Consultation Steering Group key messages 4 April 2019

Key highlights

• A proposed refreshed role and scope for the CSG will be discussed at the next CSG meeting
• Corporate Tax Association representative Michelle de Niese nominated as CSG external Co-chair
• Discussion on how CSG members can contribute to policy design consultations
• Improvements on transparency of consultation and timeframes for public advice and guidance
• ATO proposed pilot of a fast-tracked Tax Determination (TD) process.

Introduction

The Chair Jacqui Curtis, Chief Operating Officer, Enterprise Strategy and Corporate Operations welcomed members and noted that Glen McCrea, Deputy CEO and Chief Policy Officer representing the Association of Superannuation Funds of Australia and Louise Clarke, Deputy Commissioner, Policy Analysis and Legislation, ATO have recently joined the Consultation Steering Group (CSG).

Jacqui Curtis advised members that Deputy Commissioner Erin Holland has retired noting that Erin Holland was a CSG member since the inaugural CSG meeting on 29 November 2013. On behalf of CSG members, Jacqui Curtis thanked Erin Holland for her contribution to the CSG and wished Erin Holland all the best for the future.

Role of the CSG

Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design, ATO

The purpose of this item was to seek members’ views on the role of the CSG including CSG chairing arrangements, future guests at CSG meetings and to discuss how the ATO Consultation Hub can best support CSG members.

Sandra Roussel noted that when the CSG was established in 2013, the expected role of the group was to oversee the revised consultation arrangements that had been implemented and to identify opportunities for improvement. It was expected that the group would:

• review emerging patterns and trends in consultation
• understand the nature of consultation being undertaken
• contribute ideas for consideration to enhance the effectiveness of the ATO’s consultation arrangements

Jacqui Curtis noted that as it has been some time since the group was established, it was timely to discuss and refresh the role and scope of the group.

Sandra Roussel advised she recently sought members’ views on the role of the CSG. Comments included:

• the group works and adds value with some members noting that a refresh of purpose and intent is required
• it is not always clear the distinction between the role of the National Tax Liaison Group (NTLG) and the CSG’s role
• it is a ‘trusted circle’ for members to discuss concerns with how the ATO’s consultation arrangements are working
• there is value in ‘looking over-the-horizon’, to inform any upcoming issues and to consider whether or how consultation from the ATO, Treasury or Board of Taxation may support the issues
• it has accountability to ensure that consultation is occurring, and being undertaken in a timely manner
• there is a need to encourage the discussion of higher level issues, as the group has a natural tendency to go into the detail of matters.

During the discussion, comments from members on the role of the CSG included:

• it should focus on the effectiveness of current and closed consultations
• it could have an advisory role for consultation groups
• what are the measures of success for the CSG
• what are the outcomes expected from the CSG
• a debrief on closed consultation matters would be of value
• it should include a focus on public advice and guidance products, eg the delay of the finalisation of draft rulings that are aged
• a refreshed role of the CSG could impact on the frequency of meetings.

Jacqui Curtis noted that a paper outlining a proposed refreshed role and scope for the CSG will be discussed at the next CSG meeting.

CSG chairing arrangements

Jacqui Curtis suggested that a co-chair for the CSG would assist with the operation of the group. Members were supportive of this and agreed with the nomination of Michelle De Niese as CSG Co-chair.

Future guests at CSG meetings

Jacqui Curtis sought members’ views on the attendance of future guests at CSG meetings. Members noted it would be appropriate to invite guests provided that their attendance is relevant to consultation activities.

Additional support from the Consultation Hub to CSG members

Sandra Roussel asked members to identify any additional support the Consultation Hub could provide to help members understand the consultation environment.

Members suggested that pre-meetings between CSG members would be of value and that Michelle De Niese as Co-chair could facilitate these meetings with support from the Consultation Hub.

Stewardship Groups’ External Chairs’ meeting

Michelle de Niese, Executive Director, Corporate Tax Association

Michelle de Niese provided an update from the Stewardships’ External Chairs’ meeting held on 6 December 2018.

Michelle de Niese noted that the Co-chairs agreed that their respective Stewardship Groups were working reasonably well. The Co-chairs agreed they are well supported by the ATO in their roles.

In discussing their roles and responsibilities, the external Co-chairs identified a number of issues and agreed on the following actions:

• The role and responsibilities of external Co-chairs of Stewardship Groups should be codified
• The policies and processes underpinning each of the stewardship groups should be consistent and understood by both the ATO and external Co-chairs, including:
  • agenda setting processes noting that some Co-chairs do not have input in the development of the agenda
  • responsibilities for the outcomes of related working groups
  • the management of new and existing external members
  • educating external members on the role and responsibilities of the CSG (which was clearly not understood across the stewardship groups)
  • ensuring a certain number of meetings are held face to face – at least one per year
  • responsibilities regarding related working groups.
   

Jacqui Curtis noted that Sandra Roussel and the Consultation Hub will work to progress the suggested actions.

Michelle de Niese suggested that she and Grant Wardell-Johnson (external NTLG Co-chair) attend the next ATO Stewardship Groups’ Co-chairs’ meeting to discuss the proposed actions from the external Stewardship co-chairs meeting.

Role of CSG in policy design

Louise Clarke, Deputy Commissioner, Policy Analysis and Legislation, ATO

The purpose of this item was to discuss how the CSG members can contribute to policy design consultations. Louise Clarke noted that the Government considers how consultation on law design and policy is conducted.

Louise Clarke advised members that a paper titled Consultation on Tax Policy and the Administration of the Tax System was presented by Michelle de Niese and discussed at the 4 March 2019 NTLG meeting.

Louise Clarke noted that better outcomes are achieved when Treasury and the ATO consult on policy. For the ATO, consultation is undertaken on the relevant public advice and guidance product that would support the administration of the law. The Policy Analysis and Legislation business area works very closely with Treasury during the consultation process.

Treasury representative Lynn Kelly noted that she chairs an internal Treasury steering group that is focused on consultation. In consulting, Revenue Group:

• considers the broader environment
• where possible provides advance notice of issues to key stakeholders
• undertakes transactional engagement on particular law as well as non-transactional engagement
• works closely with the ATO’s Policy Analysis and Legislation business area.

Members noted that there is a lot of positive engagement with Treasury with the key concerns regarding the:

• ad hoc approach to consultation on pre-policy announcements
• lack of clarity on the objective of the legislation
• lack of feedback on submissions provided.

Lynn Kelly acknowledged that there have been inconsistencies in acknowledging the receipt of submissions and for providing feedback on submissions. In addition, it was noted that upfront clarity about the purpose of specific consultations would assist participants (eg issues of policy vs law design). Lynn Kelly agreed that at the next CSG meeting, Treasury would share observations and best practices when consulting with Treasury. Members noted that observations from the Board of Taxation on its consultation processes would also be useful.

Members asked about the role of the ATO in Treasury’s consultation processes. In these consultation processes, members noted that it assists them to hear from the ATO representatives; in particular, the ATO’s concerns with the relevant new legislation. Louise Clarke and Lynn Kelly agreed to work together to explore the ATO’s role within Treasury’s consultation processes including when the consultation relates to the ATO’s implementation of measures, eg the Treasury consultation undertaken Implementing a reporting regime for sharing economy platform providersExternal Link (undertaken in January – February 2019).

Processes for consultation and approval of public rulings

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

This discussion included the following topics:

• Transparency of consultation for public advice and guidance under development (related to action item CSG 1811/1)
• Timeframes for public advice and guidance (related to action item CSG 1811/2).

Andrew Orme outlined some of the recent changes that had been made to improve transparency of consultation and timeframes for public advice and guidance:

• the ATO has now added contact details to the advice under development program page on ato.gov.au
• there will be improved linkages between the pages for consultation and advice under development on ato.gov.au
• there will be improvements made to make the items on the program more informative, including providing more information where possible on the reasons for the delays for advice under development.

Members were supportive of the changes.

Andrew Orme outlined a proposed pilot of a fast tracked Tax Determination (TD) process for issues that are medium to low risk with a low likelihood of technical controversy about whether the position is correct. The main feature of the proposal is to shorten and simplify consultation on a public draft.

A fast-tracked TD will be published in draft to the ATO Legal Database. However:

• there will be a shorter period for comments on the draft TD, around two weeks rather than the current four weeks
• the draft TD will invite comments to be provided by directly contacting the nominated approving officer in the first instance. A formal written submission would be the exception, but allowance will be made for this if a stakeholder wishes
• where there has already been targeted consultation prior to issue of the draft, the request for comments will indicate that comments already provided in the targeted consultation process need not be made again. In some cases a compendium of comments may be published with the draft to show what the ATO has already considered
• an appropriate annotation will be added to the published draft on the Legal Database, highlighting the fast-tracked process.

Members were supportive of the proposed pilot.

Members requested that delayed or long term consultation processes as well as aged draft rulings be discussed at future CSG meetings.

Treasury update

Lynn Kelly, Chief 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 19 November 2018.

Lynn Kelly sought feedback from members on any of the recent completed consultations. Members’ feedback was positive for the consultations they had been involved in. A concern was the targeted amendments to Division 7A due to the difference between the Board of Taxation’s recommendations and the Treasury paper.

Members also noted that the Black Economy measures will require significant input from the ATO to implement. Members wanted to understand the next steps for the measures. Louise Clarke agreed to advise the CSG at the next meeting.

Input from members

• Relevant forums and consultations or matters of significance relating to consultation
• Potential new matters for consultation

The Chair asked members to share their views and debrief on any other relevant forums and consultations or matters of significance relating to consultation, and for members to note potential new matters for consultation they may have identified. A status update will be provided at the next CSG meeting on potential new matters identified for consultation.

Members noted the following matters:

• An emerging issue that may require consultation is the private companies maximising the use of franking credits. Members noted there was a gap in the current advice and guidance for private companies
• Consultation activities underway:
  • The ATO has engaged the Private Groups Stewardship Group on a draft discussion paper for extending the Tax Payment Reporting System to Private Groups and Professional firms
  • The Legal Professional Privilege working group has held its first meeting
  • A new group has been established for the administration of the Research and Development Tax Incentive - Research and Development Tax Incentive RoundtableExternal Link.
   
• Other issues raised included:
• The ATO needs to ensure they are clearly communicating the appropriate operative dates for the changes to the tax rates for small business
• Concerns about the overuse of ATO comfort letters
• Outstanding Public Advice and Guidance matters of concern to members:
  • [201806] Professional firms - allocation of profit guidelines and Everett Assignment web material
  • Draft TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees' travel expenses?
  • Review of TR 96/26 - car parking fringe benefits
  • Guidance regarding definition of 'taxi' and how it affects ride-sharing vehicles.
   

Other business

Suggestion for future governance of the stakeholder relationship and special purpose working groups (related to action item CSG 1811/4)

Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

At the 19 November 2018 CSG meeting, discussion of the stakeholder relationship and special purpose working groups resulted in action item CSG 1811/4 for the ATO to provide suggestions for a governance approach for stakeholder relationship and special purpose working groups for consideration by members.

Sandra Roussel noted the ATO Consultation arrangements include the Stewardship Groups, Stakeholder Relationship and Special Purpose working groups. The Consultation Hub provides CSG members with information on the changes to the Stakeholder Relationship and Special purpose working groups since the last meeting as well their purpose, membership numbers, the Chair and details of the last meeting held. For this meeting, members have also been provided with the outcomes from the Stakeholder Relationship groups for 2018.

Members found the outcomes very useful and noted that not all of the activities of the groups were focused on consultation. Jacqui Curtis advised that this information continue to be provided to the CSG with a focus on the consultation activities of each group.

Report on ATO consultation activity

A report on ATO consultation activity from November 2018 to March 2019 was provided for members’ information outlining details of new matters raised and completed matters for consultation and information on the changes to special purpose and stakeholder relationship groups. The report includes information on draft public advice products released for consultation and the release of final public advice and guidance products.

Future CSG meetings

It was agreed that the planned CSG meeting for 14 May 2019 will not proceed and that a CSG meeting be held in July 2019 and another meeting later in 2019.

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 1811/1 - Review of processes for notifying the community of progress of public advice and guidance products including related consultation activities
• Action item CSG 1811/2 – Review of processes for the development of public advice and guidance
• Action item CSG 1811/3 – Visibility of participants in pilot phase testing of online services for agents -
• Action item CSG 1811/4 – Special purpose working groups and Stakeholder relationship groups.

Members agreed to close all open action items

Attendees

Organisation and name of attendees

Apologies