The Resilient Tax Function. Interview with CCH Integrator clients, Woolworths and NAB
As we take the first steps to the new normal, there is no denying that a return to ‘business as usual’ is unlikely. Tax professionals, although a particularly resilient lot, have had to adjust like everyone else and several of those adjustments may be permanent.
In the second of our articles exploring the impact of COVID-19 on the Tax Function, Wolters Kluwer has reached out to corporate tax leaders to get their thoughts on what the new normal looks like, what the next normal might be, and how they might transition between the two. Our experts are:
- Darren Day, Head of Tax, Woolworths; and Andrew Murray, Tax Manager, Woolworths
- Kylie Loi, Associate Director, NAB, and
- Andy Hung, Director, Professional Firms & International, Wolters Kluwer
How have you managed working remotely? What has worked well? What are the major challenges?
As with any crisis, where you start from makes a big difference to your ability to manage a demanding situation. For those leading Tax Functions and their teams, working remotely and accessing systems on the cloud was already common practice prior to the pandemic, making for a relatively smooth transition.
While the balance and boundaries between work and home sometimes blur, especially with home schooling demands, many in business have enjoyed the quieter home environment, where you can shut yourself away when needed. Andrew Murray, Tax Manager, Woolworths, has enjoyed seeing his team put time back into their days – some saving one and half hours each way on their daily commute – and spending that additional time with family.
Andy Hung, who oversees the global roll-out of the CCH Integrator Tax Platform, has even found advantages in using online and collaborative workspaces. Working in virtual workspaces such as Microsoft Teams has allowed for continued face-to-face interaction with his team and his clients: “where we are on the one platform, sharing and working on the same document has allowed for better collaboration and review across the team.”
And even though his team are now all behind screens, Andy has observed a strong sense of empathy and a willingness to support each other and their customers. A Professional Firm recently thanked Andy’s team for their ongoing support during this trying time telling them “not to go anywhere for the next six months”.
Whilst the tax teams are accustomed to working remotely, the first few weeks were not without their difficulties. Access to VPNs to connect to systems and shared folders on corporate networks, sourcing suitable hardware to work remotely, sending files to printers and scanners that were in now empty offices, and the stability of servers and applications due to the increased demand placed on them – all presented challenges.
Life was further complicated for businesses who have staff located overseas or outsourcing partners offshore, who had to make the jump to remote work with only limited planning and testing.
And video conferencing, a vital tool in the current dilemma, is not without its frustrations. It can be hard to tell when people are about to speak, they often talk over each other, and most have at one time or another shared a profound insight, only to realise their microphone was on mute. In a physical meeting it’s just easier to read people through their expressions and body language.
Darren Day, Head of Tax, Woolworths, notes that it can take longer to perform some functions and resolve issues working from home. Extra time is needed to contact people and line up calls – the quick five minute catch-up in the office kitchen is no longer an option.
Simple things like getting work authorised and signed now require a process and procedures. There are digital solutions and electronic signatures in place, but they take time and organisation to ensure the required security protocols are met.
“It’s business-as-usual, plus more.” Darren Day, Head of Tax, Woolworths.
What changes to the taxation system due to COVID-19 are most impacting your business and your customers?
External obligations have been, and continue to be, adhered to and filing deadlines remain in place (though many businesses have sought an extension from the ATO for the lodgment of the 2019 income tax return). Kylie Loi, NAB, notes that she did need to implement new processes for the receipt of ATO notices and the provision of documentation to the ATO, which was initially an issue, but NAB now use an ATO portal for the safe upload of documents.
Whilst the effect of COVID-19 policy changes on our corporates as taxpayers is somewhat limited, our Tax Functions are being called upon to help explain the impact and readiness of COVID-19 tax responses such as JobKeeper and stimulus measures. For example, NAB, as an Authorised Deposit-Taking Institution, has engaged with the ATO around data reporting and administration in relation to the JobKeeper scheme.
For business customers, the JobKeeper scheme is the policy change that is having the most impact – it is a huge piece of work and takes a lot of time for businesses to comply.
Many businesses will also need to account for the concessionary actions brought out by the ATO – a number of which basically postpone payments, such as the deferral of payment on FBT and the delay of PAYG tax instalments.
For many businesses generally, revenue is going to be different to pre-COVID projections requiring more forecasting to work out what their tax payments should be. “You will need to do more forecasting of where you think your business is headed – to work out the tax payments you should be making,” says Darren Day, Head of Tax, Woolworths.
Employers may be asked about the FBT implications for the ongoing provision of benefits to their employees, which may or may not be applicable during the COVID-19 crisis. These include car parking, childcare, even vehicles unexpectedly garaged at employees’ homes and with limited opportunity for use. Technical issues can arise involving employees stranded offshore during the crisis and the related domestic and foreign tax consequences of these employees working remotely in a foreign jurisdiction.
Working from home has also led to staff raising questions about FBT exemptions, such as on home office equipment.
How do you envisage the tax function returning to BAU?
Darren Day believes that “the reality is that we won’t go back to full-time office work for a while – it will be some combination of working from home and working from the office”. There will be a transition phase where people won’t be working at the office full time and that office will have to be restructured to accommodate the restrictions imposed by COVID-19.
Kylie Loi agrees that early indications suggest that much of this shift may endure in the long term. “It would seem that working remotely may become more prevalent even post the crisis and so it continues to be a priority for all team members to be able to easily access files and perform duties away from the office.”
All our leaders believe that forecasting will be crucial to most businesses over the coming months. The Government may be interested to see the extent to which some of the benefits and schemes have been taken up, such as the 100% depreciation of qualifying assets, amongst others (although they may already see that information through the current reporting).
“We need to focus on our forecasting activities to ensure we provide real time and accurate forecasts of tax attributes to senior management in a very timely manner.” Kylie Loi, NAB.
As businesses emerge there also will be additional costs – for example extra cleaning and safety measures – that will impact on profitability. Andy Hung suggests that it would be valuable for businesses to capture, collate and report this information centrally, including revenue and tax expense trends during COVID-19, to allow future business insights from the tax data.
Has the crisis changed how the tax function will look and operate in the future? In what ways?
The changes will impact different industries in different ways. Whilst supermarkets have continued to operate during the crisis (with additional safety measures in place) airlines, for example, are operating very differently now and will continue to do so coming out of the crisis. There will be a range of things that businesses do structurally that could throw up a tax issue.
Pre-crisis, greater use of technology was already on the agenda, including increased automation of data collection, faster access to reporting, and analytics that are easier to view and understand. Working remotely has highlighted these needs, particularly when you must do them by yourself without a team around you. Tax Functions will look to continue and possibly accelerate the move to automation and digitisation that has already commenced in the tax world.
“It’s lucky that our businesses invested early to move our technology forward – it’s allowed us to carry on with some form of normality. We are able to work remotely, access shared drives and use cloud-based tax software like CCH Integrator, that’s not stuck on the servers at work anymore,” Andrew Murray, Tax Manager, Woolworths.
“Beyond the immediate crisis, working will be different, such as how the office is set-up including a rethink on ideas such as mobility, hot-desking and what agile working looks like moving forward,” Darren Day, Head of Tax, Woolworths
Kylie Loi notes that there will be changes to where we work as it is unlikely that teams will be adopting the traditional model of physically working together in the office for the foreseeable future. This will mean defining new ways of collaborating and connecting with colleagues. There has been an increased focus on technology capabilities such as expanded use of videoconferencing for meetings, file sharing and collaboration, and applications such as Microsoft Teams for collaboration and workflow management. These are now a permanent part of the toolkit.
The pandemic has also highlighted the importance of governance and controls to ensure tax obligations continue to be met during times of disruption. This is particularly important when obligations rely on the processes and controls that are owned by teams other than Tax. Organisations will need to continue to work on better data governance and access to data across the enterprise.
Andy Hung believes that ultimately the crisis offers tax professionals an opportunity to fundamentally shift the way they work and to start thinking about what their role and what the Tax Function of the future should look like. External and internal demands are increasing for Tax Functions to move away from ad hoc processes to more uniform methodologies to manage, assess and dynamically report tax risk and outcomes that is closer to real time – with “technology as an enabler to perform work faster, smarter and more easily”.