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  • Consultation Steering Group key messages 19 November 2018

    Introduction

    The Chair, Second Commissioner Andrew Mills welcomed members and noted that John Maroney, Chief Executive Officer of the SMSF Association has advised the SMSF Association is unable to continue with its participation in the Consultation Steering Group (CSG). The Chair expressed his appreciation for John Maroney and the SMSF Association for their contribution to the CSG.

    The Chair advised members that Jacqui Curtis, Chief Operating Officer, Corporate and Enabling Services will take over the role as chair of the CSG in the new year.

    Treasury Update

    Brendan McKenna, Principal Adviser, Corporate and International Tax Division, Revenue Group, Treasury

    Members were provided with a list of Treasury consultations completed since the last CSG meeting on 27 August 2018 and upcoming consultations. These included:

    • Digital tax discussion paper that explores options for taxing digital business in Australia – ongoing
    • Taxation of insurance companiesExternal Link – seeking information and comments from interested parties on the tax impacts of new accounting standard for insurance contracts (AASB17) – closes 31 January 2019
    • Targeted amendments to Division 7AExternal Link – completed 21 November 2019. Members noted the key concerns are the transitional arrangements. In addition, concerns were raised about previous work that has been done on this topic and the need to contact those involved to help inform Treasury deliberations.

    Treasury noted that in the next month or two, consultation will be undertaken for a number of matters particularly around the Black Economy. Treasury’s current focus is for the Mid-Year Economic and Fiscal Outlook.

    It was noted that with an election sometime next year, this could impact on the passing of legislation before Parliament. Treasury will focus on high priority matters particularly those already before Parliament.

    During the election period Treasury will only draft and consult on non-controversial bills that have bi-partisan support. A member asked how bills are identified to have bi-partisan support. Treasury noted there is no formal process and it is often dependent on public statements by the political parties.

    A member noted the Treasury Laws Amendment (Making sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018External Link is of key interest, as it incorporates measures around Research and Development and Thin Capitalisation.

    Members referred to previous concerns with the volume of consultations and timeframes. Treasury advised they are focussing on setting timeframes of four weeks as a minimum with a preference for six weeks taking into account Parliamentary considerations. Members noted that timeframes have recently improved.

    Board of Taxation update

    Karen Payne, Chief Executive Officer, Board of Taxation

    Members were advised of the following:

    • the Board has been impressed by the level of engagement and contribution by stakeholders in its consultation activities this year
    • the Board does not expect to conduct any new consultations before the end of December 2018 – with most of the current consultations closed. The Board will be reviewing the submissions received
    • participation in the Board’s FBT Compliance Cost Survey has been better than expected
    • the Board is participating in Treasury consultations for Digital Tax and Division 7A
    • potential new topics for consultation in 2019 include:
      • granny flats and the interaction between the tax and the social services systems
      • interactions between the multilateral instrument, tax treaties and domestic law which includes issues around central management and control.
       

    The Sounding BoardExternal Link was recently redesigned to allow ideas to be better organised and managed under five new campaign headings with ideas able to be categorised under more than one campaign:

    • Sweating the small stuff: typos and slip ups – for care and maintenance suggestions [1 Idea]
    • What were they thinking: clarifying the policy – for ideas that require clarification of the policy intent or that identify uncertainty in the application of the law [4 Ideas]
    • Too taxing: reducing red tape – for ideas that result in compliance cost savings [12 Ideas]
    • Can government fix it: policy improvements – while the Sounding Board is not a forum for substantive tax policy proposals, this campaign documents suggestions submitted that require a change to government policy [45 Ideas]
    • Tell it to the Tax Office: Administrative fixes – for suggestions of ATO administrative changes [9 Ideas].

    The Board will be contacting stakeholders to assess if this is a useful format and other ideas for improvement. A member queried how matters that may be raised by taxpayers with the Inspector-General of Taxation could be placed on the Sounding Board. There is no set process for this and it was suggested that engagement by the Board with the Inspector-General of Taxation could be valuable to have this incorporated as part of the Sounding Board process.

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

    All members

    Members raised concerns about the timeliness and content of some stewardship groups’ key messages. Members noted that some of the key messages are too high level and do not reflect the issues raised by members with some of the agreed action items not recorded.

    Members noted that it is a responsibility of the stewardship groups’ chairs to check the draft key messages. Michelle de Niese will raise this matter at the next non-ATO chairs’ meeting.

    The ATO noted it is considering improving the ATO Consultation Hub’s involvement in the secretariat roles and possibly have more oversight of the key messages for consistency and quality.

    A recommendation will be made to the chairs and secretariats of stewardship groups for them to seek agreement at their stewardship meetings of the key outcomes and action items for each agenda item.

    Advice products

    CSG visibility over targeted consultation

    Michelle de Niese, Corporate Tax Association; Clint Harding, Law Council of Australia; and Andrew Orme, Deputy Chief Tax Counsel, Tax Counsel Network, ATO

    Members raised concerns about the CSG’s visibility over targeted consultation. Members noted that it is desirable for consultation to be open and transparent. Targeted consultation has a place and when done well can be highly effective. It is important for the CSG to have visibility over both types of consultation, so it can ensure the right people are being targeted and to monitor its progress.

    Members queried whether they could be automatically notified of new consultation matters and observed that it can be challenging to track consultation matters and related advice and guidance products under development.

    In response to the above, the ATO noted:

    • there is a lot more early stage and targeted consultation occurring
    • anyone can register to receive notification for updates to the consultation section of ato.gov.au but it will not specifically identify what has changed
    • the ATO Consultation Hub provides a monthly report to members that contains details of consultation matters opened and closed during the month but this currently does not include draft advice and guidance products when they are released for comment
    • the ATO will review processes for notifying the community of the progress of public advice and guidance (PAG) products including the related consultation activities.

    Action item

    1811/1

    Due date

    27 February 2019 CSG meeting

    Responsibility

    Deputy Chief Tax Counsel, Public Advice and Guidance and AC Strategy Engagement & 2024, Enterprise Strategy and Design

    Review of processes for notifying the community of progress of public advice and guidance products including related consultation activities

    Andrew Orme and Sandra Roussel to review processes for notifying the community of the progress of public advice and guidance products and related consultation activities.

    Follow-up on potential consultations for advice and guidance matters identified at last meeting

    At the 27 August 2018 CSG meeting, members raised a number of potential new matters for consultation. Members noted that Andrew Orme had contacted the relevant member to follow-up on the potential matters raised.

    The ATO noted the ATO Consultation Hub will provide a status update at the next CSG meeting on the potential matters for consultation raised at the previous meeting.

    Assessing consultation effectiveness on advice products

    A report outlining the consultation effectiveness on public advice products was provided and discussed with members. An accompanying summary of ATO draft advice products released for consultation from 1 August 2018 to 31 October 2018 was provided for members’ information.

    Andrew Orme noted that in a couple of cases the advice and guidance was divided into a Law Companion Ruling and a Practical Compliance Guideline (PCG). This approach was applied to Central Management & Control and Diverted Profits Tax and will be applied for the anti-hybrid legislation. Members were asked if this approach is working. Feedback was that it is useful but sometimes the PCG does not give practical guidance with appropriate examples that would apply broadly in the relevant market.

    The ATO noted that prior to the development of a PCG, a triage process is conducted to ensure the scope and proposed content is identified.

    Process for development of ATO public advice and guidance

    At the 27 August 2018 CSG meeting, members discussed the consultation processes and timeframes for approving final public advice and guidance products. Following those discussions, Andrew Orme provided members with a document outlining the process for development of ATO public advice and guidance for their information.

    Members expressed some concern about the timeframes outlined for briefing the Assistant Treasurer and internal consultation activities and asked if there is a way to shorten the process. Members suggested that where targeted consultation has occurred, this could be considered in the process of developing the guidance by having different approval processes and less consultation on the draft product to reduce the timeframes.

    Andrew Orme noted that the ATO is undertaking a review of processes for the development of public advice and guidance that will include improved intervention points and more regular check-ins. Andrew Orme will aim to discuss proposed changes with the CSG in 2019. It was suggested that the processes in other jurisdictions and other Australian government bodies such as ASIC and APRA be considered during the review.

    Action item

    1811/2

    Due date

    27 February 2019 CSG meeting

    Responsibility

    Deputy Chief Tax Counsel, Public Advice and Guidance

    Review of processes for the development of public advice and guidance

    Andrew Orme to provide an update on the review of processes for the development of public advice and guidance.

    ATO consultation activities

    Consultation matters greater than 12 months

    201655 – Improving digital services for tax practitioners

    Sonia Corsini, Project Manager, Improved Digital Services, Intermediaries, ATO

    Consultation lead Sonia Corsini noted that the consultation regarding online services for agents had taken longer than expected due to different factors, including the technology issues the ATO had faced and the technical complexities of the build process.

    A focus of the project is to ensure that online services for agents meets user expectations and delivers an improved digital experience. Ongoing consultation and testing has enabled the ATO to fix bugs and allow for further refinement of the service before being made publicly available to the broader tax and BAS agent population. The ATO was guided by the beta testers to determine when the ‘right’ time was to release the product. The consultation was important as it allowed the ATO to understand the business processes from the perspective of the users.

    A member noted that although there were now only minor bugs, agents had asked for these to be fixed before a broader release, as this would impact on the user experience and the acceptance of the services.

    Consultation will cease at the time the services are publicly released with users encouraged to continue to provide feedback so ongoing refinements to the services can be made.

    The ATO will operate the new services and the portal in parallel for some time so agents can transfer at a time that suits them.

    A concern for the professional associations is that they were approached to provide the names of willing participants in the pilot phases but have no visibility of who was actually involved. The ATO noted it will investigate the availability of this information and whether it can be provided to the professional associations.

    Action item

    1811/3

    Due date

    27 February 2019 CSG meeting

    Responsibility

    Assistant Commissioner, Intermediaries and Lodgment (Andrew Watson)

    Visibility of participants in pilot phase testing of online services for agents

    The ATO to investigate the availability of information on participants involved in pilot phase testing of online services for agents and whether this information can be provided to the professional associations

    Consultation with digital service providers continues as the ATO builds and releases application programming interfaces. The process is expected to be completed within the first quarter of 2019 with the aim to make all online services available to digital service providers so they can incorporate what is required into their software products.

    The approach taken was largely based on the feedback of the users and the ATO’s ability to act on that feedback. Slowing down the process and focussing on ‘getting it right’ rather than meeting a deadline has been invaluable in meeting the project outcomes with the support of the profession. Members acknowledged that this consultation process had worked well and was a good model for the ATO to follow.

    A member queried whether the updated Taxpayers’ Charter would reflect the new online services environment. Members were advised that the Taxpayers’ Charter was released at the end of October 2018 and did reflect the online services environment.

    Post-meeting update: An email was sent to CSG members on 21 November 2018 advising the updated and revised Taxpayers’ Charter was available on the ATO website.

    Special purpose working groups

    Stakeholder relationship groups

    Robyn Theacos, Director, ATO Consultation Hub

    Members were asked for their views on the role of the CSG in providing oversight of the stakeholder relationship groups and special purpose working groups and the relevance and value add of these groups.

    The ATO is currently seeking feedback from the secretariats and ATO members on their perspective of whether the group is effective, meeting its intent and if there is visibility of their activities. The non-ATO group members will be asked for their feedback in early 2019. A report of the findings will be prepared for the CSG.

    Members noted they do not have real oversight of these groups and it would be useful if they could have a summary of each group’s achievements for the year including how often they meet before they could provide their views on the groups.

    There is concern that the groups’ focus is on information sharing and not consultation. The ATO noted the stakeholder relationship groups are about maintaining ongoing relationships with business and industry representatives with some elements of consultation.

    Points raised included:

    • is there crossover between stakeholder groups?
    • is there an opportunity for some groups to be incorporated into a relevant stewardship group?
    • what are the governance/reporting requirements for these groups?
    • what are the connections to the stewardship groups?
    • should these groups be reviewed because the last review was nearly six years ago?
    • there are a number of groups for the same project, eg Single Touch Payroll.

    The ATO advised that generally the tax practitioner groups are connected to the Tax Practitioners Stewardship Group and the superannuation groups are connected with the Superannuation Industry Stewardship Group. For Single Touch Payroll groups they are not connected to a specific stewardship group but are connected by the Project lead for Single Touch Payroll.

    Action item

    1811/4

    Due date

    CSG Secretariat

    Responsibility

    27 February 2019 CSG meeting

    Special purpose working groups and Stakeholder relationship groups Secretariat to:

    • continue to provide information on the current groups and changes that have occurred since the last meeting
    • provide suggestions for a governance approach for Special purpose groups and Stakeholder relationship groups for consideration by members
     

    Snapshot of ATO consultation activity since the last meeting

    A report on ATO consultation activity from August 2018 to October 2018 was provided for members’ information outlining 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.

    Potential new matters for consultation

    All members

    The ATO advised that for future meetings a status for matters raised in this item will be provided at the next CSG meeting.

    Members noted that consultation is necessary for Australian Accounting Standards Board (AASB) 15 and 16 and the way they interact with taxation legislation. Members suggested that consultation on the issues should include major corporates. The ATO advised that the ATO has met with the Corporate Tax Association.

    Members stated that they believed there was a specific group within the ATO who consider AASB matters. The ATO will follow-up with the relevant business area and report back to the CSG.

    Post meeting update:

    The ATO has a number of staff with a broad range of commercial experience who provide specialist audit, accounting and financial reporting advice to support ATO staff undertaking client engagement cases. They have contributed to a number of projects, such as: 

    • assistance with drafting Factual Findings Procedures, previously known as External Compliance Assurance Process (ECAP)
    • considering statutory audit approaches to help streamline tax reviews and audits
    • contribution to the development of justified trust and tax assurance work program
    • working with ATO project teams and the Tax Counsel Network on Country-by-country and certain Significant Global Entities (SGE) lodging General Purpose Financial Statements(GPFS) on topics such as financial reporting requirement and interaction between accounting standards and tax legislation in the new legislation implementation
    • liaison with external entities such as Australian Accounting Standards Board, Australian Securities and Investments Commission and the Accounting Professional & Ethical Standards Board on related matters concerning both Accounting and Tax.

    Effectiveness and contribution of CSG for 2018

    All members

    Members were asked to provide their views on the:

    • effectiveness of the CSG; that is, do discussions/outcomes meet the intent for the group, what works well, what needs to be changed, is the work of the group effectively communicated – if not, what needs to be done
    • key outcomes achieved in 2018.

    Members noted that the CSG is managed well and provided broader feedback on consultation – what has worked well:

    • significant progression in consultation process with the appointment of non-ATO co-chairs which has been accepted and embraced
    • commitment of Deputy Commissioners’ to their groups
    • pre-meeting agenda discussion with non-ATO co-chairs
    • improvement in members’ participation in stewardship groups as consultation has been embraced more.

    Opportunities for improvement:

    • need to get increased dividend from non-ATO co-chairs role
    • need to report and measure outcomes and benefits of consultation.

    It was noted CSG members are an advocate for the CSG but others do not understand the purpose and value of the group.

    Other business

    All members

    Members thanked Second Commissioner Andrew Mills for his leadership and chairing of the CSG

    Attendees

    Organisation

    Members

    ATO

    Andrew Mills, Second Commissioner, Law Design and Practice (Chair)

    ATO

    Jacqui Curtis, Chief Operating Officer, Corporate and Enabling Services

    ATO

    Andrew Orme, Deputy Chief Tax Counsel, Tax Counsel Network

    ATO

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    ATO

    Robyn Theacos, Director, ATO Consultation Hub

    Treasury

    Brendan McKenna, 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

    Independent member

    Keith James

    Tax practitioner

    Keith Clissold

    Apologies

    ATO

    Erin Holland, Deputy Commissioner, Intermediaries and Lodgment

    SMSF Association

    John Maroney

    The Tax Institute

    Stephanie Caredes

    Angie Ananda (as a replacement for Stephanie Caredes)

    Treasury

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

    Institute of Public Accountants

    Tony Greco

      Last modified: 25 Feb 2019QC 58068