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  • Consultation Steering Group key messages 14 May 2018

    Introduction

    The Chair, Second Commissioner Andrew Mills welcomed new Consultation Steering Group (CSG) members Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance, ATO, and Law Council of Australia representative Clint Harding. Clint is the new Chair of the Law Council of Australia Tax Committee, previously held by Adrian Varrasso. The Chair expressed his appreciation for Adrian Varrasso’s contributions to CSG meetings.

    Treasury update

    Kathryn Day, Principal Adviser, Corporate and International Tax Division, Revenue Group, Treasury; and Marisa Purvis-Smith, Division Head, Individual and Indirect Tax Division, Treasury

    Members were updated on Treasury activities noting public consultations that have been undertaken since the last CSG meeting on 7 March 2018. These included:

    • Implementing the OECD Hybrid Mismatch Rules – closed 4 April 2018
    • Informal discussions with fund managers on Taxation of Financial Arrangements reform (hedging) – closed April 2018
    • Discussions with representatives from the not-for-profit sector on the Government’s reforms to the Deductible Gift Recipient regime (announced November 2017) – completed

    Members were also advised of upcoming consultations:

    • Taxing digital businesses – expected June 2018
    • Attribution Managed Investment Trust exposure draft legislation – expected mid/late May 2018
    • Corporate Collective Investment Vehicle exposure draft legislation (tax framework) – expected late June 2018
    • Stapled Structures exposure draft legislation – expected end May 2018
    • Removing the CGT discount at the MIT/AMIT trust level – expected late 2018
    • Cash payment limit – paper and subsequent consultation to be released shortly
    • Increasing the integrity of Government procurement processes – paper and subsequent consultation to be released shortly
    • ABN reforms – paper and subsequent consultation to be released shortly.

    Members discussed some of the budget measures in the Federal Budget 2018-19. These included the transition to a black economy implementation team, taxable payments reporting system (TPRS), the proposed ABN reforms, Division 7A and unpaid present entitlements (UPEs) and the Tax Practitioners Board budget announcements.

    Treasury noted there will be various consultations undertaken regarding the announced budget measures.

    A member queried how the use of external drafters in the policy and legislative design process was progressing and how early in the process do the external drafters get involved. It was suggested that representatives from Treasury’s Law Design Office attend the next CSG meeting on 27 August 2018 to provide an update.

    Board of Taxation update

    Karen Payne, Chief Executive Officer, Board of Taxation

    Members were briefed on the work undertaken by the Board of Taxation, including:

    • No new consultations have commenced since the 7 March 2018 CSG meeting
    • The Board’s report on the review of income tax residency will be released shortly
    • The Board’s ‘earnouts’ project is in the final drafting phase
    • A number of projects are being planned with the Charities/not-for-profits and FBT compliance projects likely to start soon
    • Consultation has commenced for the review of small business tax concessions and a paper will be released shortly
    • Alignment of tax and accounting standards – the Board’s website is to be updated to reflect the work that has been undertaken in this area. The Board plans to consult further on the leasing accounting standard with the aim of getting people’s practical feedback once they have had an opportunity to apply the standard.

    The Board is reviewing its Sounding Board and how it is working and welcomed feedback from CSG members.

    Other members’ relevant forums and consultations or matters of significance relating to consultation

    All members

    Members noted the following:

    • Consultation matter 201806 – Professional firms – allocation of profit guidelines and Everett Assignment web material – The Tax Institute is preparing a submission
    • Central Management and Control – Product has been delayed but is very close to finalisation. A member suggested that it may be worthwhile reviewing the consultation process for this product once it is released.

    ATO Consultation activities

    Snapshot of consultation activity since the last meeting

    Robyn Theacos, Director, Consultation Hub, Strategic Engagement, ATO Corporate

    The February 2018 to April 2018 report on ATO consultation activity covered matters discussed at Stewardship Group meetings, details of new matters raised and completed matters for consultation and changes to special purpose and stakeholder relationship groups.

    Members were provided with an overview of ATO consultation activities noting:

    • there were seven new and three completed consultations
    • a new questionnaire is now being used to improve the process for receiving feedback on the effectiveness of consultations from participants.

    Snapshot of public advice and guidance consultation activity since the last meeting

    Andrew Orme, Deputy Chief Tax Counsel, Tax Counsel Network

    A report outlining the consultation effectiveness on public advice products finalised between 28 February 2018 and 11 May 2018 was provided to members.

    Members were briefed on public advice and guidance consultation activities and noted that a number of improvements have been put in place. This includes deploying surveys to the Legal database allowing the ATO to gain insight into the usability of products and of the database itself. The ATO has received useful feedback on products through this feedback button. As there has been difficulty in receiving feedback from public advice and guidance consultation participants, there will be changes to the processes to improve this aspect.

    Other activities included:

    • Consultation on new ruling on tax treatment of long term construction contracts – the consultation process was very useful in assisting and resolving the issues early
    • Law Companion Ruling for GST – as there were limited responses to this consultation, the ATO contacted businesses directly to discuss the issues. A learning was for the ATO to have clarity on the issues for consultation
    • SMSF Regulator’s Bulletin 2018/1 – this is a new product and initial targeted consultation helped to frame a useful product
    • Cryptocurrency – consultation through the Let’s Talk page has had a very large response.

    Consultation matters greater than 12 months

    201615 Single Touch Payroll

    John Shepherd, Assistant Commissioner, Single Touch Payroll, ATO; and Laine Alexander, Director, Single Touch Payroll

    An update was provided on Single Touch Payroll (STP) consultation activities which included:

    • the ATO is continuing to consult on specific matters such as commencement of new employees, BAS prefill and small business alternative solutions
    • a number of webinars have been held co-presented with industry experts
    • reviewing the membership of the STP working groups and have invited more employers to join the groups
    • STP will be extended to employers with 19 or less employees from 1 July 2019. The ATO has now started to consult with ‘micro employers’ (4 employees or less) to discuss alternative solutions for digital reporting noting that the ATO will not be offering its own free software for micro businesses.

    John Shepherd noted that some of the learnings the ATO is incorporating as the consultation progresses include:

    • shifting the focus and who needs to be part of the different conversations, eg updating the membership of the STP Advisory Group
    • recognising industry participation and providing feedback on their feedback
    • thinking of innovative ways to share information about STP – theme based webinars, live streaming and social media.

    Spot checks

    201512 – Safe Harbours – Fringe Benefits Tax (FBT) and Remuneration

    Anna Longley, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    Members were advised that the Safe Harbours – Fringe Benefits Tax (FBT) and Remuneration (SH FBT) working group has been closed. This working group was established in 2015 to consider opportunities to improve the employer experience in managing FBT obligations. However, in 2016 the working group confronted a number of challenges in delivering solutions, particularly in relation to minor benefits.

    The consultation resulted in the publication of two Practical Compliance Guidelines (PCGs) and a commitment to provide further guidance on the Commissioner’s views as to the provision of minor benefits.

    A learning from the consultation was that safe harbours are not always the best way to address red tape in the FBT area. The FBT provisions are very prescriptive and safe harbours do not seem to fit the purpose. Another learning was that to assist employers to comply with their FBT obligations, the ATO needs to consider each proposal as not necessarily leading to a PCG and to consider other guidance approaches especially where the issue is simply an interpretation matter.

    A new Fringe Benefits Tax (FBT) Working Group is being established. The FBT Working Group seeks to understand key FBT compliance difficulties for employers as well as explore and develop tailored, practical guidance on areas of the FBT law where there is uncertainty. The working group has a good cross section of representation across the client experiences engaging with employers.

    Consultation debrief process

    Robyn Theacos, Director, ATO Consultation Hub, ATO Corporate

    Members were provided with an overview of the current and future state of the consultation evaluation process seeking members views on the future approach to providing feedback on the effectiveness of completed consultations.

    A questionnaire is sent to consultation participants once consultation is complete, seeking feedback on the effectiveness of the consultation. This feedback is included in the CSG report for the quarterly meetings. Getting feedback has been challenging as limited responses are received.

    To improve the feedback process, in addition to the questionnaire sent to consultation participants, a questionnaire will also be sent to the consultation leads seeking their views on the effectiveness of the consultation.

    Members were advised that they could raise any consultation matter for discussion at the CSG meetings. This includes new and closed matters.

    CSG action items update

    Robyn Theacos, Director, ATO Consultation Hub, ATO Corporate

    Members were provided with an update on the status of open action CSG 1803/1 Deductible Gift Recipient reforms – information on timing and next steps. Members agreed this action item can be closed.

    Attendees:

    Organisation

    Name

    Australian Taxation Office

    • Andrew Mills, Second Commissioner, Law Design and Practice (Chair)
    • Erin Holland, Deputy Commissioner, Intermediaries and Lodgment
    • Andrew Orme, Deputy Chief Tax Counsel, Tax Counsel Network
    • Susie Smith, Assistant Commissioner, Strategic Engagement, ATO Corporate
    • Robyn Theacos, Director, ATO Consultation Hub, Strategic Engagement, ATO Corporate

    Treasury

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

    Board of Taxation

    Karen Payne, Chief Executive Officer

    Chartered Accountants Australia and New Zealand (CA ANZ)

    Michael Croker

    Corporate Tax Association

    Michelle de Niese

    CPA Australia

    Gavan Ord

    Law Council of Australia

    Clint Harding

    SMSF Association

    Franco Morelli

    The Tax Institute

    Stephanie Caredes

    Independent member

    Keith James

    Tax practitioner

    Keith Clissold

    Apologies

    Organisation

    Name

    Institute of Public Accountants

    Tony Greco

    SMSF Association

    John Maroney

      Last modified: 20 Jul 2018QC 56294