to an amicable way forward,” he said.

“Again, the ‘Why’ is not under question, it’s the ‘How’.”

The “highly productive” discussion will likely lead to further meetings, an ATO spokesperson said.

“We expect to meet with the group again in the coming weeks to continue productive discussions and ensure the final version of the product addresses the concerns raised without comprising our objective of strengthening our systems to protect against fraud.”