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Tax ombudsman Karen Payne has criticised the byzantine design and implementation of the process, throwing her support behind calls for an overhaul.
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ATO’s client-agent linking a threat to system integrity: IGTO
18 March 2024
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The taxation watchdog has criticised the ATO for making client-agent linking (CAL) "too hard" and finalising it without industry consultation, calling for an overhaul to maintain the integrity of the tax system.
Karen Payne, Inspector-General of Taxation and Taxation Ombudsman (IGTO), said she was concerned that the current process, designed with the aim of enhancing system integrity, was spawning new problems that had "real implications" for taxpayer engagement.
"Client-agent linking is not hitting the mark and is actually creating its own other problems and repercussions which need to be worked through," she told Accountants Daily. "It's just too hard.”
"It's got real implications for ensuring the experience of the taxpayer in the system is an engaging one, that it upholds the integrity of the tax system – that's the concern."
The ATO’s new, multi-step linking process came into effect for all ABN holders except sole traders in mid-November.
Four months into its implementation, however, tax agents say it has unleashed an administrative “nightmare”, leading to lost clients or wasted hours spent navigating the process for taxpayers who were unfamiliar with the ATO’s Online Services for Business portal or needed help to acquire myGovIDs.
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Payne said that in her experience, clients relied on tax practitioners to “take the red tape burden away”, and a system that placed the onus on the client to handle administrative tasks was incompatible with the traditional client-tax agent relationship.
She was also critical of the ATO’s design and implementation, which she believed had “somehow been over-engineered to the point where it is now” in comparison to the more “user-friendly” authentication systems commonly used by banks and airlines.
“A very complex process is now my concern. The tax ecosystem is not in a good place if it is difficult for clients and agents to be linked up,” she said.
"The more difficult you make it for somebody to engage with somebody or something, the higher the risk they opt out of engaging with it, or they are locked into a relationship with an agent that they're unhappy with. I think that’s a poor solution."
Inadequate support infrastructure, such as long-winded instructions and wait times on the ATO’s help hotline, compounded the issues.
“The fact that the relationship between the client and the agent means that the solution doesn't work the way that it's been designed to work. The fact that the infrastructure to support the solution is inadequate because people can't get through, people can't connect, the software's not working," she said.
As a result, frustrated businesses have reportedly given up on the linking process, likening it to "running into a brick wall" and declaring “no more tax” until the steps are simplified.
Industry members have also told Accountants Daily the ATO finalised the regime and announced the decision to expand it in December 2022 without consulting the CAL "working group" of professional bodies and tax practitioners it had assembled.
Payne said the community outrage CAL was causing further evidenced “it was a solution that has been imposed rather than co-designed”.
She said the ATO was “not at all” justified in proceeding with the process against the industry's wishes. “If it hasn’t been a process of co-design, then it’s probably not surprising participants and users of the system are unhappy,” she said.
“The ATO is ultimately there to serve the public. So, it would be an expectation that they would consult collaboratively and constructively and openly with the public to develop and co-design the solution.”
However, she said there were no plans yet for the IGTO to open a formal investigation, calling on the ATO instead to overhaul the system.
“Everybody knows we're here to help. For the time being though, you would think this is a problem that the Tax Office and tax agents should be able to resolve between themselves, but if not, we're happy to jump in,” she said.
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