Client Agent Linking

Client Agent Linking (CAL) has been in action since 13 November 2023. CAL was created to reduce identity-related fraud attempts, including criminals taking over agents’ identities. CAL ensures that a client has authorised an agent to access his/her tax records. Before CAL, all an agent had to do was enter a client’s ABN into their Online Services for Agents portal to connect himself to the client. This connection method has become very unsafe since ABN data is easily attainable on the ABN Lookup site. This has meant that criminals could easily create a scenario where clients’ data is compromised and misused.

No one disputes that creating a process whereby clients’ data is kept secure and criminal activity is kept to a minimum, is warranted. As cybercrime increases, the more we can use technology to help us fight the war, the better! CAL is part of this technology arsenal, however, since its live delivery, both agents and clients alike are finding that from a practical perspective, CAL is less than perfect! Many issues and challenges have arisen as a result of CAL. Some of these are described below.

Issues and Challenges for Clients

• CAL requires the set up of myGovID and Relationship Authorisation Manager (RAM). Some clients find setting this up difficult and even harder to access help from the ATO.
• The process is quite complicated. It involves setting up a myGovID, linking the ABN to the myGovID in RAM, logging into Online Services for Business (OSB), nominating a new agent and finally advising the agent that the nomination has occurred.
• The above process is made more difficult if a financial structure is complicated e.g. involves trusts, self-managed super funds etc
• CAL requires some level of technological expertise and experience which is not available to all clients.
• Setting up a myGovID requires strong identification proof which includes a passport. Not everyone has a passport and applying for one is difficult, time-consuming and expensive. Currently, there isn’t any process available to clients who do not have a passport.
• For CAL to work, a client’s Australian Business Register (ABR) must be current and up to date. A client must access his/her ABR and update the details before beginning the CAL process. This means more time and more frustration.
• Setting up CAL must be done by the client only. Agents cannot assist the client for security reasons. If a client is not tech-savvy or doesn’t understand the steps required, not being able to ask their agent for help is an issue!
• Clients can ring the ATO for assistance in setting up CAL, however, this can be very time-consuming.
• If a client cannot complete the CAL, he/she won’t be able to use an agent for tax lodgements. If this occurs, lodgements will be late and tax payments will be on hold. As a result, such clients may face penalties from the ATO (even though this situation isn’t their fault!). Clients will be forced to process their lodgements via OSB themselves. Of course, some clients are capable of self-lodgement, however, the more complex their tax situation, the less likely they will want to attempt lodgements without some advice and assistance for fear of making errors etc. These are the clients who will fall through the cracks!
• If a client wants to change from one agent to another but cannot action CAL successfully, the client will be forced to remain with the original agent. This isn’t ideal if the client/agent relationship has broken down.

Issues and Challenges for Agents

• A major issue for BAS agents is losing access to current clients in Online Services for Agents (OSFA). This occurs when a tax agent uses the wrong identifier when setting up a new client for income tax lodgements. The correct identifier is the tax file number but many tax agents enter the client’s ABN instead. When an ABN is chosen, this instantly removes the BAS agent’s access to the client. This is frustrating for both the BAS agent and the client because to link to the client again, the client has to go through the CAL process even if the BAS agent and the client may have been engaged for many years! I have been told anecdotally that this is also happening between BAS agents. For example, if one BAS agent is responsible for payroll and another for BAS lodgement, each time payroll is lodged via STP or a BAS is lodged, each agent removes the other from OSFA – crazy stuff! As you can imagine, this is very frustrating for clients but can also create friction between agents. The whole tax landscape is on a slippery slope due to CAL!
• Following the above issue, if a tax agent uses the ABN as the identifier in OSFA for a new client, s/he will not see the option to add the income tax account for that client. In this case, the tax agent must ask the new client to perform the CAL process again. As you can imagine, this will be very frustrating for the new client – not a great way to begin the client-agent relationship! Tax agents need to understand that using the TFN identifier provides them access to all client accounts i.e. income tax, FBT and ICA (BAS).
• BAS agents are losing clients to tax agents as a result of CAL. The complexity of CAL for some clients is forcing them to remain with a tax agent to lodge all tax liabilities even if they would like to engage a BAS agent to assist them with BAS, bookkeeping and payroll. Clients can’t be bothered to go through the CAL process for every agent so they are taking the easy way out and asking their tax agents to do the lot!
• Some agents find that CAL is taking too much of their time (for which most are not charging). Even though agents cannot assist clients with CAL, clients are asking for help nonetheless. Until the CAL process is improved, many agents have decided against engaging new clients.
• All agents, BAS or tax are losing work because potential and current clients find CAL too complex and time-consuming. Some clients are avoiding navigating the CAL process and are instead choosing to go it alone. This is not ideal for agents wishing to build their client base or for clients who need tax assistance and advice (which is most of them!).
• When a client successfully links to a new agent, the client must contact the agent to advise him/her. From there, the agent can accept the new client in OSFA. If, however, the client does not advise the agent or the agent doesn’t receive/read the message in the current time frame (currently 28 days), then the CAL is reset and the whole process will have to begin again. A better notification system is required here.

As you can see, many issues and challenges are being met by agents and clients due to CAL. This situation has occurred because CAL was not fully tested at the time of its release. I believe more testing, research and education should have been carried out before going live. While it works on the whole, for those clients with complex tax needs or who are technology-challenged, CAL is too hard! Until these issues are resolved, I believe CAL should be removed. If this does not happen, agents will lose work, clients’ lodgements and payments will stop and the tax industry as a whole may implode! Hopefully, the ATO will review their decision to continue to implement CAL without first resolving these issues.

---

What is Client Agent Linking?

Client Agent Linking is an ATO initiative intended to improve security over client identity and limit OSFA (Online Services for Agents) fraud by agents, their employees, and other authorised persons. From November 13, 2023, if you want to engage a new BAS or Tax agent to act on your behalf, you will need to nominate them in your Online Services for Business. This is known as “Client-Agent Linking”.

Why is Secure Client Agent Linking Important?

The intended outcome of this new process is to reduce fraud and identity theft and improve data security. By strengthening the security of this process, all parties involved – including you, your agent, and the ATO, can have confidence that you, the client, and not a fraudulent person, have authorised an agent to act on your behalf. 

Rollout of Client Agent Linking Process

The ATO has implemented a phased rollout of the client-to-agent linking process. The following businesses and organisations are currently included in the rollout or will be soon:

1. Public and multinational businesses who are part of the Top 100 and Top 1,000 – effective from 19 June 2022.
2. Most public and multinational businesses – effective from 13 December 2022.
3. Businesses in the Top 500 privately-owned wealthy groups, where that group has a significant level of ownership of the business – effective from 13 December 2022.
4. Government entities – effective from 24 February 2023.
5. All types of entities with an Australian Business Number (ABN) excluding sole traders – effective from 13 November 2023.

Please note that the client-to-agent linking process does not currently apply to individual taxpayers. However, from 13 November 2023, it will apply to all types of entities with an ABN, excluding sole traders.

Nominating a New Agent

When you intend to do either of the following, you need to nominate or link the agent. 

1. Engage a new tax or BAS agent, or payroll service provider to represent you.
2. Provide extra authorisation to your existing authorised agent, such as representing you for a new obligation like activity statements or a new entity in your group.

You can do this by using the new agent nomination feature in Online Services for Business (see the steps below).

Once you complete the agent nomination, you must let your agent know that you have nominated them as he/she will not receive any notification from the ATO. The agent will have 28 calendar days to add you to his/her client list in Online Services for Agents or Practice Software.

Steps to Nominate a New Agent

1. From the Online Services for Business home page:
2. Select Profile, then Agent details at the Agent nominations feature, and select Add
3. On the Nominate agent screen, go to Search for an agent
4. Type your agent’s (or payroll service provider’s) registered agent number (RAN) or practice name and select Search
5. Select the agent you want to nominate (if multiple results are returned, select the correct agent)
6. Check that the agent’s details are correct
7. Complete the declaration by selecting Submit. You’ll now see your agent’s details listed under Agent Nominations.
8. Let your agent know that you have nominated them!

Useful Links

1. How to nominate an agent in online services for business (download)
2. The agent nomination process explained
3. Troubleshooting guide for agents
4. How to set up myGovID
5. Online services for businesses
6. Relationship Authorisation Manager (RAM)
7. Link your myGovID to your ABN
8. For agents – think before you link!

Conclusion

The Client-to-Agent linking process strengthens security measures for you and your business, agents, and the ATO. It not only protects your business but also safeguards your sensitive information from fraudulent attempts and uses in identity theft. By following the steps to link to a new agent, you can embrace a more secure digital landscape for your business and your agent/s.