Transition from AUSKey to myGovID: All you need to know

What needs to be done
How to make the transition
Current experience (help is at hand — also see ‘ATO assistance’ below)
Some common myths (incumbent system, phone types, phone costs, ex-employee access)
The big issues (access, mobile phones, lost & replaced phones, deductibility, FBT, overseas staff)
ATO assistance (useful links, factsheet, helpful videos)

There is one very important and current matter that should be focusing the minds of tax agents across the nation. This is the transition from AUSKey to myGovID for access to, among other things, Online Services for Agents.

Background
Tax agents will be very familiar with the AUSKey security access method that has been used as the gateway to the former tax agent portal and now Online Services for Agents.  The AUSKey method of access has been used for many years but the ATO is very concerned with the lack of security of this method in relation to the current technological world. Further, due to the way AUSKey was originally created, it is mandatory that the ATO moves to a different system before the end of March 2020.

The ATO went through a long process of analysis to determine what would be the best solution to this problem. It has decided to adopt a security method that requires high-level proof of identity using an application on an individual’s own mobile device. The application requires the input of certain information, which is discussed below, to verify a person’s identity. Further, access to a particular tax agent’s clients can only be granted to that individual through the Relationship Authorisation Manager software (RAM) that is managed by the tax agent.

Through this software, the tax agent can give approved individuals the ability to access their clients’ data in Online Services for Agents. The ability to access this information is through the individual’s personal mobile device and individual’s personal myGovID. It is considered that this is best practice in relation to access to the very sensitive information that is held by the ATO in relation to each taxpayer.

What needs to be done
It has been announced that access to AUSKey will be switched off at midnight on the 27th of March 2020. Do not think that this date may be delayed, because it will not. The ATO is not able to extend the date beyond this due to technical issues that relate to AUSKey. You must have made the transition by midnight on 27 March 2020 if you want to gain access to your client information immediately after that time. If you have not made the transition by that time, you will still be able to go through the process of making the transition, but your staff will not be able to obtain access to your client information until all your staff have their own myGovID linked to their personal mobile devices.

So, just to be clear, the deadline for the termination of AUSKey is not 31 March 2020. It is 27 March 2020.

How to make the transition
Step-by-step, here is what you need to do in order to make the transition.

Number 1:  You and each of your staff must have their own personal smart device.  Most often this will be a mobile phone.  It does not matter whether it is an Android device or iOS. For some practices, this will immediately raise problems as not everyone has a mobile phone or they may have an older style phone. Unfortunately, no method other than using a personal smart device will be available to gain access through myGovID.  There is no exception to this rule and it appears there will never be any other method available.

Number 2: You and each of your staff must create a myGovID. This is not to be confused with a myGov account.  Many people already have a myGov account, but this is not a myGovID. Unfortunately, the government decided to use a very similar name for these two separate products. Very few of your staff will already have a myGovID.

A myGovID is created by downloading an app. The app can be downloaded from the Apple App Store or Google Play. The myGovID app is compatible with most smart devices that use iOS 10 or later on Apple devices and Android 7.0 or later.

To set up an individual myGovID, currently you must have two of the following Australian identity documents to achieve what is known as a “standard identity strength”. It is important that the name of the individual matches on these documents. The documents are:

  • A passport (not more than three years expired)
  • A drivers licence (which includs a learner’s permit)
  • A birth certificate
  • A Medicare card.

Any two of these documents may be used to verify your identification through the myGovID app. Other types of documents will be able to be used in the future.

There have already been numerous reports of people having difficulties using these documents to successfully obtain their myGovID. This is usually because there is some irregularity with the names on the particular documents. Married women, who have changed their surname, seem to be a particular issue. Also there has been trouble with hyphenated names and other issues.

In the process of setting up each individual’s myGovID, the individual will be asked to supply an email address. Please ensure that this is a private email address of the employee and not their work-based email address. This is because the myGovID is personal to the individual and not governed by the business in which they work. Accordingly, if they stop being an employee of your practice, they will not want to have an email address link to your business as part of their myGovID maintenance.

So make it very clear to your staff that the email address they must use must be their private email address. If they do not have a private email address, they will need to get one.

There have been problems with certain individuals being able to complete this process. Notably, these are people who may only have one, or even zero, identity documents. Typically these are foreign residents, but we will discuss this topic more below.

Number 3: The next step in setting up your practice is to ensure that your AUSKey and Australian Business Register information is correct and the names match identity documents exactly.  You can log in to AUSKey Manager at abr.gov.au/tax-professionals to check this.

Number 4:  The next step in getting your practice ready is to link your practice in RAM (remember that this is Relationship Authorisation Manager). To do this, you must be the principal authority to link your business’s Australian Business Number to your personal myGovID.

There are also reported difficulties in relation to this.  One particular problem is if your practice is being conducted through a trust. There currently is a problem with linking the personal myGovID to the practice. The ATO is aware of this problem and there should be a solution to it coming shortly.

If the only listed associate of a business is another entity (that is, not an individual) you will need to manually link the business by calling the ATO.

Number 5:  The next step for your practice is to authorise your employees to use Online Services for Agents. For explanation purposes, let us assume that you are the principal authority in your practice for RAM. Once you are sure that your employees have set up their own myGovID, use RAM to authorise them to act on behalf of your practice. You will need to provide the employee’s details including their legal name and email address. Of course, these details must match the details that the individual has used to set up their myGovID. When you authorise someone, they will receive an authorisation request via email with steps to follow.

You can use RAM to appoint a person who is authorised to administer access to your client’s details. If you use desktop software (that is, not cloud-based) you may need to undertake additional steps. If you use cloud-based SPR-enabled software, you won’t need to undertake additional steps.

Number 6:  Once all this has been done, the final step is for each authorised individual to individually access Online Services for Agents. This is done through the myGovID app. It will provide the individual with a four-digit code to be entered into the login screen.

Some people have had difficulty with the application logging the user out quickly when the application has not been used for a short period.  This is referred to as the “time-out”.  If you experience a short time-out, this is not a result of a change in policy by the ATO regarding access times. The time that a user is not using the system, after which a person is logged out, has not changed from the AUSKey system.  The issue of being logged out quickly is being investigated by the ATO and is possibly due to differences between browsers.

Current experience
When we talk through this stepped process, it may sound that it is easy. And to be fair, there are many people that have been able to go through this process without any problems. However, there are many people who have had difficulties. But if you do, it is best to be persistent. Please ensure that you have fully understood the process by visiting the ATO website that deals with using myGovID and RAM for tax professionals.

There are a number of helpful videos on that site, which we link to below:

There is also an ATO helpline service, however it is fair to say some practitioners have not always been able to obtain the help they needed from this service.

Some common myths
What follows are some of the common myths that the ATO has heard regarding the introduction of myGovID.

Some people are saying that there is already an existing system that is used by ATO staff. Why could not that system have also been used rather than what is being proposed? The answer is that the ATO system used for ATO officers is a very high level security system which has many more hurdles to go through than the myGovID system. It was simply impractical to enforce the system used by the ATO on the general community due to the high level of access protocols that are employed in the ATO system.

The next myth is that the system will only operate on particular phone types. This is not correct. The system will operate on any phone that uses the Android or iOS operating systems as I’ve previously described. The ATO states that this will cover around 98% of all phone types.

Another myth is that tax agents who need to provide a phone to a staff member will have to pay around $1,000 in order to obtain such a phone. This is not correct. In a recent meeting, an ATO officer produced a $99 phone that was being used to access Online Services for Agents using a personal myGovID.

Another myth regards the ability of an ex-employee to access the tax information of a particular accounting firm’s clients.  Access to the information of an accounting firm’s client base is managed through RAM. If an employee is about to terminate their employment, it is the responsibility of the person managing RAM for the particular firm to ensure that that employee is no longer permitted access to the information.

The big issues
There are of course some quite significant issues that have been raised in relation to the introduction of the myGovID.

Access: The first of these, and no doubt the biggest issue, is the ability of staff to access information from Online Services for Agents outside the office and outside office hours.

It goes without saying that the information concerning the clients of an accounting firm, to the level of detail that is provided in Online Services for Agents, is highly valuable to the firm. Further, there are privacy issues that must be observed in relation to this information.

The new access system will enable a person to obtain access to the information of an accounting firm’s clients on an individual’s mobile device — no matter where the device is located or at which time the information on the device is accessed. This is of great concern to many owners of accounting firms. Although it can be said that such information could be obtained by copying an AUSKey, the fact is that this was more difficult to do than simply accessing information through a mobile device.

It is fair to say that the ATO had not properly appreciated the level of concern in the tax agent community concerning this issue. The ATO is now likely to have gained a proper appreciation of the concerns and, in time, may amend the software to permit some restrictions on the use outside business hours. The ATO has informed us that there will be an ability to track, by way of an audit log, the people that have been using their device to access Online Services for Agents, although this will not be available immediately.

To put it plainly, your staff are going to have greater access to the information about your clients outside the office and after hours. This will be a matter that you will need to manage carefully and you will need to inform your staff of the issues and risks regarding the conveying of sensitive information to people outside your organisation. In time, there will be some controls, but they will be, probably, “after the event” controls. The access to information is a new challenge that you will need to deal with.

Having a mobile phone: The next issue concerns each person on staff having their own mobile device. While smart phones have become very prevalent, not everyone has one. Further, some people have older devices which are used purely as a mobile phone. For these staff members, the owners of firms will need to determine what they going to do.

Note that there is no desktop application for myGovID and RAM (that is, a personal computer will not suffice).

Owners of accounting firms will need to deal with the situation where a staff member, who does not have a smart device, demands one from the accounting firm for the purpose of doing their work. If a smart device is provided to such people, will your other staff also demand that your firm pay for a new device? Unfortunately, there is no easy answer to this issue. Each firm will have to make its own decision as to what is practical for it.

You may be thinking that the ATO will, in time, provide some other solution beside each person having their own mobile device. However keep in mind that the ATO, after a long process of investigation, decided to go down this path, and there appears to be no indication that it is going to consider any alternative to it.

Loss of a mobile phone etcetera: What happens if your mobile phone gets lost? In this case you need to purchase another phone and go through the process of downloading myGovID again.

What happens if you leave your mobile phone at home? In this case, you will probably have to turn around and go home to get the phone as otherwise you will not be able to use your personal details to get access to Online Services for Agents.

Tax deductibility: Another issue concerning the need to have a mobile phone is whether the costs of that phone are tax-deductible to the staff member. Alternatively, should an accounting firm decide to pay for the provision of a mobile phone to a staff member, what are the FBT implications?

Let’s first deal with the tax deductibility of the use of a mobile phone.

The costs of a mobile phone will be tax-deductible to the extent that the costs are incurred in deriving the assessable income of the employee. Unfortunately, the ATO view of how to apportion these expenses, as referred to on its website, is based purely on telephone calls. That is, the apportionment is to be based on the amount of work related calls and the amount of private calls. Now this seems to be outdated.  It is more likely the case that the main use of a mobile phone is not in relation to telephone calls. As we all know, there are all sorts of apps that are available and these will influence the percentage deductibility.

Unfortunately, the ATO also requires substantiation when a claim for the use of a mobile phone is greater than $50. Its website says: “To claim a deduction of more than $50, you need to keep records for a four-week representative period in each income year. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls from home will also help you show that you are entitled to a deduction.”

As everyone will appreciate, this is problematic, to say the least. Who has the time or the determination to record the use of their phone over a four week period? This is impractical and there needs to be a legislative change to make this easier. Alternatively, the ATO should release updated guidelines that will make it easier for people to claim a tax deduction for the use of their phone. These need to be more flexible and up-to-date with the way people use their mobile devices. There should be a specific reference to employees of tax agents and the use of their phone to access Online Services for Agents. The ATO should propose an easy to understand “rule of thumb” on which people can rely to obtain a tax deduction without fear of their assessment being amended.

Some people say that because they must have a mobile phone for work, that all of the expenses related to the phone are tax-deductible. This is rarely ever correct. The expenses must be apportioned on a reasonable basis between the production of assessable income and private use.

Fringe benefit: If an employer decides to pay for the mobile phones of employees, the issue of fringe benefits tax needs to be considered. Normally, the taxable value of the benefit would be determined by the “otherwise deductible” rule. That is, the taxable value of the benefit is influenced by the amount for which the employee would be able to obtain a tax deduction if the employee had incurred the expense. However, in relation to portable electronic devices, section 58X of the FBT Act needs to be considered. This section exempts from fringe benefits tax an expense payment benefit, a property benefit or a residual benefit where the benefit is in relation to an eligible work-related item. An eligible work-related item is defined to be, among other things, a portable electronic device that is primarily for use in the employee’s employment.

The word “primarily” probably means 50% or greater of its use is for the employee’s employment. If an employer wants to claim a fringe benefits tax exemption in respect of a mobile phone, it will be advisable for employees to give an employer a declaration that they are primarily using the device in respect of their employment. Also, in the terms of the employee’s contract, it should be stipulated that the provision of the mobile phone is primarily for use in the employer’s business and not for private purposes. Whether the employee observes that stipulation will be another issue.

The issue of the tax implications of mobile devices, due to the introduction of myGovID, will probably need more clear guidance from the ATO.

Overseas employees: As stated earlier, the myGovID app requires proof of identity using two separate documents. But what happens if you don’t have these two documents? An example of this is an overseas employee needing to get access to Online Services for Agents who does not have an Australian passport, a Medicare card nor an Australian driver’s licence. What do they do?

The first thing that should be appreciated is that there are two levels of security access under myGovID. The first is a basic myGovID, which is also known as IP1. The second is a standard myGovID, which is also known as IP2. The ATO website says that in March 2020, you will be able to use a myGovID with a basic identity strength to access online services. To do this you will need to be authorised as a basic user using RAM and to meet additional proof of identity requirements. These types of authorisations will need to be renewed every 12 months.

People who have a basic myGovID identity will be able to access Online Services for Agents, but they will have a restricted ability to undertake certain actions. These include the ability to update or cancel client details and update or cancel registration details.

The ATO is working on a process whereby an overseas employee with a basic myGovID can obtain a standard myGovID. This will entail the employee having certain documents approved by their employer. It will require the certification of copies of original documents, however this solution looks like not being available until about mid-March 2020.

With regard to overseas employees, and indeed any employees, it is only necessary for them to have a myGovID if they need access to Online Services for Agents. Accordingly, if an employee’s work only entails using your in-house software such as Xero or MYOB, there is no need for them to obtain a myGovID. They will simply log on to the software using two-step verification and work as normal. Accordingly, if you have an offshore employee that, for example, is working for you using cloud-based software, there may not be a need for them to obtain a myGovID.

ATO assistance
The primary source of information is the ATO’s website, which is linked to above and also here. This has videos and other information that will assist (also see below). Also, there is a helpline that can be contacted with regard to the process.

In relation to mid-tier accounting firms, the ATO is contacting these firms directly to determine whether they need assistance. The ATO will visit these offices if required.

Useful links

Useful videos

Conclusion
The change from AUSKey to myGovID is being forced on the tax agent community by the ATO. It is just a matter that you need to deal with in your business. There are only weeks to go before AUSKey is no longer available. Some people have said that they will leave the change to the last moment, the thought being that the longer people leave it, the more bugs the ATO will iron out. But a better idea is to have a plan underway as to when you will make the conversion and explain it fully to your staff as to what is required. Get your staff to organise their identification documents so that they can have a speedy transition.

As time goes by it is likely the ATO will make some improvements to the system to iron out some of the difficulties. However, don’t think that those solutions will come quickly. Major changes in technology take the ATO some time to consider, test and implement.

Website Comments

  1. Peter McMahon
    Reply

    There is an issue of the ongoing maintenance of the MyGovId in relation to the password reset. This function does not work and the result is that it asks the user to follow the verification ID but this does not work and it ends up locking the account. It is then necessary to set up a new account but using an alternate email address. How many email addresses should a business maintain? Clearly this is not expected to happen as on re-establishment of the account the ABM and RAM information is already imported. This work around may be satisfactory in the short term but is clumsy and not apparent that this is required until the Tech Support people suggest it. They find the information by referring to the error codes when the Identity recheck process is started but as soon as you leave the page the error codes are lost. The system should be well beyond the beta phase where these bugs are still being worked out prior to the Auskey closing.

  2. Malcolm Dean
    Reply

    Interesting article but as a trustee of an family SMSF using an online cloud service for fund admin – there are a bunch of questions not addressed. Can we have a related article for the members of Tax&SuperAustralia who are running true DIY SMSFs. It may be that there are few issues, and that they will mainly be dealt with by cloud service providers – but I would like some clarity on this issue.

  3. Eleanor
    Reply

    Hi
    I too am a director of the trustee company for a family SMSF using an online cloud service for fund admin – same as Malcolm. I had no difficulty setting up SMSF in October. However when Auditor required information I could not remember my password and had terrible issues re-establishing my Identity. To cut a long story short I raised a complaint through the ATO and a technical person with access to the back-end ATO databases had to assist me to re-establish mygovid for the SMSF. myGovID is still to be addressed by online cloud service – but in the pipeline. Then we tackled the Family Trust which I had previously been unable to link to myGovID. There are issues with this set up and again I required assistance from techie to get set up. So … two done out of three! Next I was authorised person for a charity where I was treasurer until SIX years ago. Proper form had been submitted then along with covering letter. However ATO required copy of minutes appointing new office bearers. Somehow, this has either not been requested OR sent OR actioned. I certainly don’t want to be responsible person for something I no longer am part of. I would assume the charity would also want their new officebearers to be the contact. Not sure how long this will take to sort out but when I took over I found some of the nominated contact had been dead for 10 years. At least I got them removed and my name substituted. If having issues with myGovId do not keep trying with phone app – just get on the phone to the ATO and place a complaint. At least my complaint has been resolved for 2 out of three items!

    • david
      Reply

      Definitely agree with the need to place a formal complaint with the ATO. (No good trying to go through the Gov Ombudsman) as they cannot deal directly with the ATO.
      -this is beta software, 6 weeks out from the removal of the AusKey, What a joke…..
      -I have since received three phone calls, including two directly from the ATO regarding my complaint.
      => app appears to be working at the moment (hopefully will still work when notification of Super is required at the end of next month).
      =>accountants should consider using an Android emulator (eg Bluestacks – worked for me), instead of purchasing phones for everyone. Not all android phones can be used – see the phone print with regard to Android One and Android Go — NO Good!

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