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  • Consultation Steering Group key messages 30 August 2016

    Board of Taxation update

    • The Board continues to gather ideas and proposed solutions for tax system improvements through its Sounding BoardExternal Link and is populating it with legacy ideas.
    • For Board initiated projects, a working group is set up including Board members, Secretariat staff, ATO and Treasury officials, to assist in scoping the project and identifying potential participants in consultations. Participants are also sought from the Board’s Advisory Panel and, depending on the project, from relevant associations. It was suggested that professional associations be included as recipients of the Board’s monthly updates on its current projects, which could also assist in identifying potential participants in consultations.

    Other members’ relevant forums and consultations

    • Other consultations include:
      • Single Touch Payroll - John Shepherd ATO leading
      • Impact on businesses of Greyhound legislation - Steve Vesperman ATO participating
      • Sharing economy - Judy O’Connell ATO leading
    • There may be potential impacts from the Cities and Digital Transformation activities
    • ATO is meeting regularly with the Australian Small Business and Family Enterprise Ombudsman.

    Private Groups Stakeholder Group

    Members agreed to the proposal to transition the Private Groups Stakeholder Group from a stakeholder relationship and management group to an ATO stewardship group.

    Also noted:

    • The group’s focus is on closely held private groups, with care to be given to potential overlaps with issues dealt with by the Public Groups and International and Small Business business lines. Risk reports and dispute resolution were areas also noted in this context.
    • Consideration should be given to engaging a recently retired partner from an advisory firm, to assist in dealing with potential conflicts of interest while ensuring currency of views.

    Consultation effectiveness - advice products

    • Positive feedback has been received on improvements including the new Law Companion Guidelines and Practical Compliance Guidelines.
    • A strong emphasis on early consultations allows a more detailed consideration of the issues before advice is drafted.
    • Responses are now more tailored and contemporary, assisted by the use of new tools such as Let’s Talk.
    • Focussing on ways to disseminate best practice identified in consultations.
    • Some lessons have been learnt, for example:
      • relevant industry participants might have been identified earlier
      • consultation material could have been circulated more widely
      • development of advice should have started with a preliminary conversation.

    Suggestions given

    • Feedback on the consultation process:
      • identify an external member at the outset of consultation to provide their views on the consultation process
      • consider using a standard set of questions to capture feedback from participants.
    • Provide adequate context on how extensive a problem is when issuing taxpayer alerts, as these products attract negative attention. Consider using words such as ‘emerging’ or ‘isolated cases’ when taxpayer alerts are released to avoid creating the wrong impression.
    • ATO confirmed that it is gradually replacing ATOIDs with better products such as TDs where appropriate.

    Action item CSG 1608/1 – Consultations on taxpayer alerts
    As taxpayer alerts are now more on interpretative issues, the ATO to consider in detail when, with whom and how much consultation is undertaken on taxpayer alerts. Will Day to consult with Jeremy Hirschhorn and Michael Cranston on consultations on taxpayer alerts and will report back on 17 November 2016.

    Report on ATO consultation activity


    Consultation report provided an update on Stewardship group meetings, new matters raised and closed, changes to special purpose and stakeholder relationship groups. It was identified that it would assist if the date of the last meeting is included.

    New matters (12)

    Matters registered May to July 2016

    [201617] - Making it easier to finalise a deceased estate

    [201618] - Making it easier to plan for retirement

    [201619] - Corporate Tax Governance Review Guide (CTGRG) consultation

    [201620] - Reportable tax position guide

    [201621] - Partnership relationship model

    [201622] - Partnership framework

    [201623] - Understanding and improving the Division 293 Tax client experience

    [201624] - Remaking sun-setting GST Legislative Determinations

    [201635] - Client communication list (CCL)

    [201636] - Tax incentives for early stage investors

    [201637] - Assistance for drought affected farmers

    [201639] - Effective Life Review of Assets used in specific industries

    Completed matters (10)

    Matters completed May to July 2016

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

    [201473] - ATO guidelines when contacting clients of tax practitioners

    [201483] - Tax agent lodgment program

    [201491] - Interpretation of section 215-10 in relation to when certain non-share dividends paid by Authorised Deposit-taking Institutions are un-frankable

    [201503] - Supporting the tax profession during 2015-16

    [201504] - Future of the tax profession in the longer term

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

    [201578] - Employee share schemes (ESS)

    [201618] - Making it easier to plan for retirement

    [201635] - Client communication list

    Matters in progress >12 months

    [201547] - Foreign investment reforms

    • Monthly meetings have been held with a group of 18 external members since the group was formed.
    • Further consultation was needed following announcements by the Treasurer in February 2016 and clarification of the application of taxation conditions to foreign investors as announced in the May 2016 Budget. The development of law underpinning a water register of foreign ownership before December 2016 is also discussed with planned implementation from 1 July 2017.
    • Meetings are continuing on a quarterly basis, with minutes produced and distributed more widely by participants. It was agreed that the group would continue until 30 June 2017.

    [201548] - Record keeping requirements for foreign general insurers carrying on business through an Australian permanent establishment

    • The legislative instrument will sunset on 1 October 2016 and the law will cease to have effect.
    • A review including external stakeholder consultation was undertaken to assist in making an informed decision about managing the sunset of the legislative instrument.
    • The legislative instrument will be allowed to sunset.

    [201557] - Marketing Hubs – practical guide

    • A discussion paper was released on 18 August 2016 seeking submissions by 30 September 2016. It has been provided to international treaty partners, in particular Singapore, the UK and Canada, to assist in avoiding double taxation.
    • Consultations are planned with Big 4 firms, the Minerals Council of Australia and the Australian Petroleum Production and Exploration Association.
    • It was acknowledged that not providing the discussion paper to key stakeholders under embargo, as was provided to the media, was an oversight.

    Spot check on matters

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

    • A further round of consultation is to be undertaken in October 2016.
    • A draft ruling is expected to be released in March 2017.

    [201619] - Corporate Tax Governance Review Guide (CTGRG)

    • Consultation had been undertaken with a large panel consisting of stakeholders from external firms and taxpayers.
    • Feedback from the consultation panel suggested that the ATO also consults with the Australian Institute of Company Directors and the Governance Institute. They have been included in the consultation currently being undertaken. The ATO will then make further changes and refinements (where applicable) based on the recommendations from the consultation panel.

    [201620] - Reportable Tax Position Schedule

    • The ATO is close to finalising the changes to the Reportable Tax Position (RTP) Schedule and relevant guidance material.
    • The ATO will seek final feedback on the RTP schedule and relevant guidance material by end of September 2016.

    Blockers to consultation

    No negative impacts on effective consultation were noted for the period May to June 2016.

    Potential matters for consultation

    The following matter was raised:

    • PS LA 2010/4 - Division 7A: Trust entitlements

    CSG action items

    It was agreed to close the following action items:

    • CSG 1603/1 – Interpretation issues regarding the new sub-division 768-A (matter no 201498)
    • CSG 1605/1 – Alignment of Tax and Accounting
    • CSG 1605/2 – Online consultation tool
    • CSG 1605/3 - Large Business Stewardship Group
    • CSG 1605/4 - Guidance for Chairs
    • CSG 1605/5 – Register of stakeholders willing to be consulted
    • CSG 1605/7 – Clearance certificate for property sales
    • CSG 1605/8 – Cumulative non-concessional contributions
    • CSG 1605/9 – Clarification of the reporting for Employee Share Scheme statement.

    Action item CSG 1605/6 – Franking Dividend Declarations – to be closed after additional information is provided to CSG members out of session.

    New action item

    CSG 1608/1

    Responsibility: Will Day, Deputy Chief Tax Counsel, Public Advice and Guidance

    Due: CSG meeting
    17 November 2016

    Consultations on taxpayer alerts
    As taxpayer alerts are now more on interpretative issues, the ATO to consider in detail when, with whom and how much consultation is undertaken on taxpayer alerts. Will Day to consult with Jeremy Hirschhorn and Michael Cranston on consultations on taxpayer alerts and will report back on 17 November 2016.

      Last modified: 10 Oct 2016QC 50288