Key points
- The ATO’s new tax agent rules require stricter justification for deadline extensions, with late client paperwork not accepted as a reason for deferrals.
- All new clients must be registered by 31 October 2024, with the ATO providing fast-track processing and support programs.
- The system has shifted to online lodgement tools and uses data analytics for the early identification of struggling practices.
The changes come amid reports of widespread misuse of the ATO’s lodgement program. “We’re seeing agents treat due dates as starting points rather than deadlines,” says Felix Manero, ATO Director of Practitioner Insight at an Institute of Public Accountants (IPA) webinar this month. “That’s not what the program was designed for.”
The reforms focus on deferral requests based on clients delivering their records late. “Late client documentation is no longer an acceptable reason for extensions,” Manero says.
Tax agents must add all new clients by 31 October 2024 to secure extended lodgement periods. Those who miss this deadline face standard statutory deadlines for their clients’ returns. However, the ATO introducing the new lodgment deferral function in Online Services for agents the end of last year, which has streamlined how agents request a lodgment deferral. The ATO assured that Agent Assessed deferrals would be process and a response provided in a guarantee turnaround time of a maximum 48hrs for requests that meet specific criteria. ATO assessed deferrals will still be processed in 28 days.
Those that fail to achieve performance benchmarks will receive support rather than being penalised. “Failing to meet lodgement benchmarks won’t cost agents their program access,” Manero says.
He says the on-time lodgement for performance is only calculated on the current year. “It doesn’t get calculated on prior years,” he says. “When we start the first of each financial year, we forget about the prior years. We start then looking at your current years… so your on-time lodgement performance is based on your current lodgement program.”
A new Supported Lodgement Program provides tailored assistance packages, including temporary suspension of compliance actions and strategic planning support. The ATO has also streamlined the process for both deferrals and regular submissions, scrapping its spreadsheet-based system for online lodgement tools.
Small business concern over tighter deadlines
While larger firms welcome the clarity, the tighter deadlines are a cause for concern for smaller practices. However, the ATO insists proper planning removes the need for most deferrals.
As part of the ATO’s efforts to modernise tax administration, lodgement patterns are continuously monitored and data analytics used to identify practices that require support.
Key requirements under the new system include:
- Detailed explanations for all deferral requests.
- Regular client list reviews and updates.
- Progressive lodgement throughout the year.
- Early collection of client documentation.
- Prompt notification when returns are not required.
The reforms include new support mechanisms. Practices facing genuine difficulties can access the ATO’s practitioner support channels that include temporary deadline extensions and comprehensive practice reviews.
“This isn’t about punishment,” Manero says. “It’s about creating a more efficient system that works better for everyone.
“We really want to make sure there’s that really strong understanding across the profession about what it is, how it can help you, and what you need to do to reach out.”
The ATO plans to monitor the program’s effectiveness over the next 12 months, with further refinements in response to industry feedback and compliance data.
Watch the full webinar Tax Practitioner Lodgement Program and Deferrals – The Do’s and Don’ts for 2024/25 HERE.