The professional body says a review should be undertaken into how the ATO assesses the appropriateness of the data it relies on for its data matching programs.

Chartered Accountants Australia and New Zealand (CA ANZ) has raised concerns about how the ATO tests the appropriateness of data for its data-matching campaigns following complaints about a recent mass mailout.

The professional body made a range of recommendations for improving the ATO's letters and written communications in response to the review being undertaken by the Taxation Ombudsman.

In a recent submission, CA ANZ said it regularly receives complaints from members about ATO letters, particularly in relation to about pay-as-you-go instalments (PAYGI) and Division 293.

The professional body said it has also received complaints about the ATO's recent email to tax agents about their client's lodgement obligations for rental property income.

This was followed up by an ATO letter to the client giving them an opportunity to correct any mistakes or to request their tax agent’s help to lodge tax return amendment.

"The ATO had used property management data to data match with taxpayers’ tax returns to see if rental income had been omitted," said CA ANZ.

"However, feedback from our members suggests the data on the ownership of rental property was sometimes incorrect and therefore, the ATO letters were addressed to taxpayers where there was no omission of rental income in their tax return as they did not own rental property."

CA ANZ has called for a review into how the ATO tests the appropriateness of the data used for these types of mass mailout activities.

"There needs to be a review of the processes undertaken by the ATO to ensure the appropriateness of the data that is being relied upon when using third party data matching to produce a mass mailout regarding a particular issue," it said.

CA ANZ said the ATO could also introduce a process where letters are co-designed with practitioners.

"Currently, there does not appear to be a requirement for ATO letters to be tested and co-designed with key players such as industry representatives and tax practitioners," it said.

The submission noted that the ATO already has communication content working group which co-designs products to assist the ATO in developing suitable communication solutions for tax and BAS agents and their clients.

"This group has discussed a variety of ATO web pages, emails, and newsletter articles. It does not appear to discuss ATO letters on a regular basis," said CA ANZ.

"Consideration should be given to refreshing the membership of this group and broadening its mandate to include a broad review of existing ATO letters – starting with PAYGI and superannuation contribution notices including those for Division 293."

CA ANZ said this group could ensure that the letters:

• Use every day, easy to understand language with links to the ATO website

• Clearly set out the taxpayer’s obligations, relevant timelines and any other correspondence that the taxpayer will or may receive

• Provide all relevant information on the first page of an ATO letter.

"This is particularly important when the ATO is considering a mass mailout regarding a particular issue," the professional body said.

"There needs to be a communication process to tax practitioners that ensures that they are aware of which clients will be affected and how."

The submission noted that this may be difficult to achieve at times due to issues regarding integration of information systems.

"It would be useful if this review could determine the extent to which incompatible information systems are impacting the structure and development of appropriate communication of issues," said CA ANZ.

The accounting body also acknowledged that some of the ATO's letters are well designed an effective.

"Feedback about the research and design compliance activity letters has been positive," it said.

"Those letters were presented to small working groups of industry representatives and tax practitioners for feedback before they were finalised."