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It is time that the accounting profession and other stakeholders seriously ask whether the consultation processes with the ATO are effective or are achieving anything worthwhile.
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Consultation or consternation?
22 March 2024
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If nothing else, the latest drama involving the client-linking process should cause this issue to be at the forefront of the conversations between the ATO and the accounting and legal professions.
This is a matter to which the new Commissioner of Taxation, Rob Heferen, should give his urgent attention.
The ATO does commit a good deal of senior resources into the consultation process with the professions (accounting, legal and others). This is all good and to be commended.
However, the Australian community is entitled to ask whether all the effort expended on consultation processes with the ATO (and Treasury) are of any significant benefit to the community.
I congratulate representatives of the profession who try to engage in consultation processes with the ATO. These folk often put considerable effort into analysing proposed legislation, responding to consultation papers, responding to draft tax rulings and so forth. I have been involved in such processes, but my overall impression has been that the effort is often a waste of time and resources.
Too often it seems that the “consultation” occurs on a foundation of decided or entrenched positions that are adopted by the government departments. There are times when I felt all the government departments were doing was “ticking” the consultation box so that it could be said to others that they had consulted.
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I can think of tax developments over the years where the ATO/Treasury was informed of the problems with proposed legislation and then pressed ahead with the problems. These issues were then inculcated into the legislation. Then, often years later, the law was “reformed” to take away the problems that should never have been there in the first place.
If only people had listened to what was being said at the time the laws or rulings or systems were being designed. Then, the community would not have had to endure the costs and inefficiencies involved. The costs arise due to uncertainty and inelegant or unworkable positions adopted by the ATO. Taxpayers then need to engage advisers to tell them what to do, fight matters in court or request rulings from the ATO. The costs and inefficiencies to the community are enormous.
It is my proposition that many of the difficulties of our tax system are the result of ineffective consultation about the effects of various legislative developments and interpretations of the law by the ATO which impose arduous decisions and costly engagement of professionals on the community.
If this problem is to change, it must be driven from the top. The Commissioner of Taxation, perhaps with the assistance of the Inspector General of Taxation, Karen Payne, and other interested parties should conduct a full and open review of the consultation processes with the view to developing a much more efficient and effective system.
The accounting profession is continually having administrative, legislative and systems headaches foisted upon it by the ATO. The accounting/tax agent profession is left to deal with the problems. Tax practitioners are engaged in a never-ending circle of being confronted with problems, trying to find out what to do with the problem, contacting ATO officers that frequently don’t understand, taking advice, trying to explain the debacle to the client…and so on.
Unfortunately, for many tax practitioners, they feel they cannot charge their clients for this work, and this creates significant costs for accounting businesses, not to mention the mental stress. Accountants and tax agents are frustrated that no one seems to be able to solve this
endless conundrum.
I may be like John the Baptist; “A voice of one calling in the wilderness”, about this issue. Nevertheless, I strongly believe that our taxation system would be much improved if the professions could achieve an efficient and effective consultation process – not a consternation process.
John Jeffreys is a Chartered Accountant, Chartered Tax Adviser and director of John Jeffreys Tax Pty Ltd.
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