Date posted: 19/04/2024

What tax agents want – Client-to-agent linking fixed

Tax agents are losing time, money and clients due to the complexity of client-to-agent linking. Calls for improvements are being made to the ATO.

In brief

  • CA ANZ members and clients are frustrated with client-to-agent linking.
  • Complex guidance and a multi-step process damaging tax agent/client relationships.
  • CA ANZ will continue the push for streamlining the client agent linking process.

CAs pride themselves on being a key advisor and red-tape navigator – particularly when dealing with the Australian Taxation Office (ATO).  So, when the ATO devised Client-to-agent linking (CAL) – which requires clients to undertake a series of identity verification steps without tax agent assistance – CAs were quick to express their frustration.  CA ANZ and others industry bodies put alternate approaches to the ATO but to no avail.

Frustrations and disruptions

Frustrations with the quality of the ATO material provided, a multiple step process that can require taxpayers and agents to call the ATO numerous times – with many unable to get through – and complaints about the quality of assistance eventually received.

Business relationships are being disrupted as CAs deal with frustrated existing clients and potential clients. Tax professionals who are on-boarding new clients are losing hours of unbillable time helping clients navigate the obstacle course that is CAL. It has almost become a form of restraint of trade and, risks damaging the integrity of the tax system by discouraging the use of tax agents.   

"Tax professionals who are on-boarding new clients are losing hours of unbillable time helping clients get through the obstacle course.”
Susan Franks, Senior Tax Advocate CA ANZ

Why is this process needed?

Every CA ANZ engagement with the ATO acknowledges that identity fraud of both taxpayers and tax agents is on the rise. There is undoubtedly a need for preventive measures, particularly at an individual level. But CAL currently focuses on businesses other than sole traders. Questions are being asked about whether tighter refund controls would have been a cheaper effective option.

The number one comment we hear is: “Why doesn’t the ATO trust tax professionals to play a key role in identity verification?” The answer may relate to the ATO’s aspiration to implement the OECD’s Tax Administration 3.0 by 2030 – a system where “tax just happens”.  

This initiative involves information flowing from taxpayer systems directly to the ATO without any extra intervention by taxpayers and little input from intermediaries.  A key prerequisite for this initiative is that there is a strong effective digital identity. DirectorID and client-agent linking are part of this process.  

Pain points for taxpayers

Taxpayers are not necessarily ready for that change. Many small businesses and individuals are not digitally savvy and 47% of the population do not have an Australian passport. There is also a complete disconnect between government and the Australian population when it comes to the importance of the Australian Business Register (ABR).

The 6-step process for taxpayers requires a smart phone, the ability to download apps, a personal email account and a passport. Many older Australians do not have any of these. But they do have a self-managed superannuation fund that is subject to CAL. Without an Australian passport or having out of date Australian Business Register details, individuals need to call the ATO. Members report clients calling the ATO over 10 times before getting through only to be placed on hold for long periods of time. 

Simpler, clearer messaging is needed. The instructions regarding the 6-step process are not easy to understand and much of the information is provided by video. Whilst this appeals to the young, many others will be dealing with incomplete instructions and are confused by MyGovID and myGov. 

We are also hearing about technical glitches, delays caused by ATO and ABR records being different, out of date records, and investment trusts needing ABNs even if they don’t run a business. 

Pain points for tax agents

Tax agents are frustrated about needing to accept a tax agent nomination within a fixed time without being advised that it is there to action.  Tax agents are expected to regularly access a client nomination report on Online Services for Agents (OSfA) to see if they have been nominated.  

When adding a client to a tax agent list it is easy to inadvertently remove another tax or BAS agent. To rectify this both the client and tax practitioner need to start CAL again.  On-boarding new clients which are self-managed superannuation funds, strata title entities and trustee companies is particularly difficult. 

Possible solutions?

Many members want CAL changed to previous practices or to a system that requires the ATO to verify client identity. CA ANZ and other industry bodies have proposed alternatives which were rejected by the ATO. 

The ATO has recently stated that it “will continue to engage with the tax associations and look for opportunities to enhance the process and further capitalise on any changes to the technology that will improve the process for agents and clients.” 

CA ANZ will be asking the ATO for: 

  • Simpler clearer messaging. 
  • A dedicated ATO call centre with more staff and better training. 
  • The ability to organise a convenient time to call. 
  • Automatic notification to tax agents when a client link needs authorisation.  
  • Improved technology infrastructure to enhance the system's reliability.  
  • Creation of a bulk application process for when a partner changes firms. 

Hopefully this time with the Inspector General of Taxation opining “The tax ecosystem is not in a good place if it is difficult for clients and agents to be linked up” a better process will be found. 

Update to Online services for agents (as at 19 April 2024)

In response to feedback, the ATO has made some updates to the in-system guidance in Online services for agents to help agents link to the correct account once a client has nominated them as their agent.

The in-system guidance will prompt you to confirm the account level you're linking at. For example, if you're authorised to access the income tax account, you must use your client's business TFN to link at that level. If you try to link using your client's ABN, you'll be prompted to confirm that you don't require access to the income tax account. If you proceed and later require access to the income tax account, your client will need to create a new agent nomination.

The in-system guidance will also reduce the risk of you removing an existing agent who has been authorised by your client to represent them for an activity statement account. If an existing agent link is overridden in error, this can only be fixed by your client creating another agent nomination to reinstate the agent's access.

The following support materials are available on the ATO website:

CA ANZ submission to the ATO

CA ANZ lodged a submission and a list of members issues with the ATO client agent linking process for the ATO’s post-implementation review of the process.

Read more