Legislating under pressure

Speaking to Public Accountant, Tony Greco, the general manager of technical policy at the IPA, reveals that the body is in close contact with its members who are currently putting all else aside to cater to their clients’ eager needs, around the clock. 

“Some may not see the rewards of all the services they’re providing their clients, others are having to work very long hours, which is having an impact on their own health and wellbeing,” Mr Greco says. 

Examining the government’s stimulus measures in their totality, the biggest items are the cash flow boost and the JobKeeper program and for both the key agency is the ATO. This essentially means that accountants are on the frontline when it comes to ensuring these programs are successfully disseminated and implemented. 

“A great bulk of the stimulus is going via the ATO and the trusted adviser is the intermediary between a small business and the Tax Office,” Mr Greco notes. 

He explains that one human aspect that has surfaced during this crisis is the accountant’s close-knit relationship with their clients. Mostly, accountants feel a sense of obligation to make themselves wholeheartedly available, ensuring their business client keeps their operations afloat during the downturn. 

“They put their clients’ interests ahead of their own. 

“The average age of a tax agent is above 50, and some of those people can’t handle this load. Some of them are falling apart on me. I spoke to one the other day who said his doctor is giving him running repairs so he can maintain a 12-hour day,” Mr Greco reveals. 

With accountants digging deep in their attempt do fulfill almost the impossible by servicing the mounting needs of each client, Mr Greco explains that the current circumstances in the profession are quite unique.  

“In earlier conversations we had business owners saying they have no revenue, and then came stimulus one, two and three, and now we’re at the pointy end of JobKeeper so the confusion reigns,” he acknowledges. 

But Mr Greco is also aware that the stimulus measures, such as the JobKeeper, have been “dropped” on the Tax Office overnight. The ATO has had to create a special JobKeeper system within weeks of its announcement to deal with the biggest outflow of money they have had carriage over since their founding a century ago. 

“The sheer size of what they’ve been asked to do is to hand out over $130 billion over the next six months. They’ve never done that before. It’s a credit to the resources of the ATO and its personnel as there would be very few government agencies capable of pulling off this sort of challenge in such a short time frame. 

“The ATO has strong links to its intermediaries which includes the professional associations such as the IPA which provides the necessary interface to deal with implementation issues as they arise.

“They’re going to be accountable for not misusing public money and then at the same time, not pulling the strings too hard, where a legitimate business is having to jump a lot of hoops to access government support. 

“There’s a dual responsibility. One is to make the system work and the other is to protect the integrity of the money, because it is taxpayer money that is being pushed out.”

Recognising the load that has been placed on the ATO, Mr Greco explains that they too are struggling to digest some of the Treasurer’s rules.  

“Its like a jig saw puzzle to start with.

“It has only recently become a little more certain how these rules apply. 

“When legislation surfaces you sort of have a reasonable idea of how a package will work, but from there you rely on a whole bunch of other things coming to fruition to complete puzzle,” says Mr Greco. 

Speaking about a few of the most commonly shared JobKeeper qualms, Mr Greco draws on complexities surrounding the turnover test and the ATO’s announced “soft” approach. 

“You can only base this on the best available information you have at the moment, because if you wait until the end of the June quarter then you miss out for April, May and June and that’s unfair and not what was intended. 

“No one can budget with certainty let alone in this climate,” says Mr Greco, but admits he himself is nervous under the enormity of the funds at stake, which would keep many advisers awake at night. 

“If you’ve got ten employees, that’s $30,000 every month, so by the end of the quarter there is $90,000 that you might have to pay back with interest if your projections are challenged. That’s part of the uncertainty.”

However, Mr Greco encourages accountants to do their best given the impossible circumstances.

“The ATO has given us a little bit of comfort, so as long as the methodology behind the prediction is sound, then they won’t hunt you down.

“That’s what they’re saying and we’ll hold them to account on that.” 

Another point of confusion is the 12 March lodgement rule that says businesses are required to demonstrate business activity by lodging, before 12 March 2020, their 2018–19 income tax return showing business income, or an activity statement or GST return showing supplies. 

This means that a new business that opened its doors post January could very well miss out. 

“This is a group that will miss out and as I keep saying to everyone there are winners and losers, and I think businesses have to accept the umpire’s, the ATO’s, decision when they say that it is not catered for by the law,” says Mr Greco. 

“You have to recognise that the government has been honest and said there will be people who are in and those that are out, and you have to accept that that is the eligibility criteria.”

Mr Greco says it is important to recognise that JobKeeper reach was extended to include sole traders and non-employing entities  that missed out on the cash flow boost. JobKeeper provides for one active participant to be eligible for the fortnightly $1,500 payment. 

“JobKeeper was a little like a consolation prize.” 

But at the end of the day it is the government’s call, Mr Greco notes. 

“You’re not going to please everyone, but there has to be a dividing line somewhere,” he says.

“The government is right to choose that.”

He reminds accountants that many of these decisions were made by the government behind closed doors, meaning that the usual consultation process was entirely removed.  

“The usual life cycle takes months if not years. Here we have an announcement and two weeks later it’s being rammed through parliament with warts and all and we’re having to implement in the shortest amount of time. It’s a humongous task and that’s what’s keeping accountants so busy,” Mr Greco says.

In concluding our talk, Mr Greco says that although he could question every element of every policy, unfortunately the government did not have the luxury of time when arriving at these decisions. 

“I’ve never had more meeting with the Tax Office and often it was a daily occurence,” he admits. We even had access to ATO personnel during weekends which is unheard of.

“There are some rough edges. There are even spelling errors in the legislation. The drafters were working under extreme pressure. Parliament passed it and handed it all to the ATO. Now the ATO has to make it work in a practical sense. 

“If we ever have to experience this sort of timeline again, in our lifetimes, we’re learning a lot of lessons now.”