THE Australian Taxation Office (ATO) and the Tax Practitioners Board (TPB) have developed new guidelines on client identity verification. These guidelines will also help improve security to stop criminals from committing tax fraud by stealing taxpayer identities, according to the ATO.

“We are increasingly concerned that criminals are committing tax refund fraud by stealing data and impersonating taxpayers,” ATO Deputy Commissioner, William Day said.

“Protection of privacy and information is important for all Australians. Tax Practitioners have a trusted role and these new guidelines will further help them to meet their obligations to secure the personal and financial details of their clients.”

The TPB and ATO have consulted extensively with industry and tax practitioners in the development of these guidelines. A cyber security incident can have serious financial consequences for its victims, whether they are an individual, small business or large company.  

The TPB has released proof of identity (POI) guidance to help tax practitioners verify their clients’ identities and reduce the risk of identity theft and tax fraud. The ATO has also released the 'Strengthening client verification guidelines' which complements the TPB’s guidance and is intended for registered tax practitioners using online services for agents or practitioner lodgment service software.

The TPB will soon be running a free webinar with the ATO, to explain the POI requirements to tax practitioners. Details of the webinar will soon be published on the TPB website.

The new guidance has been developed with the ATO and TPB to support tax practitioners in adopting a practical and robust proof of identity process.

“In a period where cybercrime is becoming increasingly prevalent, maintaining best practices for client verification is vital," TPB chair Ian Klug said.

He said the TPB guidelines outline appropriate requirements for verification-- "this includes defining the documents to be sighted, maintaining records and recommendations about achieving remote verification of clients”.

The ATO and TPB will conduct additional consultation to support tax practitioners with transitioning to the new guidelines, which are intended to become minimum standards in due course.

Mr Klug said many tax practices had already implemented robust proof of identity systems as part of their risk management and governance processes.

“I encourage other tax advisers to review and update their systems as soon as possible," he said. "After an appropriate time for education, consultation, and transition, we will formalise these guidelines and their date of effect. 

www.ato.gov.au

www.tpb.gov.au

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MELBOURNE lawyer Rob Jackson is warning of the high risk to businesses intellectual property (IP) should workers change jobs in large numbers post-COVID – a phenomenon that US and Europe is already calling the Great Resignation.

Rigby Cooke Lawyers’ workplace relations partner Rob Jackson said experts advice was the full impact of the Great Resignation would not be felt in Australia until March 2022, with almost 40 percent of Australian workers predicted to change jobs in the next 12 months.

Mr Jackson said the increased turnover of employees would put Australian businesses at risk of compromising their IP, so he urged companies to take the necessary steps now to protect their creation and innovation, before the predicted wave of resignations hits.  

“It takes years to turn innovation into commercialisation, and yet, you can lose your IP in minutes,” Mr Jackson said.

“Businesses, large and small, are vulnerable to the real risk of somebody leaving and taking not only that great idea with them, but the whole system of suppliers, investors and customer data.”

TIME TO PROTECT IP

In times of change or uncertainty, identifying and protecting business IP was more important than ever, Mr Jackson said.

Mr Jackson said businesses should consider what makes them unique and whether that formula or process is protected by means of confidential information, copyright, trade mark or patent. 

It’s also important to determine who the key workers and customers are and what impact their departure would have on the business. 

“A small organisation may have no safeguards in place,” he said. “Whereas a large business might become lost in a myriad of policies, and repeatedly amended contracts, where key protections are now poorly expressed.”

Mr Jackson said there were things businesses could and should be doing now to protect themselves, among them:

1. 1. An IP audit to identify what assets can be protected by copyright, patents and other means of IP protection, and identify which workers have created those rights.
2. 2. Keep employment contracts up to date and review them regularly, clearly outlining ownership of IP rights.
3. 3. Clearly define what constitutes confidential information and only disclose information to necessary employees. Before disclosing any details, obtain a signed acknowledgement to ensure the person will protect its integrity.
4. 4. Ensure contractors have a written agreement which gives the organisation ownership of all IP rights on anything they create during their engagement with the business.
5. 5. Conduct an IT audit to ensure the integrity of all online systems, ensuring unauthorised use is either prevented or at least detected as soon as possible. This will also assist in managing a business’ privacy law obligations.
6. 6. Conduct a HR audit. He advised a reality check of how strong your workplace culture was. For example, are there issues that may prompt employees to resign, such as lack of career progression or bullying?

REAL VALUE IS IN MOTIVATED EMPLOYEES

While protecting the business was important, retaining valuable employees would be equally critical over the next 12 months, Mr Jackson said. 

Mr Jackson said businesses that cultivate a culture of genuine trust and respect would be more likely to retain employees who feel they are valued – as well as attract new talent. 

“A positive, respectful and inclusive workplace with clear and fair leadership is just as essential as protecting your IP,” Mr Jackson said.

“Great employees who are unhappy with the workplace culture will be more difficult to retain, providing competitors – new or existing – with the perfect opportunity to hire your staff and leverage their knowledge and experience of your business and industry. 

“An employer who provides a positive and supportive workplace culture will have greater success in creating teams who enjoy coming to work and are not tempted to leave.” 

Rob Jackson is a partner in Rigby Cooke Lawyers workplace relations team – a commercial law firm providing specialist legal advice, backed up by in-depth industry knowledge to public and private sector clients across Australia – and he has more than 25 years legal experience.  He is the author of Post Employment Restraint of Trade, published by Federation Press.

www.rigbycooke.com.au

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THE Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, has released an interim report into the insurance crisis facing Australia’s amusement, leisure, and recreation sector. 

“There is a clear and present danger facing the amusement and recreation sector because an inability for these businesses to get insurance cover means that many of the attractions people know and love won’t be able to operate,” Mr Billson  said. 

“The lack of insurance coverage could lead to the closure of businesses in the amusement and leisure sector, significant job losses, particularly in regional areas, stranded assets and loss of economic activity generated by metro and regional shows and amusement parks.” 

The report, The Show Must Go On, explores whether a Discretionary Mutual Fund (DMF) can be a durable solution and discusses required legislative reform by states and territories to ensure it is ‘fit for purpose’.  Mr Bilson said it also highlights the need for DMFs to be recognised and accepted as a suitable solution by councils and showground managers. 

Mr Billson said the interim report seeks urgent feedback from all stakeholders by November 3 to the ideas and questions raised in the report.

“We are calling for submissions from those in the industry so we can further understand any issues before we release a final report to government,” Mr Billson said.

“As businesses look to re-open after lockdowns, this issue is a shattering blow for those small and family businesses in the amusement, leisure and recreation sector which will be forced to stay shut because they can’t get insurance.  There is a very real possibility shows won’t go on – something has to be done for the show to go on. A DMF may represent the only workable solution.” 

The ASBFEO has been reviewing a proposal by the Australian Amusement, Leisure and Recreation Association (AALRA) to establish a DMF as a solution to the critical and immediate need for insurance in the sector. 

The interim report found the lack of affordable insurance was not the fault of the amusement industry but due to a 'hardening' in the global insurance market. Very few insurers are willing to insure the industry, and premiums – when available – had risen by as much as 200 percent. 

“In many instances the policy is priced such that it may as well not exist because small operators have no capacity to pay for the cover they need to continue operating,” the report said. 

“In the case of the amusement, leisure and recreation sector, there isn’t an offering that provides full coverage.”

Public liability insurance coverage is a legal requirement for the operation of rides at showgrounds and fixed installations, both through contractual obligations and obligations imposed on councils and other landowners by state and territory governments. 

DMFs operate to provide cover on a discretionary basis to a group of individuals or organisations that have a similar risk profile.  Under a DMF, members who meet requirements would have access to a certificate of protection, enabling them to operate these amusement rides. 

The Show Must Go On interim report and overview can be found at www.asbfeo.gov.au/reviews/discretionary-mutual-fund-review.

Submissions should be sent to: This email address is being protected from spambots. You need JavaScript enabled to view it. by COB, November 3, 2021.

Report Overview

The Show Must Go On: Is a discretionary mutual fund the solution to the insurance crisis facing Australia’s amusement, leisure, and recreation sector?

Background

• The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) conducted a self-generated inquiry in 2020 into the insurance market for small business, finding significant dysfunction for several sectors.
• The Amusement, Leisure, and Recreation Association (AALARA) submitted to that review noting that many members were facing closure and/or stranded assets due to the unavailability of insurance.
• AALARA then approached the Federal Government to seek support to establish a discretionary mutual fund (DMF).

Preliminary findings

• A DMF suits the industry represented by AALARA.
• A DMF may be a suitable way to address the current insurance crisis facing the industry.
• The suitability and durability of a DMF solution for the sector will depend heavily on:

o   support for legislative reform from states and territories, and willingness to accept the solution by councils and land/showground managers.

o   the final makeup of the membership.

o   the cost of premiums and reinsurance, the management of the DMF and any management costs, and the size of any claims in the first years of operation.

About Discretionary Mutual Funds (DMFs)

• DMFs operate to provide risk cover on a discretionary basis to a group of individuals or organisations, through a ‘Certificate of Protection’.
• DMFs do not offer an insurance product: o Under traditional insurance coverage, a policy holder has a contractual right to have their claim paid upon meeting the policy’s terms and conditions.

o   Under DMF coverage, the DMF’s members are entitled to submit a claim for indemnity to the DMF’s board, which may or may not approve the claim, at its discretion.

Benefits of a DMF

• DMFs are often created to address market failure or significant dysfunction.
• DMF members are accepted or rejected by the directors, who have significant industry knowledge, allowing them to more closely monitor risk profiles of those covered.
• DMF membership can also be predicated on compliance with a range of risk management and training protocols to lessen the risk profile across the membership.
• Because DMFs do not have shareholders to make returns to, they are able to operate on slim margins, potentially reducing costs to members.
• DMFs can offer additional services to their members, adding value over the protection offered.

Challenges

• The DMF should be fully funded for the first year, requiring a reasonable amount of start-up capital.
• Many pieces of state, territory, and local government legislation and regulation require businesses operating on their land to hold insurance, which a DMF cannot offer.

o   To address this, these pieces of legislation and regulation could be amended to allow membership of a DMF in lieu of insurance where insurance is not available, or the market is significantly dysfunctional.

• A DMF should be established in such a way to ensure its ongoing durability.
• Consumers may have concerns about the discretionary nature of coverage.

Alternatives

• A range of alternative options have been considered to address this issue, including a captive, self-insurance, group insurance schemes, a reinsurance pool, tort reform to address risks (‘the New Zealand solution’), implementation of a National Injury Insurance Scheme, and hybrid models.
• A recent entrant to the market has been Coversure, a respected UK-based insurer:

o   Only provides $10 million coverage (half of the $20 million required by most legislation/regulation).

o   Industry is reporting premiums of at least double that they were previously paying.

o   Will not cover the whole market.

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THE Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, has strongly backed a call from the Inspector-General of Taxation for the Australian Taxation Office (ATO) to more consistently and transparently inform taxpayers of their right to review, complain and appeal decisions.

“This is a significant investigation and report by the Inspector-General of Taxation and Taxation Ombudsman, Ms Karen Payne, and the findings and recommendations are really important for delivering a better and fairer tax system,” Mr Billson said. 

 “Tax issues are among the top concerns for small businesses, and it is critical for the Tax Office to step up as a modern revenue agency to help people as part of their charter.” 

Ms Payne’s report called for the ATO to update the Taxpayers’ Charter to include an express right to be informed of rights to review, complain and appeal decisions and to be told about all relevant channels to do so.  

The report found over the past three years fewer than 1 percent of ATO staff had attended a training course to teach them how to tell taxpayers about their rights to complain, review or appeal a decision and a survey found 60 percent of taxpayers were unaware of or had not used the ATO’s complaints function. 

“I am pleased the Tax Office has embraced this report from the Inspector-General and has committed to working through these important recommendations,” Mr Billson said. 

“I look forward to seeing the Tax Office implement these changes to improve the way it deals with taxpayers.” 

The ASBFEO has released several reports outlining measures to improve the tax system for small business, especially around the vital need to tell taxpayers about their opportunities to complain about or have a decision reviewed. 

Since March 2019, more than 650 small businesses have sought the help of the ASBFEO’s Small Business Tax Concierge Service -- a team of specialists and case managers who respond to requests for assistance from small business who receive a negative decision from the ATO.  

For further information about the Concierge Service call 1300 650 460 or email This email address is being protected from spambots. You need JavaScript enabled to view it.