As the year draws to a close, the ATO has shifted its focus firmly to 2024. At a recent conference, the Second Commissioner of Client Engagement, Jeremy Hirschhorn, outlined three key areas of focus that are expected to impact suppliers, clients and businesses of all sizes in the year ahead.
Strengthening cyber security and identity protection
With cyber-crime, scams and data breaches increasing across Australia, the ATO has taken additional steps to strengthen cyber security and protect taxpayer information. A major focus for 2024 is reducing identity-related fraud and unauthorised access to tax data.
Client-to-agent linking for businesses
For all businesses with an ABN, excluding sole traders, the ATO has introduced client-to-agent linking. This requires businesses to digitally nominate their tax or BAS agent through the ATO’s secure online services before the agent can access any business data.
This change affects around 4.7 million businesses and applies when a business engages a new agent, changes its existing agent, or wants to provide additional authorisation to an existing agent.
myGovID becoming essential for individuals
For individuals interacting with the tax system, the ATO is strongly encouraging the use of myGovID. This aligns with the Government’s move to tighten access to myGov accounts.
Once an individual uses myGovID to access the ATO, that same myGovID will be required for future logins. In practical terms, it will no longer be possible to access an ATO account without it.
myGovID is a digital identity app that allows users to securely access government online services without passwords. It can be used for personal and business purposes, although business access requires the myGovID to be linked to an ABN through the Relationship Authorisation Manager. Anyone over 15 with a smart device and personal email address can set up myGovID.
Protecting the tax system and taxpayers from fraud will remain a central theme for the ATO throughout 2024.
Increased focus on unpaid tax and super debts
Another major priority for the ATO in 2024 is addressing the growing level of collectable debt. The collectable debt book currently sits at around $50 billion, with small businesses responsible for approximately 67% of this amount. This figure relates largely to self-assessed debt and excludes disputed amounts.
According to the ATO, changes in compliance behaviour during the pandemic, including reduced audits, fewer lodgment pursuits and lower debt recovery, have contributed to a concerning shift. Some businesses have continued to deprioritise paying tax and super, relying on unpaid liabilities to support cash flow.
While the ATO says it will continue to engage with businesses to help them understand and manage their obligations, it is also using stronger enforcement measures to protect employees, customers and compliant businesses.
Reporting tax debts to credit bureaus
One key tool being used is the disclosure of overdue tax debts to credit reporting agencies. Since 1 July 2023, the ATO has reported more than 10,500 businesses with significantly overdue, undisputed tax debts of $100,000 or more. This approach is intended to level the playing field by discouraging non-compliance and protecting businesses that do the right thing.
Improving small business tax performance
Small business tax performance currently sits at around 87%. While this is relatively strong, the ATO notes that a small minority of dishonest operators working wholly or partly in the shadow economy are responsible for much of the underperformance.
In 2024, the ATO aims to reduce shadow economy activity and honest mistakes by building a more digital-first tax ecosystem. This includes moving tax reporting closer to the time of the underlying transaction and creating more seamless reporting flows from business systems to the ATO.
Key takeaways for 2024
For businesses, particularly small businesses, the key message for the year ahead is to stay proactive and engaged with the ATO, especially where there are unpaid tax or super obligations. Early engagement can help prevent more serious enforcement action.
Businesses and individuals should also prioritise data security and ensure they are using the most secure methods available to access government services. Taking these steps will reduce the risk of fraud, financial loss and compliance issues as the ATO increases its focus on system integrity in 2024.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
