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  • Consultation Steering Group key messages 19 May 2016

    Treasury update

    • Treasury continues to work on all pending issues, including on preparing draft legislation, but cannot issue instructions to Office of Parliamentary Counsel during caretaker period. Can receive submissions and respond to queries clarifying what is intended in discussion papers.
    • Treasury expects consultations in the second half of the year on Integrity of the Corporate tax base and Superannuation measures, as there is bi-partisan support for these issues, although with different approaches.
    • Consultations on:  
      • increasing access to company losses using a similar business test closed on 22 April with feedback informing draft legislation to be released in May
      • diverted profits tax - submissions close on 17 June. Looking at UK legislation as a reference
      • mandatory disclosure rules - submissions close on 15 July. Aim is to not impose undue compliance burden
      • GST treatment of digital currencies and on encouraging venture capital investment in Fin Tech will close on 3 June, with further developments contingent on the election outcome.
    • There was interest in providing feedback to Treasury on the proposed increased administrative penalties for significant global entities (budget announcement). Comments on the practicalities of implementing proposed legislation are welcome.

    Board of Taxation update

    It was noted that in the recent Budget the Government has stated it will introduce designated Regulatory Reform Bills into the Parliament. Stakeholders will be encouraged to suggested matters to be included in these Bills, including through the new Board of Taxation Sounding BoardExternal Link.

    Other projects being considered are:

    • Stocktake of common definitions in tax legislation
    • Hybrid mismatch rules for of regulatory capital
    • Alignment of tax and accounting – note connection to safe harbours working group
    • Targeted trust simplification measures
    • Research on concepts of residency for individuals
    • Asset swap, merger and roll-overs
    • Tax and the sharing economy looking at tax collection and when a hobby becomes a business.

    Action item CSG 1605/1 - Alignment of Tax and Accounting
    Scope of the Board of Taxation work to be provided to consider alignment to the Safe Harbours working group.

    Report on ATO Consultation activity


    • Recommendation made for an online consultation tool to be available to assist with consultation on documents.
    • Large Business Stewardship Group (LBSG) had a significant number of issues discussed at their April 2016 meeting.
    • Workshop conducted on 18–19 April, which included tax agents, software developers and representatives from the professional associations was a subset of work undertaken by the Future of the Tax Profession working group and will be reported as a new matter in the next monthly report.
    • Membership of the stewardship groups raised – advised that it is reviewed annually for two year appointments; they are staggered, so not all are renewed at the same time; not all professional bodies need to be in all groups, the aim is to have broad representation of all stakeholders and interested participants can register their interest with the Consultation Hub. There might be value in a short guidance note for chairs as to their role.

    Action item CSG 1605/2 – Online consultation tool
    Investigate an online consultation tool be available to simplify feedback on documents.

    Action item CSG 1605/3 – Large Business Stewardship Group
    Discussion by co-chairs of the LBSG of a way forward due to the volume of matters that are impacting on the segment.

    Action item CSG 1605/4 – Guidance for Chairs as to their role
    Consider if guidance note for Stewardship Group Chairs is required.

    Action item CSG 1605/5 – Register of stakeholders willing to be consulted
    Review the consultation register and how it is being used.

    New matters (7)

    [201608] Country by country (CbC) reporting

    [201609] Legal database

    [201611] GST and salads

    [201612] Starting a small business - Fix it squad

    [201613] BAS - making it easier - Fix it squad

    [201614] Regulation and the sharing economy – getting the balance right - Fix it squad

    [201615] Single touch payroll

    Completed matters (9)

    [201320] Guidance on the application rules to the rights to future income amendments

    [201496] Application of TOFA to repurchase agreements (repos)

    [201492] Application of Subdivision 820-D to Authorised Deposit-taking Institutions (ADIs) using Australian Prudential Regulation Authority (APRA) conglomerate rules

    [201514] Safe harbours - excise

    [201525] Changes for the new tax system for managed investment trusts

    [201546] Foreign currency hedging transactions

    [201552] Enhanced third party reporting, pre-filling and data matching

    [201575] Revision of PSLA 2005/24

    [201605] Outstanding claims liability (OCL) declaration

    Matters in progress >12 months

    [201510] Safe harbours - small and medium enterprises

    [201511] Safe harbours - transfer pricing

    [201512] Safe harbours - Fringe Benefits Tax (FBT) and remuneration

    [201513] Safe harbours - tax and accounting

    • A number of outcomes have been achieved or will be delivered within the next couple of months.
    • Progress on some of the safe harbours has taken longer than anticipated but the Practical Compliance Guides are a welcome development.
    • FBT and remuneration - The Board of Tax has a working group and there might be a need to coordinate with them. Review of the FBT and remuneration safe harbour working group membership might also be needed.
    • Tax and accounting - problematic to progress initiatives on tax and accounting, as most initiatives being considered so far were policy issues requiring law changes. See also action item CSG 1605/1.
    • Intended appointment of co-chairs for the safe harbour working groups would assist.
    • More focus will be placed on communicating outcomes and also to progress examination of ideas that may require further policy consideration.
    • Suggested that involving the co-chair with Revenue Analysis Branch estimate conversations would be useful.

    [201519] Petroleum resource rent tax (PRRT) - deductible expenditure

    • Consultation arisen because of a gap in the Public Advice regarding PRRT general deductibility.
    • Two draft Practical Compliance guidelines had been substantially agreed with industry stakeholders with aim to publish by August 2016.
    • Next round of consultations will be with advisors who have strong PRRT practices.

    Spot check on matters

    [201604] - Significant global entities lodging general purpose financial statements

    • Discussion paper to be released, however delayed because of the calling of the election.

    [201603] - Meaning of the phrase ‘alteration, extension or improvement’ as it appears in Division 43 of the Income Tax Assessment Act 1997

    • The consultation matter arose because of gaps in TR 97/23 with amendments to the ruling being considered. Approach being considered is to provide principles rather than examples. Suggestion made that other approaches rather than just updating the ruling be considered.

    Blockers to consultation

    Early engagement was identified as an area of improvement for the ATO's consultation activity. Early engagement and early discussion in terms of the ATO's view (even if preliminary) was thought highly beneficial for achieving timely and sensible outcomes. However, this needs to be balanced with the ATO view not being “set in stone” too soon.

    It was suggested that one approach could be to not have a clear view but guiding questions on the matter and that a differentiated approach is required depending on the situation.

    Potential matters for consultation

    • It was noted that discussion by the ATO with ASIC, ASX and AASB, in relation to the way in which listed companies disclose settlements, had occurred. This was to be discussed further at the Safe Harbours Steering Group meeting.
    • GST “enterprise rules” – this was being discussed at the GST Stewardship meeting held 19 May 2016.
    • Transfer pricing forum necessary – need a specific issue and then would identify correct people to be involved in consultation.

    Clarification requested

    The following topics were raised during the course of the meeting:

    • Can franking dividend declarations, which are made by reference to the company tax rate paid, be delayed until clarity is obtained on the applicable company tax rate?
    • Issues of timing for obtaining a ‘clearance certificate’, required at the time of settlement, from the ATO for potential withholding on sales by non-resident members.
    • Clarification was sought on whether the ATO can provide superannuation fund members with their cumulative non-concessional contributions made on or after 1 July 2007 so that they could meet the $500,000 life-time cap on non-concessional contributions. During the meeting it was confirmed that the ATO can provide the information for 1/7/2007 to 30/6/2015 where the superannuation fund had met their lodgement obligations. Need to confirm alignment in call centre scripting.
    • Employee Share Scheme statement - there is a technical requirement under the tax law for the employer to amend the Employee Share Scheme statement and Employee Share Scheme annual report in the case where the shares / rights have been forfeited as a result of performance hurdles not being met. What is the reporting requirement in this situation?

    Action item CSG 1605/6 – Franking Dividend Declarations

    Action item CSG 1605/7 – Clearance certificate for property sales

    Action item CSG 1605/8 – Cumulative non-concessional contributions

    Action item CSG 1605/9 – Clarification of the reporting for Employee Share Scheme statement.

      Last modified: 21 Jun 2016QC 49403