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  • Consultation Steering Group key messages 22 July 2019

    Key highlights

    • Members agreed to the proposed refreshed role and scope of CSG
    • Overview of Treasury’s structure and tax policy process
    • Update on proposed consultations from Treasury, Board of Taxation and the ATO
    • Overview of future consultation on public advice and guidance for work-related expenses
    • Members supported the proposal to decommission the ATO Consultation Stakeholder Register

    Introduction and opening remarks

    Michelle de Niese, Corporate Tax Association

    Consultation Steering Group (CSG) Co-chair Michelle de Niese informed members that ATO Co-chair Jacqui Curtis was not able to attend the meeting and noted Jacqui Curtis’ apology. Michelle de Niese advised that she would chair the CSG meeting.

    Michelle de Niese welcomed members to the second CSG meeting for 2019. Michelle de Niese welcomed Lynn Kelly attending as Interim Chief Executive Officer of the Board of Taxation and noted apologies from Glen McCrea representing the Association of Superannuation Funds of Australia and tax practitioner Keith Clissold.

    Michelle de Niese noted that the CSG was established in 2013 following the restructuring of the ATO’s consultation arrangements. The CSG has had a vital role influencing ATO consultation activities. However, consultation approaches have changed and it is appropriate for the group to review its purpose. There is a lack of understanding of the role of the CSG within the ATO and externally. It is important for CSG members to continue to influence consultation being undertaken with the need for members to take a more active role.

    Other points noted:

    • there would be value in external CSG members having a discussion before the CSG meeting
    • the group should consider if there is value in having consultation participants attend the meeting to provide verbal feedback on the consultation process and groups
    • ownership of consultation by ATO business areas is important
    • consider having the external co-chair of a Stewardship group brief the CSG
    • conduits to the CSG need to operate better.

    Presentation on ‘Demystifying Treasury’

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

    At the 4 April 2019 CSG meeting, discussions under the Treasury update resulted in action item CSG 1904/4 for Treasury to share its observations and best practices when consulting with them. In response to this action item, Kathryn Davy presented to members a paper titled ‘Demystifying Treasury’ to outline Treasury’s structure and the tax policy process.

    Kathryn Davy provided an overview of Treasury’s structure, in particular, the Revenue Group. The Revenue Group provides advice to the Government on revenue and taxation policy matters and includes:

    • Tax Analysis Division (costings for revenue and superannuation and works closely with the ATO Policy Analysis and Legislation Division)
    • Law Design Office (drafts instructions and all legislation in Treasury’s portfolio)
    • Tax Framework Division (brings a whole-of-system perspective to major tax policy issues)
    • Black Economy Taskforce Division (oversees the multi-pronged approach to targeting the black economy)
    • Corporate and International Tax Division (large corporates)
    • Board of Taxation Secretariat (provides and coordinates advice and support to the Board of Taxation)
    • Individuals and Indirect Tax Division (individuals and small business).

    Members suggested that an officer from the Tax Framework Division (TFD) attend a future CSG meeting to discuss the work of TFD for members to gain an understanding of TFD’s role.

    Kathryn Davy briefed members on Treasury’s tax policy process noting:

    • ideas for tax policy can come from many sources
    • Treasury undertakes a preliminary analysis and prioritises the issues raised
    • there is a focus on stakeholder engagement with the ATO, advisers and industry groups who may be impacted
    • a recommended policy position is decided, taking into account the views of the ATO and stakeholders
    • the Law Design Office prepares drafting instructions on the policy agreed by Government and the Office of Parliamentary Counsel drafts the law
    • once the law has been enacted by Parliament, the ATO’s role is to focus on the implementation and Treasury evaluates the effects of the tax policy changes.

    Members questioned the appropriate time to lodge pre-Budget submissions. Treasury noted that stakeholders are encouraged to raise their suggestions by sending emails or contacting Treasury by phone if there is insufficient time to lodge a formal submission.

    Future role and scope of CSG

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

    At the 4 April 2019 CSG meeting, members discussed the current role of the CSG. It was agreed that a discussion on a proposed refreshed future role and scope of the CSG would be discussed at this meeting (action item CSG 1904/1).

    Sandra Roussel noted that a discussion paper was provided to members that outlined the proposed future role and scope of the CSG. The proposed future role of the CSG would be:

    • oversight of the operation of the ATO consultation framework
    • evaluation of the effectiveness of ATO consultation activities
    • a future view of matters on the horizon to see what is coming and whether/how consultation might support the impacts on the tax and superannuation systems for the community.

    Sandra Roussel advised that the CSG discussion paper was provided to the ATO Stewardship Group Co-chairs for their feedback.

    Sandra Roussel asked CSG members for their feedback on the CSG’s proposed future role. Members noted:

    • there should also be a focus on current or outstanding consultation activities rather than focusing only on completed consultation activities
    • their concerns about ensuring the relationship between the CSG and the ATO Stewardship Groups is well-understood
    • that the future role should reflect the contribution of Treasury and the Board of Taxation.

    Sandra Roussel noted the current CSG Charter will be reviewed and redrafted to align with the refreshed role of the CSG. The revised draft CSG Charter will be provided to CSG members seeking their feedback before final endorsement.

    Action item

    CSG 1907/1

    Due date

    11 November 2019 CSG meeting

    Responsibility

    CSG secretariat

    Description

    Review and redraft CSG Charter for members’ feedback

     

    ATO to review and redraft current CSG Charter to align with the refreshed role of the CSG. The revised draft CSG Charter is to be provided to CSG members for their feedback before final endorsement.

    Outcomes from Special Purpose Working Groups for 2018-19

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

    The ATO provided members with a report of the outcomes achieved by the special purpose working groups in 2018-19. A snapshot of the status of the special purpose working groups as at 28 June 2019 was also provided for members’ information.

    Sandra Roussel noted that the report provides:

    • visibility of the range of topics and issues the groups consult and engage on
    • insight into the roles of the groups in the ATO’s consultation framework
    • an opportunity to identify topics/issues which may have synergy or significance in the broader consultation landscape.

    Members noted that:

    • an Assistant Commissioner must approve the creation of the group
    • some groups appear to be more in the nature of stakeholder groups based on the stated purpose
    • special purpose groups should have a limited life with a proposed closing date required for the group
    • it would be valuable to provide CSG members with details of the current members of each group.

    Sandra Roussel and the Consultation Hub will undertake an assessment of the groups in conjunction with the chairs. This assessment would:

    • consider the stated purpose of each group and whether it is correctly categorised as a special purpose group
    • identify an appropriate end date for groups where this currently is not provided
    • review existing end dates for the remaining groups.

    The results of these assessments will be provided to CSG members at the 11 November 2019 CSG meeting.

    Action item

    CSG 1907/2

    Due date

    11 November 2019 CSG meeting

    Responsibility

    ATO Consultation Hub

    Description

    Assessment of special purpose working groups

     

    The Consultation Hub to undertake an assessment of the special purpose working groups to review the stated purpose, category and the end dates of the groups. The result of these assessments to be provided to CSG members at the 11 November 2019 CSG meeting.

    Report on ATO Consultation activity

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

    A report on ATO consultation activity from April 2019 to June 2019 was provided for members’ information outlining details of new matters raised and completed matters for consultation. The report included information on draft public advice products released for consultation and the release of final public advice and guidance products. The report was provided for information with matters to be discussed by exception.

    Insights from Stewardship Groups Co-chairs’ meetings

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

    Sandra Roussel briefed members with an update from the ATO Stewardship Groups Co-chairs’ meeting held on 1 July 2019. The key messages from the meeting were provided to CSG members for their information.

    The Stewardship Groups Co-chairs discussed the proposed refreshed role and scope of the CSG, action items from the external Co-chairs meeting on 6 December 2018 and insights from the Stewardship Groups.

    The Co-chairs agreed to a standardised charter to be used across Stewardship Groups as well as a statement that outlines the role of Co-chairs.

    Sandra Roussel noted we are working at providing more visibility about the Stewardship Groups to the ATO Executive. This is likely to be a biannual briefing to the ATO Executive by Second Commissioner Andrew Mills (NTLG Co-chair) and Chief Operating Officer Jacqui Curtis (CSG Co-chair).

    Report on the findings of Consultation Effectiveness Measurement for Stakeholder Relationship and Special Purpose working groups

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

    A report was provided to members with the key findings from the Consultation Effectiveness survey that was undertaken in late 2018 and early 2019.

    Sandra Roussel noted:

    • the overall responses on the effectiveness of the groups were generally positive although there was a low response rate to the survey
    • ATO members perceived their input differently to how the external members viewed their input
    • external members’ comments demonstrated the high value placed by members on being a part of the group.

    The members of the groups noted some opportunities for improvement regarding the:

    • clarity and communication of the group’s purpose, work and outcomes
    • diversity of membership
    • proactive planning and efficient reporting for meetings.

    The ATO Consultation Hub will be exploring ways to implement some of these opportunities.

    Feedback on recently completed consultations

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    Sandra Roussel provided members with some feedback from participants and consultation leads in recently completed consultations. The feedback received was positive. Consultation leads noted that early engagement with stakeholders before the first draft of a public advice and guidance product was issued, improved outcomes.

    The ATO noted that it is considering how to better evaluate the effectiveness of public advice and guidance once it has been issued.

    Proposed consultations

    Kathryn Davy, Principal Adviser, Corporate and International Tax Division, Revenue Group, Treasury; Lynn Kelly, Interim Chief Executive Officer, Board of Taxation; Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance, ATO

    Members were provided with updates from Treasury, the Board of Taxation and the ATO on any proposed future consultations.

    Treasury

    Treasury provided a summary of Treasury consultations undertaken or completed from April 2019 to July 2019 to members for their information. Kathryn Davy noted that due to the election and alignment of Ministerial responsibilities, a small number of consultation activities have been undertaken since the 4 April 2019 CSG meeting.

    Board of Taxation

    Lynn Kelly noted that the Board of Taxation (the Board) is finalising a number of current projects including the ‘FBT compliance cost and international practice review’ and the ‘Review of the Voluntary Tax Transparency Code’. The Board is consulting on the ‘Review into granny flat arrangements’ while being conscious of the broader government processes that are considering elder abuse issues. There have been a number of Sounding BoardExternal Link ideas raised with themes around simplification (fringe benefits tax, deductions, etc) and superannuation issues.

    The Treasurer appointed Dr Julianne Jaques as Acting Chair of the Board for a period of three months from 11 July 2019. Members expressed their interest to know the direction of the Board once a new Chair is appointed. CSG members acknowledged the significant contribution that Mr Michael Andrew, AO made through consultation to improve the design of the tax system.

    ATO

    Andrew Orme noted there is ongoing work regarding the GST financial supplies with a draft ruling released on creditable purpose in the banking industry. The next phase of that work is to provide further guidance for apportionment issues. Targeted consultation will be undertaken shortly on the proposed draft ruling on Section 100A for ordinary family commercial dealings. The ATO is expecting that public consultation will be undertaken in the near future regarding professional firms profit allocation guidelines.

    The following matters were discussed:

    • Application of CGT Event D1 to Infrastructure sub-projects – Michelle de Niese noted the Corporate Tax Association has had discussions with the ATO. The law could potentially give rise to double taxation and that this is being managed by the ATO with comfort letters. Michelle de Niese suggested that, for transparency, this may be able to be managed with the issue of a Practical Compliance Guideline (PCG). The ATO noted it would consider this suggestion although the ATO needs to understand the extent of the impact on taxpayers.
    • Central Management Control – Andrew Orme noted that the ATO has heard from a number of sources there are a number of issues the ATO may need to explore further to clarify possible ambiguity in the advice and guidance products the ATO has released. Clint Harding to provide further examples for consideration to include in the advice and guidance.

    Overview of future consultation on public advice and guidance for work related expenses, including discussion in relation to travel expenses ruling (Draft Taxation Ruling TR 2017/D6)

    Andrew Orme, Deputy Chief Tax Counsel, Public Advice and Guidance, ATO; and Trent Jakubowski, Director, Individuals and Intermediaries

    Andrew Orme noted that over the last two years the ATO has focussed on providing guidance on work-related expenses on its website. Andrew Orme provided an overview of the information available for work-related expenses.

    The ATO has recently updated around 30 to 40 occupation guides and has published new guidance Employees guide for work expenses for which the ATO has received positive feedback from the community. The ATO will now focus on providing advice and guidance and instructional products including specific rulings that support work-related expenses, eg travel expenses. There will be broad consultation undertaken with industry groups, tax professionals and the professional associations.

    Michael Croker raised concerns about the delay of finalising the Draft Taxation Ruling TR 2017/D6 Income tax and fringe benefits tax: when are deductions allowed for employees’ travel expenses? Andrew Orme noted that finalising the draft TR is a high priority issue. The ATO is reviewing the draft TR and work is well underway on redrafting the guidance into separate components as a suite of products. Stephanie Caredes noted The Tax Institute would like to be involved in the consultations regarding the proposed advice and guidance.

    Potential new matters for consultation and environmental scan of impacts on consultation

    All members

    This item provides members with the opportunity to identify potential matters that may benefit from consultation and to discuss any current or future environmental matters that may impact on consultation.

    Members raised the following matters for consideration:

    • Whistle-blower protections – support products are needed for employers who receive a disclosure as well as for professional associations so they can advise clients. It was suggested the ATO may be able to share any products they have developed
    • Black Economy taskforce update on measures that are legislated would be valuable
    • Digital economy/Digitisation will have a big impact in the future
    • Controlled Foreign Companies (CFC) rules – there was work undertaken by Treasury on modernising the CFC rules almost ten years ago. A future review of the rules should consider the work that has been previously undertaken.

    ATO consultation stakeholder register

    Co-chair Michelle de Niese, Executive Director, Corporate Tax Association

    Michelle de Niese provided members with an overview of the ATO consultation stakeholder register, including:

    • the ATO Consultation Hub established a stakeholder register following the 2013 review of the ATO’s consultation arrangements. As at September 2018 there were 359 registered stakeholders
    • the stakeholder register has had limited use since it was first created as consultation participants are usually identified by the relevant ATO business area involved with the consultation
    • the information on the register is generally not granular enough to identify the appropriate field or area of contribution that a stakeholder could provide.

    Michelle de Niese noted a proposal to decommission the stakeholder register. This would include:

    • contacting the registered stakeholders advising them they can review the open consultation matters page to engage in specific consultation matters of interest to them
    • Consultation matters are published on the ATO’s website with the ATO officer’s contact details so interested consultation participants can get involved in relevant consultation.
    • CSG members to identify appropriate stakeholders for new consultation matters.

    Members were supportive of the proposal to decommission the ATO consultation stakeholder register.

    CSG membership refresh

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    Sandra Roussel noted that with the review of the role and scope of the CSG, it is considered that a review of the CSG membership should also be undertaken. The CSG membership has not changed since the CSG was established in 2013. A membership refresh will provide benefits by having a new and fresh perspective to look at the ATO’s consultation arrangements.

    Members noted that association representation on the CSG should remain with independent and tax practitioner members to be rotated.

    Sandra Roussel advised that she will bring a proposed approach for the CSG membership refresh, to be discussed at the next CSG meeting.

    Action item

    CSG 1907/3

    Due date

    11 November 2019 CSG meeting

    Responsibility

    Sandra Roussel, Assistant Commissioner, Enterprise Strategy and Design

    Description

    Proposed approach for CSG membership refresh

     

    Sandra Roussel to bring a proposed approach for the CSG membership refresh, to be discussed at the next CSG meeting.

    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 1904/1 – Discussion paper on proposed refreshed role and scope of CSG
    • Action item CSG 1904/2 – Actions from 6 December 2018 Stewardships Groups’ External Co-chairs’ meeting regarding external Co-chairs’ role and responsibilities
    • Action item CSG 1904/3 – Invitation to Michelle de Niese and Grant Wardell-Johnson to attend the next ATO Stewardship Groups’ Co-chairs meeting
    • Action item CSG 1904/4 – Observations and best practices when consulting with Treasury
    • Action item CSG 1904/5 – The ATO and Treasury to explore the ATO’s role within Treasury’s consultation process
    • Action item CSG 1904/6 – ATO’s next steps for Black Economy measures.

    Action item CSG 1904/5 – The ATO and Treasury to explore the ATO’s role within Treasury’s consultation process

    Louise Clarke, Deputy Commissioner, Policy Analysis and Legislation, provided an oral update for Action item CSG 1904/5. Louise Clarke noted the ATO and Treasury have been working closely together and that the work for this action item is still in progress.

    Members agreed that action item CSG 1904/5 remains open and action items CSG 1904/1, CSG 1904/2, CSG 1904/3, CSG 1904/4 and CSG 1904/6 can be closed.

    Attendees

    Attendees are listed below.

    Organisation

    Members

    ATO

    Andrew Orme, Public Advice and Guidance

    ATO

    Louise Clarke, Policy Analysis and Legislation

    ATO

    Robyn Theacos, Enterprise Strategy and Design

    ATO

    Sandra Roussel, Enterprise Strategy and Design

    Board of Taxation

    Lynn Kelly

    Chartered Accountants Australia and New Zealand (CA ANZ)

    Michael Croker

    Corporate Tax Association

    Michelle de Niese (Co-chair)

    Independent member

    Keith James

    Institute of Public Accountants

    Tony Greco

    Law Council of Australia

    Clint Harding

    The Tax Institute

    Stephanie Caredes

    Treasury

    Kathryn Davy

    Apologies

    Apologies are listed below.

    Organisation

    Members

    ATO

    Jacqui Curtis (Co-chair), Chief Operating Officer

    Association of Superannuation Funds of Australia (ASFA)

    Glen McCrea

    Tax practitioner

    Keith Clissold

      Last modified: 02 Sep 2019QC 60043