• Consultation Steering Group meeting minutes 15 August 2014

    Meeting details

    Venue:

    Australian Taxation Office – Melbourne

    O’Connor Conference Room L9.715

    747 Collins Street, Docklands

    Co-chair:

    Andrew Mills, Second Commissioner, Law Design and Practice

    Co-chair:

    Tania Constable, Chief Adviser, Personal and Retirement Income Division, Revenue Group

    Attendees

    Jeremy Hirschhorn

    Chief Tax Counsel, Tax Counsel Network

    Andrew England

    First Assistant Commissioner, Integrated Tax Design

    Erin Holland

    Deputy Commissioner, Compliance Group

    Peter Coakley

    Assistant Commissioner, ATO Corporate

    Deepti Paton

    Adviser, Tax Industry Liaison and Consultation

    Andrea Allen

    (Secretariat)

    Tony Greco

    Institute of Public Accountants

    Michael Croker

    Institute of Chartered Accountants in Australia

    Frank Drenth

    Corporate Tax Association

    Robert Jeremenko

    The Tax Institute

    Mark Friezer

    Law Council of Australia

    Keith Clissold

    Association of Taxation and Management Accountants

    Mark Morris

    CPA Australia

    Andrea Slattery

    SMSF Professionals Association of Australia

    Apologies

    Keith James

    Board of Taxation

    Peter Strong

    Council of Small Business, Australia (COSBOA)

    Guest attendees

    James O’Halloran

    Deputy Commissioner, Indirect Tax

    Anne Edwards

    Acting First Assistant Commissioner, Review and Dispute Resolution

    Catherine Willis

    Review and Dispute Resolution

    Item 1: Progressing identified matters/recap on action items

    Members agreed to close the following action items.

    CSG 142/3

    Consultation on legislative protection for taxpayers that have relied on ‘do not proceed’ tax and superannuation measures.

    CSG 235/1

    Members acknowledged that this consultation had concluded satisfactorily and acknowledged that next steps were for the Government to consider.

    Post-meeting update: Members of the Working Group on the Feasibility of Statutory Remedial Powers received a communication from the ATO on 15 August 2014 clarifying that the Statement of Intent that resulted from this consultation will not be published on the ATO website, and any decision to provide such a power to the Commissioner of Taxation is now a matter for Government. As such, the Statement of Intent remains subject to the relevant Confidentiality Agreement.

    CSG 142/10

    Sharing the stakeholder register.

    CSG 142/11

    Status report on ATO consultation arrangements – out of scope matters

    Members agreed to address all other open action items during the course of the meeting via the agenda.

    Item 2: Scan of current tax and superannuation consultation matters

    Members noted that the consultation arrangements were functioning satisfactorily, though many participants were still acclimatising to the current arrangements which are a paradigm shift from the former structure.

    There was some ongoing reluctance to use the Consultation Hub as people still preferred to engage in conversation and use existing networks rather than communicate via forms. A member also noted that some people that are directed to the Consultation Hub may be choosing not to submit their issue if it seems relatively minor.

    People who might have otherwise raised matters directly with the ATO in the past seem to be bringing issues to the professional associations instead to progress.

    There is a need to maintain and improve communication in relation to consultation activities and to keep the community (including former members of NTLG sub-groups) engaged in the process.

    Action Item CSG 158/1

    ATO to consider the most effective manner by which to incorporate routine input from CSG members on the completeness and currency of the ‘matters for consultation’ register, including by potentially circulating proposed updates to this register before publication.

    Consultation leads should reconsider the need for confidentiality, especially where the consultation relates to a non-contentious matter or measure.

    A member recommended that a process be adopted whereby communications in relation to confidential consultations are agreed on between the consultation lead and participating organisations to ensure that the community is kept informed. Such communications could be included in association newsletters to members.

    The ATO noted the need to ensure that communications and consultations in the public domain focus on achieving productive and sensible solutions. For example, potential legal interpretations in documents such as ATO discussion papers should be workable and should not be academic or theoretical.

    Consultation on red-tape reduction in the tax and superannuation systems

    Members noted that consultation on red-tape reduction measures appeared fragmented across the tax and superannuation systems as associations are making representations to a number of different organisations, such as Treasury, the ATO and the Board of Taxation in pursuit of similar goals.

    Treasury noted that consultation on red-tape reduction was occurring in stages – that is:

    • identifying ideas
    • prioritising
    • considering potential avenues to progress
    • implementation.

    Members agreed that the Superannuation Industry Advisory Group and National Taxation Liaison Group (NTLG) are the best forums to consider red-tape reduction ideas on a tax or superannuation system-wide basis, but that the Steering Group should be kept informed of consultation efforts and should be made aware of existing efforts to co-ordinate. [Ref: Action Items CSG 235/4 and NTLG 1906/8.]

    Action Item CSG 158/2

    • ATO to provide the CSG with details on how consultation on red-tape reduction ideas in relation to the tax and superannuation systems is being co-ordinated between the ATO, Board of Taxation and Treasury.
    • Treasury to consider whether details of co-ordination between the Treasury portfolio and other Government activities can be shared with the CSG.

    Impact of delays in resolving consultation matters and compliance activity

    A member noted that the impact of long consultation periods on compliance activity should be noted and carefully considered. For example, the ATO is currently taking compliance action on the basis of draft rulings TDs 2014/D2 to D6, though progress towards finalisation of these rulings has been slow.

    Members agreed that whether compliance activity should proceed in such circumstances will depend on the circumstances of each case, and that consultation leads should be cognisant of the impact of delays in resolving consultation matters on compliance activity.

    Action Item CSG 158/3

    • ATO to investigate the intensity of compliance activity that is ongoing in relation to the draft TDs 2014/D2 to D6.

    Transfer pricing

    Members noted concerns in relation to the ATO’s willingness to engage in consultation on the draft transfer pricing rulings via the Division 815 Working Group.

    These concerns related to a range of factors including:

    • The lack of capacity for external participants to make meaningful contributions to the most recent meeting due to materials being provided on the day rather than prior to the meeting
    • Ongoing concerns over the ATO’s draft view on the application of section 815-130 (TR 2014/D3). Members were of the view that the application of this section should be restricted to ‘exceptional circumstances’ as per the OECD Guidelines.

    Action Item CSG 158/4

    ATO to investigate the health of consultation arrangements in relation to the draft transfer pricing rulings and provide Steering Group members with an update.

    Current Tax Issues Entry System (‘TIES’) issues as at 31 July 2014 [Ref: Action Item CSG 235/5]

    Following on from discussions at the May Consultation Steering Group meeting, members acknowledged the role of the Steering Group in identifying TIES matters which could be resolved administratively.

    Action Item CSG 158/5

    Members to circulate the list of current TIES issues to their broader membership with a view to identifying matters which could be resolved via either a pragmatic interpretation of the law or an administrative solution (rather than via a legislative fix) by 12 September 2014.

    Consultation matters that have been ongoing for six months or longer (Attachment 3) [Ref: Action Item CSG 235/8]

    Members noted that this attachment would benefit from embedded links to the relevant consultation matter on www.ato.gov.au, estimated ‘completion dates’ for matters that are not long term projects and further details on the reason for delay.

    Members acknowledged that identification of matters on this list was worthwhile but that time to resolution was only one factor to take into account when considering the health of a consultation project.

    Action Item CSG 158/6

    ATO to take feedback on the document summarising consultation matters that have been ongoing for six months or longer into account and implement improvements as feasible ahead of the next Consultation Steering Group meeting.

    Matters relating to the trusts provisions that may reduce compliance costs if addressed [Ref: Action Item CSG 235/2]

    Members agreed to progress consultation on matters relating to the current trust provisions via two consultation groups focussed (primarily) on investment trusts and discretionary trusts, respectively.

    The work-plan for these groups will be drawn from the list compiled by the ATO and CSG members of issues with the current trust provisions that would likely reduce compliance costs if addressed.

    Membership of these groups should be determined via nominations from Steering Group members and representatives from relevant industry bodies including those represented on the current Trusts Group, that is, Property Council of Australia, Financial Services Council and the Australian Financial Markets Association. Steering Group members agreed that nominations to each working group should be limited to one representative per organisation in order to in order to facilitate effective discussions and consultation.

    Current members of the Trust Reform and Compliance Group should be informed of the change in arrangements.

    Action Item CSG 158/7

    • ATO to circulate a work-plan and estimated time-commitment for each consultation group to Steering Group members and relevant industry associations by 29 August 2014.
    • Steering Group members to revert with nominations to either or both Working Groups by 12 September 2014.
    • ATO to invite relevant industry associations to also submit nominations by 12 September 2014.
    • Current members of the Trust Reform and Compliance Group to be informed of new consultation arrangements.
    • Consultation programs to commence in line with each work plan.

    A member noted that the requirement to make determinations as to present entitlement to trust income by 30 June was causing ongoing difficulties for taxpayers and that an effective restoration of the ATO’s earlier administrative position would reduce red-tape significantly.

    Action Item CSG 158/8

    Treasury to investigate and report on the current state of progress of legislative reform to alter the date by which trustee resolutions need to be made to ensure a beneficiary is presently entitled to trust income.

    A member noted some ongoing issues with the new Intergovernmental Agreement between Australia and the United States of America in relation to the implementation of FATCA (the US Foreign Account Tax Compliance Act).

    Action Item CSG 158/9

    SPAA to provide ATO with details of a member that has expertise in relation to FATCA implementation to facilitate clarification and progress on the issue raised.

    Outstanding consolidation issues and the 2015 Treasury consolidation review [Ref: Action Item CSG 235/3]

    Members agreed that the current approach to tax law design in relation to consolidation has resulted in complex legislation that frequently creates odd outcomes, and that legislating changes to existing laws can frequently result in unintended consequences.

    On this basis, members agreed that a new approach to tax law design in this space was worthy of consideration and expressed cautious support for developing durable policy objectives enacted within the existing law framework to address the various areas of uncertainty in the regime.

    Treasury noted that the consolidation review was not planned to commence until after the review of Taxation of Financial Arrangements had concluded.

    Action Item CSG 158/10

    • Members to circulate the list of outstanding consolidation issues amongst their broader membership with a view to testing the completeness of the list and responding with any proposed additions or alterations by 12 September 2014.
    • Treasury to keep members abreast of developments in planning the 2015 consolidation review.

    Item 3: New matters

    Matters for ATO guidance following Government decision not to proceed with certain tax and superannuation measures

    Members noted that consideration should be given to the need for education products in relation to the ATO’s current administrative position following the Government’s decision not to proceed with certain outstanding tax and superannuation measures.

    Action Item CSG 158/11

    • Members to revert with nominations of areas of the law in relation to which there is uncertainty on the ATO’s administrative position following the Government’s decision not to proceed with certain tax and superannuation measures by 12 September 2014.
    • Members and ATO to consider whether the production of ATO guidance or other education products would be appropriate in relation to such nominated matters.

    Consultation on ‘Reinventing the ATO’ and other connected matters

    Members noted that it would be useful for external consultation participants to ‘see the whole picture’ of proposed changes within the ATO in line with the new vision. This includes but is not limited to planned changes in electronic interactions.

    The ATO provided an overview of workshops currently being conducted with tax practitioners to define the future client experience and the broader work of the 2020 Program Office.

    Members agreed that there was a need to work collaboratively to ensure that stakeholders in the tax system understand each other’s collective future and that the ATO Tax Practitioner Advisory Group (‘ATPAG’) and the NTLG were best placed to lead these discussions.

    Action Item CSG 158/12

    Members to maintain a watching brief on consultation on Reinventing the ATO, including as it relates to developments in the ATO / tax professional relationship, with a view to noting the level of comfort with these consultation efforts.

    ATO guidance on Part IVA

    A member noted that additional guidance in relation to the manner in which the ATO will seek to apply the revised Part IVA was sought by tax professionals. While tax professionals considered the minutes of the NTLG consultative workshop on Part IVA amendments to be informative, these minutes did not provide sufficient understanding of how the ATO will seek to apply the provisions of Part IVA in practice.

    Action Item CSG 158/13

    ATO to clarify request for additional ATO guidance on Part IVA via out of session discussions with CPA Australia.

    Early identification of systemic industry issues

    The ATO outlined the intent to move towards an ‘early resolution’ model for industry-specific issues, based on an early flagging of issues (ahead of identification via compliance action) and a mutual understanding of the approaches that are low-risk in the ATO’s view, that is, where taxpayers can ‘swim between the flags’).

    Action Item CSG 158/14

    Members to consider how this group can play a role in early identification and resolution of systemic industry issues.

    Additional ‘new matters’ for consultation

    Action Item CSG 158/15

    Members to consider additional interpretational, law design or tax policy matters (including nominations for rulings topics) and respond with nominations by 26 September 2014.

    Consultation on review of public ATO guidance and advice

    The ATO noted that consultation is about to commence in relation to an ATO review of public advice and guidance products and processes. Consultation is due to span across a range of market segments and tax professionals.

    Action Item CSG 158/16

    • ATO to circulate proposed external consultation plan in relation to the ATO’s review of guidance products and processes by 22 August 2014.
    • Members to revert with additions or suggested changes to this plan by 29 August 2014.

    Item 4: Health of the consultation arrangements

    ATPAG and consultation with tax practitioners

    Members noted that progress on consideration of the ATO/tax professional relationship following the Drivers for Change National Tax Practitioner Conference appeared to be fragmented.

    Members noted that tax professionals were concerned about the impact of technological change on their practice following the change program, ongoing problems with the Tax Agents Portal and recent problems with the website.

    The ATO acknowledged tax practitioner concerns in relation to the transition from ELS to SBR, the 85% electronic lodgement on-time requirement and the reliability of the Tax Agents Portal and outlined plans to progress solutions in these areas in conjunction with the ATPAG and Lodgment Working Group.

    The ATO is aware of the need to ensure the benefits of proposed changes in electronic interactions are realised in terms of reduced red-tape. The costs of transition and the role of critical mass in bringing down these costs were acknowledged.

    Members were of the view that these consultations with tax practitioners were progressing satisfactorily and that the group should be kept informed of progress.

    Action Item CSG 158/17

    ATO to add CSG members to mailing list of recipients of the program of regional ATO events.

    Effectiveness of consultation on ATO management of tax disputes

    The ATO consults on management of tax disputes via the Dispute resolution working group and the Legal Practitioners Roundtable. Consultation is also conducted via market-segment specific forums (such as the Large Business Liaison Group) in relation to specific initiatives such as Independent Review.

    Via these forums, the ATO seeks to ensure a mechanism for the early identification and collaborative resolution of issues and a mechanism by which to advance significant initiatives in relation to both products and processes in collaboration with key stakeholders.

    Matters that are currently being actively considered via the Dispute resolution working group and the Large Business Liaison Group include new codes of Settlement materials, dispute prevention strategies and reconsideration of the Test Case Litigation Program.

    Members were of the view that the consultation arrangements in relation to the ATO’s tax dispute prevention, management and resolution efforts were functioning well.

    GST Advisory Group

    The ATO outlined the journey to date with regards to the establishment of the GST Advisory Group under the new consultation arrangements which was essentially a new group to bring together.

    This advisory group was set-up to function as a high-level stewardship committee for the GST product. This is in contrast to the former NTLG GST sub-committee, which was a much larger group which had a strong technical discussion focus.

    The transition to the new consultation arrangements has been challenging for a number of key stakeholders, and it has been difficult to identify issues of a systemic nature for consideration by the Group however the progress has been positive.  

    In November 2013 to assist in the transition from the former NTLG GST sub-committee, the ATO wrote to the major professional associations offering to attend any GST or indirect tax forums that association had in place to discuss technical issues for specific agenda items. This has been taken up as associations have revisited their own consultation arrangements with the ATO.

    While the ATO sees high value in maintaining a stewardship forum in this sector, the ongoing viability of the GST Advisory Group will depend on the capacity and willingness of members to participate and contribute to the identification of major or systemic issues impacting on GST policy, legislation or administration. The ATO was open to considering the frequency at which this Group meets.

    Members observed that while this group faced some challenges in transitioning to the new consultation arrangements, stakeholders in this sector were broadly satisfied with the current state of affairs. Members noted that the June 2014 workshop had been a positive step in the development of this group and hoped that this momentum would continue into the October 2014 meeting and beyond. Members noted the importance of maintaining and resourcing a stewardship committee in this sector.

    Members noted concerns with resourcing in relation to GST at Treasury and offered to nominate experts in this area to assist Treasury by providing background and context in relation to the current state of legislative affairs.

    National Taxation Liaison Group

    Members noted that little progress had been made in the June 2014 NTLG meeting with regards to achieving a more targeted focus on a smaller number of strategic outcomes.

    Members agreed that ensuring the NTLG functions in line with the goals set at the March 2014 workshop was a shared responsibility and that all parties were responsible for undertaking out of session research and preparation to progress set goals.

    Members noted that it was important that significant NTLG projects (such as the project on safe harbours) resulted in mutually beneficial outcomes, and that such achievements would play a large role in making the NTLG a more strategic, outcomes-focussed forum.

    Members agreed that it was important to consider whether the NTLG was the right forum for submitted agenda items, and for NTLG members to work with the NTLG Secretariat to ensure items are referred to an appropriate alternate forum or other processes for resolution if that course of action is more appropriate.

    Some members noted that all NTLG members should actively contribute to the operation of the group, that is, should not be ‘passengers’, and that the current size of the membership impacted on the function of the group. However, members were of the view that other measures to increase contributions to the NTLG should be pursued ahead of reducing the number of members.

    Principles to gauge effective consultation on tax and superannuation measures [Ref: Action Item CSG 235/7]

    Members agreed to review and provide feedback on the draft document entitled Principles to gauge effective consultation on tax and superannuation measures which is intended to aid in the evaluation of the effectiveness of specific consultations as well as the CSG.

    Members noted that effectiveness measures should be sufficiently stringent to allow critical evaluation.

    Action Item CSG 158/18

    Members to provide feedback on the draft document entitled Principles to gauge effective consultation on tax and superannuation measures by COB 12 September 2014.

    Other business

    Treasury’s legislative work program

    Members discussed Treasury’s draft legislative program from Spring 2014 until Winter 2015. This draft program sets out the proposed time-line for the progress and introduction of a range of tax and superannuation measures.

    Treasury encouraged members to consult on the draft program with trusted advisors within the association to identify measures that were of high-importance, including where such measures were not currently on the program.

    Action Item CSG 158/19

    Members to provide feedback to Treasury on the draft legislative program by 12 September 2014.

    Meeting close

    The Co-Chairs closed the meeting at 2.30 PM.

    The next meeting of the Consultation Steering Group will be held on 24 October 2014 in Sydney

      Last modified: 21 Jan 2015QC 43894