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  • Consultation Steering Group key messages 11 November 2019

    Key highlights

    • Overview of the role of the ATO Consultation Hub
    • Spotlight on specific nominated consultation matters and the implications on consultation
    • Update on proposed consultations from Treasury, Board of Taxation and the ATO
    • Insights from the consultation approach undertaken with the community for child care reform in the Department of Education
    • Reflections on the achievements of the Consultation Steering Group (CSG) in 2019 included positive feedback on the refreshed role and scope of the CSG.

    Introduction

    Jacqui Curtis, Chief Operating Officer, ATO

    Co-chair Jacqui Curtis opened the meeting and welcomed new member Elinor Kasapidis representing CPA Australia. Jacqui Curtis noted that CPA Australia representative Gavan Ord has changed roles and will no longer attend CSG meetings. Jacqui Curtis expressed her appreciation and thanked Gavan Ord for his contribution to the CSG.

    Jacqui Curtis also noted that Assistant Commissioner Sandra Roussel will be moving to a new role in the Department of Prime Minister and Cabinet leading their cultural change program. Jacqui Curtis acknowledged Sandra Roussel’s significant contribution to refreshing the strategic focus of the CSG and the ATO’s internal committees.

    Co-chairs’ opening comments

    Jacqui Curtis, Chief Operating Officer, ATO; and Michelle de Niese, Corporate Tax Association

    Co-Chair Jacqui Curtis updated members on recent ATO activities.

    • Second Commissioner Andrew Mills has announced his retirement at the end of this year. Andrew Mills co-chaired/chaired the CSG from May 2014 to November 2018. Andrew Mills’ contribution has helped build and strengthen the ATO’s relationship with the tax profession and the community. On behalf of the Commissioner and the ATO, Jacqui Curtis expressed her appreciation and thanked Andrew Mills for his outstanding contribution to the CSG and the ATO’s consultation processes. Jacqui Curtis wished Andrew Mills all the very best for the future and his retirement.
    • On 23 October 2019, the ATO appeared before the Senate Economics Legislation Committee. The Commissioner’s opening statement is published on the ATO’s website.
    • The ATO has embarked on an improvement program called ‘Better as Usual’. This program includes:
      • reviewing and understanding the end-to-end client experience – ensuring that decisions are not made in isolation and have regard to the holistic experience of clients
      • improving feedback loops so that we can learn from experience, improve our services and make better decisions
      • a dedicated team to focus on the most complex cases
      • putting in place the right safeguards for actions that have a major impact on clients (not just process, but also culture).
       
    • Tax Time 2019 – this year was a very busy tax time with a greater than usual number of returns lodged during the first few weeks. The ATO also received a very high volume of calls from taxpayers. Tax Time 2019 was overall very successful.
    • Tax litigation – a significant number of important tax cases have been decided in recent times. The High Court decision in Sharpcan about poker machine licences is an important case on the age-old issue of whether expenses are capital or revenue in nature.
    • There have been a number of cases about individuals and residency, including the Addy decision about the backpacker tax, and the High Court deciding not to hear the Commissioner’s appeal in the Harding case. On 5 November 2019, the High Court also heard the BHP case about whether the parent companies on the different sides of the dual-listed structure are treated as associates of each other for tax purposes.

    On behalf of CSG members, Co-chair Michelle de Niese expressed her appreciation for Andrew Mills’ contribution to the CSG and his approach to building relationships with the professional organisations.

    Michelle de Niese noted:

    • that the replacement of AUSkey with myGovID will have significant impact on taxpayers
    • the need for transitional arrangements if there are changes as a result of recommendations from the review of the Corporate Tax Residency Rules by the Board of Taxation.

    Role of ATO Consultation Hub

    Robyn Theacos, Director, Consultation Hub, Enterprise Strategy and Design, ATO

    Robyn Theacos provided an overview of the ATO Consultation Hub and how it supports consultation activities. The Consultation Hub provides tailored advice and guidance throughout the consultation process, delivering timely and professional support when needed.

    Following a review of the ATO’s consultation arrangements in 2013, the Consultation Hub was established with an effective framework to ensure that:

    • the ATO consults appropriately with the right people, about the right issues, in a timely way
    • consultation provides enduring benefits and adds value to Australia’s taxation and superannuation systems.

    The Consultation Hub is responsible for:

    • providing guidance, advice and support to ATO staff that are consulting or planning to consult with the community
    • providing support to secretariats of the ATO’s consultation groups, i.e. stewardship groups, stakeholder relationship groups and special purpose working groups
    • providing transparency and visibility of ATO consultation by publishing information regarding consultation activities on the ATO website
    • receiving community consultation submissions and referring them to the appropriate business area for consideration
    • measuring the effectiveness of consultation activities
    • providing secretariat services for the CSG and the National Tax Liaison Group.

    Members raised concerns about confidential consultation activities and how and when the Consultation Hub is kept informed. Andrew Orme agreed to provide members with an understanding of the principles regarding transparency of confidential consultations at the next CSG meeting.

    Action item

    CSG 1911/01

    Due date

    3 March 2020 CSG meeting

    Responsibility

    Andrew Orme, Deputy Chief Tax Council, Public Advice and Guidance

    Description

    Confidential consultations

     

    Andrew Orme to provide CSG members with an understanding of the principles regarding transparency of confidential consultation activities.

    Proposed consultations

    Kathryn Davy, Principal Adviser, Corporate and International Tax Division, Revenue Group, Treasury; Lynn Kelly, Interim Chief Executive Officer, Board of Taxation; Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance, ATO

    Members were provided with updates from Treasury, the Board of Taxation and the ATO on any proposed future consultations.

    Treasury

    Treasury provided a summary of Treasury consultations undertaken or completed from August 2019 to October 2019 to members for their information. Members noted that the information provided is very useful and appreciated.

    It was noted that an update on the progress on amendments to Division 7A will be provided at the next National Tax Liaison Group meeting in late November.

    Board of Taxation

    The Board of Taxation has finalised recent reviews on FBT compliance cost and International Practice, the Voluntary Transparency Code and Granny flat arrangements.

    The Board has now completed the initial stage of consultation on the review of the Corporate Tax Residency Rules. The first stage of consultation provided the Board with valuable insights on modern board and governance practices across many sectors and business sizes, as well as practical tax residency issues facing both inbound and outbound multinationals. The consensus of the feedback was that there is a need for law change. The Board will be considering potential reform options and will test these with their reference group. This will be followed by the release of a paper for public consultation. Members provided positive feedback on the approach taken for the consultation.

    During discussions, members noted concerns that it appears the ATO is increasing its focus on corporate residency matters with detailed requests for further information being received in recent times. Louise Clarke noted that she will raise this issue with the relevant business area and report back at the next CSG meeting.

    Action item

    CSG 1911/02

    Due date

    3 March 2020 CSG meeting

    Responsibility

    Louise Clarke, Deputy Commissioner, Policy Analysis and Legislation

    Description

    Corporate residency matters

     

    Louise Clarke to provide an update at the next CSG meeting if the ATO is increasing its focus on corporate residency matters.

    ATO

    Andrew Orme noted key consultation activities:

    • Targeted consultation on transport costs – underway with public consultation to follow shortly
    • Targeted consultation on Section 100A – to commence shortly
    • Public consultation on draft ruling on capitalisation of labour costs – to commence shortly.

    A decision impact statement for the Harding case and a Draft Law Companion Ruling on Sovereign Immunity will be available soon. A draft ruling on Personal Service Income is planned for early 2020.

    Potential new matters for consultation and environmental scan of impacts on consultation

    All members

    This item provides members with the opportunity to identify potential matters that may benefit from consultation and to discuss any current or future environmental matters that may impact on consultation.

    Members raised the following matters for consideration:

    • New legislation that limits cash payments of more than $10,000
    • Foreign Investment Review Board approaches – concern about the progress of issues previously identified
    • Tax treatment of compensation payments being made by the banks – concern was raised that the community is not cognisant of the need to include payments in their tax returns.
      • Post-meeting update: These concerns have been relayed to relevant ATO business areas for consideration of any necessary actions.
       
    • Digital tax – Treasury has undertaken consultation activities. Members commended Treasury on the approach taken for consultation.

    Updates on matters raised at 22 July 2019 CSG meeting

    Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance, ATO

    Andrew Orme provided updates on the following matters that were raised by members at the 22 July 2019 CSG meeting.

    Whistle-blower protections – support products

    Andrew Orme noted that information has already been provided to the Tax Practitioner Stewardship Group. Members noted that the current information on ato.gov.au does not provide sufficient information for corporates. Andrew Orme agreed to consider what has been provided and if further information or public advice and guidance products are necessary. Andrew Orme will provide the CSG members with an update at the next CSG meeting.

    Action item

    CSG 1911/03

    Due date

    3 March 2020 CSG meeting

    Responsibility

    Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance

    Description

    Whistle-blower protections – support products

     

    Andrew Orme to review existing information on the ATO website regarding Whistle-blower protections and to consider if further information or public advice and guidance products are necessary.

    Black Economy Taskforce – legislated measures

    The ATO provided members with a summary of Black Economy policy and legislative measures that have been announced, introduced or enacted into Parliament since 2018.

    Members noted that the consultations on ‘Implementing a Reporting Regime for Sharing Economy Platform Providers’ and ‘Improving Black Economy Enforcement and Offences’ closed some time ago and there have been no Government announcements released. Kathryn Davy noted she was not aware of the current status and agreed to follow-up and will provide an update.

    Action item

    CSG 1911/04

    Due date

    3 March 2020 CSG meeting

    Responsibility

    Kathryn Davy, Principal Adviser, Corporate and International Tax Division, Revenue Group

    Description

    Black Economy Taskforce – legislated measures

     

    Kathryn Davy to provide an update on the current status of the proposed measures for ‘Implementing a Reporting Regime for Sharing Economy Platform Providers’ and ‘Improving Black Economy Enforcement and Offences’.

    ATO Consultation spotlight including updates on consultation matters

    Consultation matter 201923: Disclosure of business tax debts

    Tony Greco, Institute of Public Accountants; and Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design, ATO

    Tony Greco stated that his concern was related to the consultation process that was undertaken separately for the three elements of the new tax debt reporting regime. The elements are the Legislative Bill, draft Legislative Instrument and the draft ATO administrative procedures for credit reporting bureaus. Tony Greco also noted that it appeared that consultation with a key stakeholder was not undertaken.

    Kathryn Davy noted the concerns raised and suggested that it would be useful for Treasury to receive this feedback directly. Kathryn Davy will advise the relevant Treasury officers to discuss these issues with the relevant CSG members.

    Action item

    CSG 1911/05

    Due date

    3 March 2020 CSG meeting

    Responsibility

    Kathryn Davy, Principal Adviser, Corporate and International Tax Division, Revenue Group

    Description

    Treasury consultation on the new tax debt reporting regime

     

    Kathryn Davy to advise the relevant Treasury officers of CSG members’ concerns regarding the consultation process undertaken for the new tax debt reporting regime. Relevant Treasury officers to discuss the concerns with CSG members Tony Greco and Clint Harding.

    Post-meeting update: Kathryn Davy has advised that inquires in Treasury have identified that consultation was undertaken with the Inspector-General of Taxation. Treasury had consulted with the Inspector-General of Taxation before Ms Karen Payne’s appointment on 6 May 2019 as the Inspector-General of Taxation and Taxation Ombudsman.

    Consultation matter 201806: Professional firms – Allocation of profit guidelines and Everett Assignment web material

    Stephanie Caredes, The Tax Institute; Scott Treatt, Assistant Commissioner, Private Wealth, ATO; and Simon Webster, Professional Firms, Private Wealth, ATO

    Stephanie Caredes noted that this consultation is over 18 months old and arose following the withdrawal of published guidelines in December 2017. Completion dates for the consultation had been extended on two occasions without sufficient explanation.

    The ATO noted that there had been some discussion on the appropriate product to use for these guidelines which was not anticipated when the consultation commenced. The plan is that within the next few weeks a document for public consultation will be released with the matter to be finalised by 30 June 2020.

    Stephanie Caredes suggested that this consultation matter should continue to be monitored by the CSG until the guidelines have been finalised and published. The ATO agreed to provide an update of the current state at future CSG meetings.

    Consultation matter 201922: Improving the Company Tax Return Instructions

    Michelle de Niese, Corporate Tax Association; Rajitha Srikhanta, Assistant Commissioner, Public Groups and International, ATO; Deborah Robinson, Director, Advice and Guidance, Public Groups and International, ATO; and Dimce Ristevski, Advice and Guidance, Public Groups and International, ATO

    The ATO noted the company tax return instructions have been online for a few years. The ATO identified the instructions needed to be refreshed with the current consultation focussing on content and navigation.

    The ATO has consulted with ATO staff, 199 tax agents, digital service provides, the Big 4, Corporate Tax Association (CTA) members, Tax Banter, Private Wealth Clients, National Tax Liaison Group, Large Business Stewardship Group, Private Groups Stewardship Group and the Tax Practitioner Stewardship Group.

    The feedback received is still being considered with the themes appearing to relate to the mixing of tax and accounting concepts, out of date references and poor search functionality on ato.gov.au.

    Implications for consultation

    All members

    Co-Chair Jacqui Curtis asked members to share their views on the three consultation processes discussed and, from a system-wide perspective, to consider and identify any barriers, themes, what was done well and what could be done differently.

    The members noted that there appears to be issues with identifying realistic timeframes and reasons are not provided on why an expected completion date is being extended. A proposed approach would be for a consultation lead to provide the Consultation Hub with reasons for the change of date and this would be provided to members at CSG meetings.

    Louise Clarke noted that Treasury and the ATO have recently discussed the various materials produced for new legislation including Explanatory Memoranda and Law Companion Rulings. The proposal is to clarify the role of each document so that their intended purpose is clear. A working group will be established that will map and investigate the current issues being raised with a plan to consult in early 2020.

    Feedback on recently completed consultations

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    A report with feedback from participants and consultation leads in recently completed consultations was provided to members. Sandra Roussel noted the ATO’s concerns about the very limited feedback received on the consultation processes. Members were asked for their views and if they had any other suggested approaches on how to obtain feedback. A suggestion was that at the start of a consultation, a participant could be nominated to provide feedback when the consultation was completed.

    Consultation approach in another agency

    Matt Yannopoulos, Chief Operating Officer, Department of Health

    Mr Matt Yannopoulos from the Department of Health attended as a guest speaker to provide members with insights and approaches on how another agency consults with the community on changes in policy and legislation.

    Matt Yannopoulos discussed the consultation approach undertaken as the responsible senior officer for the Child Care Reform Implementation at the Department of Education. Matt Yannopoulos noted he was responsible for the leadership and direction for the Program of Child Care Reform Implementation including the build of the new IT system supporting the child care reforms across the Departments of Education, Human Services and Social Services.

    The policy was relatively straight forward, however, there were significant issues that needed to be discussed and solutions identified to ensure successful implementation of the policy.

    Matt Yannopoulos noted four groups were established to focus on the four streams of work:

    • Peak Reform Reference group which had representatives from across the sector
    • Information Technology group
    • Rules group
    • Software provider group.

    Some of the key approaches used were:

    • meeting monthly with the groups to discuss proposed approaches and identified issues. Where appropriate, decisions would be made at the meeting to implement changes quickly
    • setting clear expectations about what was required to be done and being realistic about what could be changed
    • at each meeting, outlining the key outcomes and timelines required to keep stakeholders focussed
    • dealing with actions of group members immediately (e.g. where information was leaked to the media)
    • directly engaging with the relevant Minister to seek approval for possible changes to proposed rules.

    Matt Yannopoulos noted that the project was successful due to the extensive consultation and co-design work undertaken.

    Other business

    All members

    Members noted the significant impact on clients of the move to myGovID and the decommissioning of AUSkey. This is a substantial change and communications are very important and should have already commenced.

    Reflections on the role of CSG for 2019

    All members

    Jacqui Curtis asked members for their views on the role and effectiveness of the CSG for 2019, i.e. do discussions/outcomes meet the intent for the group, what works well and what could be changed.

    Members noted that the changes to the agenda have enabled them to have more oversight of consultation activities and that the governance role had improved. There appears to be more clarity around the role of the group and the value it provides.

    Members thanked:

    • the Consultation Hub for their support and contribution to ensuring the meetings run smoothly
    • Treasury and the Board of Taxation for their continued contribution.

    Jacqui Curtis noted that all members were very participative and that there will be more visibility to the ATO Executive regarding the role of the CSG and issues raised.

    Action items update

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    Sandra Roussel provided members with a status update on the following open action items:

    • Action item CSG 1904/5 – The ATO and Treasury to explore the ATO’s role within Treasury’s consultation process
    • Action item CSG 1907/1 – Review and redraft CSG Charter for members’ feedback
    • Action item CSG 1907/2 – Assessment of special purpose working groups
    • Action item CSG 1907/3 – Proposed approach for CSG membership refresh.

    Members discussed action items CSG 1907/1 and 1907/3 and noted the following comments.

    Action item CSG 1907/1 – Review and redraft CSG Charter for members’ feedback

    Members were provided with a draft CSG Charter that was updated to align with the refreshed role and scope of the CSG. Members provided feedback that will require further changes to the draft Charter before final endorsement. The changes focussed on:

    • showing a strong role for Treasury and Board of Taxation members
    • being clear on the importance of the group
    • consider if oversight is the right word for the purpose of the group
    • making it clear that its role is to oversight consultation on the administration of tax and superannuation system
    • be clear about substitute attendees for Treasury and the Board of Taxation.

    Action item CSG 1907/3 – Proposed approach for CSG membership refresh

    At the 22 July 2019 CSG meeting members agreed that association representation on the CSG should remain with the independent and tax practitioner members to be rotated. Keith James confirmed that he is comfortable with a change of member for his role. He will identify appropriate people for the ATO to consider. Keith James suggested that the independent member could have a specific role to bring together the CSG members prior to a CSG meeting to propose appropriate agenda items.

    Tax practitioner Keith Clissold will remain for six months and will assist in identifying an appropriate replacement.

    Members agreed that action item CSG 1907/1 remains open and that action items CSG 1904/5, CSG 1907/2 and CSG 1907/3 can be closed.

    Update on ATO consultation stakeholder register

    At the 22 July 2019 CSG meeting, members supported the Consultation Hub’s proposal to close the ATO consultation stakeholder register.

    Sandra Roussel advised members that stakeholders can no longer request to be registered as a consultation participant via the ATO’s website. The ATO website has been updated with information on how stakeholders can be involved in consultation. Sandra Roussel will provide the chairs of existing stakeholder relationship and special purpose working groups with the details of stakeholders registered on the decommissioned register that they can consider for involvement in their groups.

    Attendees

    Attendees are listed below.

    Organisation

    Members

    ATO

    Jacqui Curtis (Co-chair), Chief Operating Officer

    ATO

    Andrew Orme, Public Advice and Guidance

    ATO

    Louise Clarke, Policy Analysis and Legislation

    ATO

    Robyn Theacos, Enterprise Strategy and Design

    ATO

    Sandra Roussel, Enterprise Strategy and Design

    Board of Taxation

    Lynn Kelly

    Chartered Accountants Australia and New Zealand

    Michael Croker

    Corporate Tax Association

    Michelle de Niese (Co-chair)

    CPA Australia

    Elinor Kasapidis

    Independent member

    Keith James

    Institute of Public Accountants

    Tony Greco

    Law Council of Australia

    Clint Harding

    Tax practitioner

    Keith Clissold

    The Tax Institute

    Stephanie Caredes

    Treasury

    Kathryn Davy

    Apologies

    Apologies are listed below.

    Organisation

    Members

    Association of Superannuation Funds of Australia

    Glen McCrea

      Last modified: 19 Dec 2019QC 61036