Show download pdf controls
  • Consultation steering group key messages 7 March 2018

    Stewardship groups’ non ATO co-chair update – National Tax Liaison Group

    Grant Wardell-Johnson, Chartered Accountants Australia and New Zealand

    Grant Wardell-Johnson attended the meeting and outlined his experience as the Co-chair of the National Tax Liaison Group (NTLG). Grant Wardell-Johnson noted that the relationship between the NTLG and the Consultation Steering Group (CSG) works well. The NTLG is chartered to deal with wider systemic issues.

    At times there is some overlap on consultation issues in NTLG and CSG meetings. This is appropriate provided the main goals of both NTLG and CSG are met. NTLG needs to ensure its discussion is focused on broad, large and systemic issues and the operation of the CSG allows this to occur by freeing up time for NTLG.

    There remains a role for NTLG to discuss technical issues which have very far-reaching implications, eg diverted profits tax. This is not and should not be suppressed and is dealt with on a case by case basis.

    Grant Wardell-Johnson noted NTLG processes work well. The NTLG agenda is strongly driven by the non-ATO members. The co-chairs work together to shape the agenda. The NTLG would benefit from an expansion of time devoted to strategic issues.

    Grant Wardell-Johnson noted that in both the NTLG and CSG, more time should be given to promote a ‘debrief culture’ on specific topics. This should be undertaken in an environment of culture of continuous improvement in finding what could have been done better and what would work well.

    Treasury update

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

    Kathryn Davy updated members on Treasury activities noting public consultations that have been undertaken since the last CSG meeting on 20 November 2017. These included:

    Kathryn Davy also advised members of two upcoming consultations:

    • revised exposure draft legislation on hybrid mismatch arrangement (announced November 2017)
    • implementation of deductible gift recipient reforms (announced December 2017).

    A member queried if information was available on the timing and next steps regarding deductible gift recipient reforms. Kathryn Davy will follow-up this information.

    Action item:

    CSG 1803/1

    Due date:

    14 May 2018

    Responsibility:

    Treasury

    Deductible gift recipient reforms – information on timing and next steps
    A member queried if information was available on the timing and next steps regarding the deductible gift recipient reforms

    Members suggested that information regarding Treasury public consultations be included in the meeting papers for future CSG meetings.

    Members noted there was a statement made by the Assistant Minister to the Treasurer Michael Sukkar MP about some embryonic work being done relating to cryptocurrencies.

    Board of Taxation update

    Karen Payne, Chief Executive Officer, Board of Taxation

    Karen Payne briefed members on the work undertaken by the Board of Taxation. Activities include:

    • contribution to a review of ASX listings of innovation companies (this project is still being scoped)
    • a review of the taxing rights for real property under Australia’s double tax agreements
    • reviewing certain aspects of the taxation of the not-for-profit sector (still under scoping consideration)
    • reviewing fringe benefits tax (FBT) compliance costs, including international comparisons
    • a review of small business tax concessions.

    Members noted The Tax Institute, Law Council of Australia, Chartered Accountants Australia and New Zealand and CPA Australia have not-for-profit committees and suggested that the Board of Taxation should connect with those committees. The Tax Institute representative also suggested that the Board of Taxation attend The Tax Institute’s FBT committee while under taking the FBT review.

    A member queried how the Small Business CGT Concessions Bill interacts with the Board of Taxation’s work. Karen Payne advised that the work of the Board is broader and that the Bill does not reflect any of the Board’s work.

    Advice products

    Louise Clarke, A/g Deputy Chief Tax Counsel, Public Advice and Guidance; Andrew Harnisch, Technical Advisor, Tax Counsel Network

    Update on Central management and control guidance

    Louise Clarke and Andrew Harnisch provided an update on the finalisation of the draft ruling and draft practical compliance guideline (PCG) on central management and control.

    The ATO noted that a targeted consultation was undertaken and feedback received is being incorporated in the documents. The ATO proposes to publish the final ruling and draft PCG together at the end of March (now April) 2018. The draft PCG will be open for public consultation.

    Members noted that the consultation has taken a long time and there appears to be no clarity with views of issues. Members suggested it would be beneficial for all people involved in the consultation to discuss issues before advice products are developed. The ATO will consider and take this on board in the future. Members also noted there should be more coordination between the ATO and non-ATO representatives to discuss issues early and suggested that The Tax Institute’s CSG representative could coordinate this on behalf of the non-ATO representatives.

    Louise Clarke briefed members on the work the ATO is undertaking to improve the quality of advice products and streamlining processes.

    In developing public advice and guidance, the ATO is making a number of improvements including:

    • prioritising the development of public advice and guidance
    • implementing strategies to ensure tailored timeliness in the delivery of public advice
    • better leveraging the tax technical expertise from within the ATO
    • further improving consultation on proposed public advice by ensuring the ATO seeks the views of the right people early in the development phase, understands what is required and take account of their views in the proposed public advice and guidance
    • ensuring that existing products are current, including withdrawing public rulings that are out of date.

    Considerations taken into account when deciding if ATO advice products are required include the following:

    • there is new legislation
    • the ATO has developed a particular compliance strategy
    • issues have been raised with the ATO.

    The ATO continues to produce binding public rulings in the form of law companion rulings (formerly law companion guidelines) to accompany key pieces of new law enacted by Parliament. These public rulings have been well received by taxpayers and advisers.

    The ATO has recently changed the name to a law companion ruling (LCR) so that it more accurately describes the product and provides advice on the ATO’s interpretation of newly enacted legislation to provide clarity and certainty at the earliest possible time on how the law operates. The ATO tries to ensure law interpretation does not creep into PCGs and the role of LCRs and PCGs is clear.

    ATO interpretative decisions (ATO IDs) have been discontinued and are not being replaced by a new product. The ATO is moving towards identifying topics where guidance is needed.

    A member queried how it was decided to involve certain stakeholders in consultations noting that the CSG should have a role in suggesting who should be involved. It was noted that as the CSG only meets four times a year timeliness of identifying appropriate people to involve in consultations would be an issue. The ATO suggested that CSG members may need to be more active in monitoring new consultations and provide feedback to the CSG mailbox if they have identified other stakeholders who should be involved in the consultation.

    ATO consultation activities

    Consultation matters greater than 12 months

    201508 Infrastructure privatisation

    Peter Maher, Director, LBI Infrastructure, Public Groups International

    Peter Maher provided an update and noted that this consultation has taken longer than expected.

    The ATO has not been able to progress the consultation due to a current Treasury consultation on stapled structures. The framework document will be finalised after the Treasurer makes an announcement on stapled structures.

    The ATO is currently reviewing public private partnerships (PPP) and is in discussions with the states and territories and other stakeholders about what this will mean for PPP structures going forward.

    The ATO anticipates some further limited consultation on the issue of negative control in the context of Division 6C before issuing its final position.

    Snapshot of consultation activity since the last meeting

    Robyn Theacos, Director, ATO Consultation Hub, Design and Change Management

    The November 2017 to January 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.

    Robyn Theacos briefed members on:

    • the recent changes to the ATO’s consultation web page – changes include the list of consultation matters now being categorised into the relevant market segments
    • draft changes to the consultation guide on Confidential consultations – this guide outlines the requirements for ATO staff undertaking confidential consultations. Members were invited to provide feedback on the updated guide
    • updates to the descriptions of the principles of effective consultation – the original wording of the descriptions have been updated to ensure they can be measured appropriately.

    Robyn Theacos advised that a questionnaire has been prepared that will be issued to consultation participants to provide feedback on the effectiveness of the completed consultation. The Public Advice and Guidance area will also use this when seeking feedback on consultations for draft advice and guidance products. A member noted that there is an issue with the timing of the request for feedback as requests were issued some time after the consultation was completed. The ATO has taken this on board for future requests for feedback.

    Potential new matters for consultation

    All members

    Members noted:

    • impact on legislation relating to the transfer of the regulatory role of administering the early release of superannuation benefits on compassionate grounds from the Department of Human Services to the ATO
    • allocation of profits with professional service firms’ consultation – first meeting on 8 March 2018
    • TaxTime 2018 and the impact of common reporting standard (CRS) reports.

    CSG action items update

    Robyn Theacos, Director, ATO Consultation Hub, Design and Change Management

    Robyn Theacos updated members on the status of CSG open action items. Members agreed that all action items can be closed:

    • CSG 1711/1 Scope of Board of Taxation consultation on ‘contingent consideration’
    • CSG 1711/2 Safe harbours – Fringe Benefits Tax (FBT) and remuneration working group
    • CSG 1711/3 Safe Harbours – Fringe Benefits Tax (FBT) and remuneration working group – learnings
    • CSG 1711/4 ATO consideration of how outcomes of requests to use the Commissioner’s Remedial Power can be transparent
    • CSG 1711/5 Is further guidance proposed for the definition of ‘base rate passive income’?

    Attendees

    Organisation

    Name

    Australian Taxation Office

    • Andrew Mills, Second Commissioner, Law Design and Practice (Chair)
    • Louise Clarke, A/g Deputy Chief Tax Counsel (Chair)
    • Robyn Theacos, Director, ATO Consultation Hub, Design and Change Management
     

    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

    Institute of Public Accountants

    Tony Greco

    Law Council of Australia

    Adrian Varrasso

    SMSF Association

    Peter Hogan

    The Tax Institute

    Stephanie Caredes

    Independent member

    Keith James

    Tax practitioner

    Keith Clissold

    Apologies

    Organisation

    Name

    Australian Taxation Office

    • Erin Holland, Deputy Commissioner, Intermediaries and Lodgment
    • Karen Foat, Assistant Commissioner, Design and Change Management
     

    SMSF Association

    John Maroney

      Last modified: 21 May 2018QC 55552