Consultation Steering Group Minutes - 12 February 2015 meeting

Meeting details


Australian Taxation Office, 747 Collins Street, Melbourne CBD


Andrew Mills, Second Commissioner, Law Design and Practice, ATO


Paul Horrocks, Principal Adviser, Corporate and International Tax Division, Revenue Group, Treasury


Jeremy Hirschhorn

Chief Tax Counsel, Tax Counsel Network, ATO

Andrew England

First Assistant Commissioner, Integrated Tax Design, ATO

Erin Holland

Deputy Commissioner, Tax Practitioner and Lodgment Strategy, ATO

Peter Coakley

Assistant Commissioner, ATO Corporate, ATO

Jorge del Busto

Senior Executive Advisor, Office of the Chief Tax Counsel, ATO

Melissa Fairhall

Acting Secretariat, ATO

Keith Clissold

Association of Taxation and Management Accountants

Mark Morris

CPA Australia

Michelle de Niese

Corporate Tax Association

Lynda Brumm

Chartered Accountants Australia and New Zealand

Adrian Varrasso

Law Council of Australia

Andrea Slattery

SMSF Association

Stephanie Caredes

The Tax Institute

Keith James

Independent expert


Michael Croker

Chartered Accountants Australia and New Zealand

Peter Strong

Council of Small Business of Australia

Tony Greco

Institute of Public Accountants

Robert Jeremenko

The Tax Institute

Additional guest attendees

Brenton Goldsworthy

Acting General manager, Macroeconomic Division, Treasury (Agenda item 2)

Michael Cranston

Deputy Commissioner, Private Groups and High Wealth Individuals, ATO via phone (Agenda item 4F)


Item 1: Meeting open - attendance and apologies

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Co-Chair Andrew Mills noted the apologies from Michael Croker, Robert Jeremenko, Peter Strong, Tony Greco and a representative from the Board of Taxation and the following substitutions:

  • Lynda Brumm, from the CAANZ Tax Committee, attending for Michael Croker; and
  • Stephanie Caredes, Tax Counsel at TTI, attending for Robert Jeremenko.

Mr Mills also noted that a Board of Taxation representative was unable to attend, as the Board had a concurrent induction session for new members in Sydney. He also noted that additional attendees were Brenton Goldsworthy (from Treasury) for item 2 and Michael Cranston for item 4F.

Item 2: Environmental scan

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Tax reform and other updates from Treasury

Co-Chair Paul Horrocks noted that the new Secretary to the Treasury, John Fraser, was very supportive of consultation with the private sector, assisted with the engagement of private sector secondees to the Treasury and the potential opening of offices in Melbourne and Sydney.

Consultations on the Tax White Paper had proceeded through informal meetings with peak bodies, the business community and the States and Territories and the next step was the issuing of a discussion paper in the not too distant future, followed by the issuing of a Green paper on options for tax reform and a White Paper with the Government’s proposals for tax reform issued before the next federal election.

Treasury was proceeding with the deregulation agenda, engaging in regular meetings with the Board of Taxation and seeking views from the Board’s Advisory Panel on opportunities and priorities for deregulation initiatives.

Regarding progress on the legislative agenda, exposure drafts were being released on amendments to the Offshore Banking Units legislation and for the implementation of the 3rd phase of the Investment Manager Regime. Draft legislation for the Managed Investment Trust regime was being introduced by mid-April 2015, for a start on 1 July 2015, although the starting date could be reconsidered. Draft legislation for Collective Investment Vehicles, including new corporate and limited partnership vehicles, was currently listed for the Spring sittings.

The Government is conducting targeted consultations on limited consolidation amendments at the moment, with the potential for them to be extended more broadly over the next weeks. The amendments deal with four areas, one of which is interactions with the Taxation of Financial Arrangements (TOFA).

A broader policy review is scheduled to commence in the second half of 2015. While the scope of the review has not been settled, Treasury anticipates it will mainly focus on progressing the recommendations of the Board’s 2012 and 2013 reviews. This depends on the progress on TOFA amendments and the potential impact of the Tax White Paper.

Members conveyed the importance of an early release of the discussion paper on tax reform and agreed to make representations to Government in this respect. It was also noted the scope for a collective approach from the professional bodies in response to the discussion paper.

Red tape reduction update

Erin Holland noted that the ATO had lodged its final report for red tape reductions in 2014 totalling $318 million. These included initiatives related to the administration of the tax system such as: myTax for streamlined individual income tax returns; changes to the pay as you go instalments system, which had taken out 560,000 taxpayers from the reporting requirements; a rationalisation of the ATO website to improve the client experience; myGov to facilitate the lodgment of income tax returns through E-tax for pre-fill or myTax; the introduction of the small business newsroom and the return exemption for the lodgment of Mineral Resource Rent Tax.

It was noted that ATO stewardship committees had provided input for the compilation of the report.

Macro trends

(Presentation by Brenton Goldsworthy, Acting General Manager, Macroeconomic Division, Treasury)

Brenton Goldsworthy provided a presentation on the context and challenges that the Australian economy faces as it continues its transition from mining investment led growth towards other drivers of growth.

As part of its presentation, Mr Goldsworthy noted the recent downward revisions to the outlook for global growth, the substantial decline in the oil price, and the role of the exchange rate as a shock absorber. He also noted by 2015-16 real GDP growth is expected to have been below trend for 7 of the last 8 years, with the consequent emergence of spare capacity. Low growth in wages and declining terms of trade are contributing to relatively low nominal GDP growth.

Mr Goldsworthy also noted that the composition of the tax base means that tax growth is more volatile than nominal GDP growth, reflecting the incidence of tax sourced from volatile components of GDP, such as profits and capital gains.

Other matters of significance

Members noted the need to ensure there are no misrepresentations in the context of the current public debate on corporate tax and the sources of revenue. It was noted that the Senate inquiry into corporate tax avoidance is an indication of the interest for an informed public debate in this area. It was also noted that quality research by an independent entity might assist in addressing information gaps in this area and that the collective voice of members would contribute to enhance confidence in the tax system.

Item 3: Update of action items

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Before discussing this item, it was noted that draft Minutes of the 24 October 2014 CSG meeting had been distributed for comments by members and no requests for changes were received. It was requested that for future meetings, draft minutes of the preceding meeting be submitted out of session for their final confirmation.

1. The following action items were accepted as being in progress.

CSG 158/5

TIES register

For TIES issue 0001/2013 Unintended double taxation of employee share schemes under certain circumstances, guidance will be provided once law amendments are passed. For 0002/2013 Treatment of the transfer of a bundle of shares in a company roll-overs when dealing with CGT event A1 which refers to ‘a asset’ or ‘all the assets of a business’, an appropriate safeguard is being explored to reduce red tape.

CSG 2410/6

Visibility of consultations with industry associations

An update will be provided at the April 2015 CSG meeting.

2. The following action items were accepted as being completed.

CSG 158/11

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

Members agreed that the workshop held on 9 February 2015 had been very productive in terms of identifying those measures that could be progressed administratively. It was noted that a status update will be provided on the ATO’s website, with hyperlinks to relevant documents.

CSG 158/13

ATO Guidance on Part IVA

The target is to provide widely available guidance. The Chief Tax Counsel is making three public presentations to assist in this respect.

CSG 2410/1

Compliance activity on draft TDs under consultation

TD 2004/D2 is very close to being finalised, focussing on cost base issues and excluding complexities relating to carry forward losses.

TD 2004/D3 also required grappling with difficult policy issues. The aim is to deal fairly with taxpayers, acknowledging that some would be disadvantaged.

Recognising the very limited number of taxpayers potentially affected, consideration is being given to whether a Determination remains the preferred form of ATO guidance. Michelle de Niese and Mark Morris will follow up with the aim of identifying potential affected taxpayers.

CSG 2410/2 and CSG 2410/3

Members feedback on ATO approach to 2015 Treasury Consolidation Review / 2015 Treasury Consolidation Review

As noted earlier, Treasury’s Consolidation review is scheduled to commence in the second half of 2015. This timeline depends on the progress on Taxation of Financial Arrangements amendments and the potential impact of the Tax White Paper.

CSG 2410/4

Regional ATO events

Good feedback was received on the new program of regional events, with oversubscribed participation at events. A webinar presentation was also introduced reaching 1200 addresses with over 5,500 participants. Consultation will follow with ATO Tax Practitioner Advisory Group, including on the potential to use surveys.

CSG 2410/5

Consideration of additional interpretational, law design or tax policy matters for consultation

It was noted that the submitted suggestion was already registered with the Consultation Hub.

CSG 2410/7 and CSG 2410/8

Draft effectiveness measures for consultation and Draft Consultation Steering Group Charter

It was noted that these items were scheduled for discussion and finalisation under Agenda item 4 at the CSG meeting on 12 February 2015.


Item 4: Health of consultation arrangements - broad oversight topics

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Post implementation review of the ATO’s consultation arrangements – Terms of Reference 4(A)

It was noted that the intention was to conduct the post-implementation review between March and June this year. Members were invited to provide comments on the draft terms of reference for the review.

Some members commented that there might be a role for education on how to locate and access the Consultation Hub, to encourage parties to volunteer for consultation processes. There was a need for the Hub to be seen as an open place.

There is a role for the professional bodies to check whether the appropriate parties are being included in consultations.

There was an acknowledgement that consultations are now more strategically focussed and targeted and that technology facilities are being used to assist consultations where a meeting in person is not essential.

It was suggested that the review should explore whether we are using technology in the most efficient way.

Other topics that members suggested should be covered by the review are whether:

  • there are system-wide dividends resulting from the activities of the oversight bodies;
  • there is clarity in the objectives of the consultations;
  • the right people are involved in consultations, including whether use is being made of the Consultation Stakeholder Register;
  • groups are of the right size to be effective;
  • timeliness is right, whether consultation groups had clearly defined outcomes and timelines with sunset clauses to deliver on the intended outcomes; and
  • there is a need for education activities to support the use of the new consultation arrangements.

It was also suggested that the terms of reference should ask for the review to assess the consultation arrangements against the effectiveness principles considered at the current CSG meeting.

Revised draft terms of reference would be distributed to CSG members on Monday 16 February for their comments before a revised version is submitted for consideration at the National Tax Liaison Group (NTLG) meeting on 4 March 2015.

Action item: CSG 1502/01

Due date: 16 February 2015

Responsibility: Assistant Commissioner Peter Coakley

Post-implementation review of the ATO’s consultation arrangements - Draft Terms of Reference

Assistant Commissioner Peter Coakley will circulate out of session, the revised draft Terms of Reference to members, incorporating views expressed at the 12 February 2015 meeting for further feedback. The revised version of this document will be presented to the 4 March 2015 meeting of the National Tax Liaison Group.

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Review of confidentiality in consultations 4 (B)

It was noted that, on reflection, the previous examples of ATO’s confidential consultations that were submitted to the December 2014 National Tax Liaison Group meeting, should not have had that restriction imposed. The ATO’s preferred approach is to be open and transparent, with no restrictions placed on the communication or dissemination of information. It is only in very limited and defined circumstances, as outlined in the proposed Consultation Guide, that confidentiality would apply.

It was also noted that the ATO’s proposed confidentiality agreement did not have references to the Crimes Act penalties where confidentiality breaches occur, as this was considered a disproportionate harsh deterrent. Rather, it was acknowledged that for breaches of the confidentiality agreement the most likely outcome would be to be barred from further consultations, a status which could be made publicly known. It was suggested that Treasury could adopt a similar approach.

Members suggested replacing the references to the Chatham House Rule in the Consultation Guide with a reference, as suggested by Keith James, to a consultation environment where, when there are particular sensitivities; the parties agree that what is being said by a participant cannot be disclosed without his or her permission.

Members also noted that the Consultation Guide should include a reference to the conflict of interest declarations that apply in consultations, precluding any personal or financial gain to be derived from the parties involved in consultations.

It was noted that in the case of Treasury, its consultations and the terms on which they are conducted, are approved by the Government on a case-by-case basis. Most of Treasury’s consultations relate to the consideration of policy issues or the drafting of Government legislation, which are circumstances noted in the Consultation Guide where confidentiality could apply.

Members noted that, to the extent possible, it would be desirable to have a common guide where confidentiality requirements apply to consultations.

Finalisation of:

Draft Consultation Steering Group Charter 4(C)

Members agreed to the proposed Consultation Steering Group Charter and that it be published on the ATO website.

Draft Principles of Effective ATO Consultation 4(D)

Members agreed to the proposed Principles of Effective ATO Consultation.

Update on key oversight items:

Discussion of template for assessing effectiveness of consultations by working groups 4(E)

Members noted that the templates provided useful information to assess the appropriateness of the consultation activities undertaken by the working groups and agreed that the CSG should provide direction with respect to the timeliness of the activities of the groups.

Consultation options for privately-owned groups and wealthy taxpayers 4 (F)

(Michael Cranston, First Assistant Commissioner, Private Groups and High Wealth Individuals attended via phone)

Michael Cranston presented this topic, noting there appears to be a need for a consultation group that allows the timely addressing of issues relevant to the privately owned and wealthy group population.

Members noted that the intended group could be described as closely held businesses that were not small businesses, with distinctly different reporting and issues to widely held businesses. It was considered that while there may be some intersection of these groups across other consultation processes, there are some unique and specific issues that would affect this group.

It was noted that business owners rely on their advisors and that some professional and industry associations might be part of the membership of the group. The Property Council of Australia, The Tax Institute, CPA Australia, CAANZ and Private Wealth Network were mentioned as potential members of the group.

Members agreed to establish a new small consultation group and that it could start its activities as a second-tier group – a stakeholder relationship group. Members acknowledged that the breadth of potential issues to be addressed by the group would span across the tax and superannuation systems and therefore it was important to carefully consider its objectives, potential membership and work program to minimise overlaps with other consultation groups.

CSG members were asked to seek feedback from their respective member associations and for Michael Cranston to provide an update at the next CSG meeting.

Action item: CSG 1502/02

Due date: 23 April 2015

Responsibility: Deputy Commissioner Michael Cranston

New consultation group for privately-owned groups and wealthy taxpayers - update

Deputy Commissioner Michael Cranston will provide to the next Consultation Steering Group meeting an update on the establishment of a small consultation group for privately owned groups and wealthy taxpayers.

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Item 5: Health of consultation arrangements - report from progress of consultations

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Matters for consultation register (5A)

Members agreed to seek feedback about the register of matters for consultation from their respective member associations and provide comments at the next CSG meeting.

It was noted that the report on consultations on the availability of section 25-90 deductions (201499) appeared more advanced than some CSG members perceived to be the case.

It was also noted that the consultations on the simplification of transfer pricing documentation and on the not-for-profit working group had progressed well.

ATO advice products released for consultation since last meeting (5B)

Members noted the update provided.

Summary of consultation effectiveness on advice products – proposed template and example (5C)

Jeremy Hirschhorn noted that the proposed template would allow feedback to be received on the effectiveness of consultations on particular advice products. He suggested that in a revised template, another item could be added asking ‘What would you have done differently or better?’ It was noted that the proposed template would assist in providing feedback internally and assist with the continuous improvement of processes.

Members agreed that the proposed template was a useful addition to the information made available to the CSG to enable assessment of the effectiveness of consultations.

Monthly report on consultation arrangements (5D)

Members agreed to seek feedback from their respective member associations and provide comments about the monthly report on consultation arrangements at the next CSG meeting. It was noted that the report will be uploaded soon on the website. Members commented that the report was distributed close to the meeting and that earlier circulation would be desirable for future meetings.

While noting that the references to the alignment of annual GST and income tax reporting included in the monthly report were accurate, some members noted that the actual paper to be the basis of consultations was still to be shared more widely.

It was also noted that consultations on Single Touch Payroll will commence shortly and be included in the next monthly report, which will also include consultations on administrative matters.

Members were complimentary of the new strategic direction undertaken by the GST Advisory Group, which had demonstrated under the leadership of James O’Halloran a significant change in its culture.

Item 6: Other business

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Draft National Tax Liaison Group member expectations (6A)

Members agreed that with some reordering of the points, the draft National Tax Liaison Group (NTLG) member expectations paper should be submitted to the NTLG.

Members noted that the time was right for a self-assessment of the NTLG. It had achieved some positive outcomes, such as the projects on safe harbours and in the area of litigation, but its big size as a group imposed a limitation on its effectiveness.

With the change in focus for the NTLG towards more strategic issues rather than tax technical issues, there was a need to revisit whether all current members had to remain in the NTLG or whether their participation would be more effective on other stewardship committees such as ATO Tax Practitioner Advisory Group.

Members also noted that there was scope to review the number of representatives attending per organisation. There was also a need to distinguish the profile of people required to attend different groups. For example, the CSG had proved to be an effective forum for participation by full time employees of professional associations.

Meeting close

There being no further business, the Co-Chairs closed the meeting at 2.45pm.

The next meeting of the Consultation Steering Group is scheduled for Thursday, 23 April 2015 in Canberra.

    Last modified: 14 May 2015QC 44852