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  • Property and Construction Forum key messages – 17 April 2018

    Welcome and update

    Joanne Casburn welcomed the group and provided an update from the last meeting.

    Property and construction is Australia's largest industry. This Forum is an opportunity to collaborate and discuss compliance in the industry as well as working toward a fair system for everyone.

    Further outcomes from October 2017 meeting:

    • Katie Welsh (AC ITX) arranged for Forum members to be given access to Treasury consultation on GST at Settlement. Further information was provided at this meeting.
    • Forum members were invited to participate in a small consultation group reviewing the ATO Property Developer Consultation Paper. Updates on the Paper will be provided as available.
    • We followed up on intelligence from the October forum about the use of gift cards by industry as a property sale incentive. Unfortunately, we were not able to obtain enough information to take further action.
    • Following the last meeting the QBCC held further discussions with Small Business around using their New to Business educational packages for their client market.

    New members

    Joe Zubcic (ASIC) is the Senior Manager of Small Business Engagement and Deterrence. His work involves enforcement of small business obligations under the law particularly around Phoenix activity. His team has been very successful in banning a number of directors in the past few years.

    Jill Lawrence's (ASBFEO) role as Director of Advocacy involves providing assistance to small business in resolving disputes and providing 'a voice'. She works closely with ASIC to support small business with both specific and systemic issues.

    Head contractor project and property developer guidelines

    Troy Whelan discussed the Head Contractor project, which involves meeting with the largest head contractors to provide comparative profiles of sub-contractor populations that highlight potential risks. We are currently devising a publication to share our insights into best sub-contractor procurement practices. We will keep the forum updated on progress.

    The Property Developer Consultation Paper is designed to share the decisions we are making in compliance and advice cases to demonstrate transparency and provide guidance in fact driven property developer cases. We have consulted with a small group of practitioners and will release the paper for broader consultation soon - details will be shared with the forum.

    GST at settlement

    Neil Dixon provided further information on the new GST at settlement requirements commencing 1 July 2018. The measure applies to new residential premises with some exclusion. The key change is the requirement for suppliers to notify purchasers of all residential sales. Penalties apply for not meeting obligations. There are forms to be completed with supplier and purchaser details. The ATO subsequently sends confirmation with payment and lodgment registration numbers which need to be retained and quoted at the appropriate time on the appropriate electronic form. The measure is intended to prevent non-payment of GST by suppliers. Transitional measures apply.

    The ATO is providing presentations through several external organisations, for example to conveyancer and accountant groups.

    See also:

    We will provide additional information to the forum as it becomes available.

    Small Business

    Loretta Bishop-Spalding outlined and discussed the findings of the Small Business Cash and Hidden Economy measurement framework survey. This involved an interview process with the community, operators and practitioners around the cash economy, consumer behaviour, how the community enables black economy behaviour and related behaviour.

    The forum discussed the fact that dealing in cash is not illegal and taxpayers often have legitimate reasons to prefer cash (for example to avoid bank merchant fees). There is a difference between a cash economy and illegal black economy where tax is not paid on cash receipts.

    The forum discussed the role of the customer in changing culture and in expecting and asking for receipts for work done. The black economy contributes to an 'uneven playing field' and can encourage some legitimate businesses to do the wrong thing to compete. The black economy has a significant impact on the Australian economy.

    What is happening in the industry?

    The HIA has a broad membership that ranges from large entities to 'mum and dad' businesses. The common message from membership is the complexity of complying with the myriad layers and complexity of regulation and legal/government requirements. The ATO is only one aspect of the issue. Members consider that compliant taxpayers pay the price of increased regulation instigated to address poor behaviour in the industry.

    Katie Welsh asked 'how do we work together to ease the burden' on taxpayers doing the right thing? Some of the suggestions included providing checklists; practical help for reasonable people in the industry; building confidence/assurance that a taxpayer can go to the regulator to seek advice without a fear of future audit; education campaigns and ensuring that members understand their obligations particularly under new provisions.

    QBCC and the future of regulation in the industry

    Commissioner Brett Bassett recommended a consolidated and considered national approach to regulation. The challenges are to ensure the regulators keep up with the pace of change in the sector. He also identified an increased requirement on regulators to identify risks early and in share information across agencies and jurisdictions.

    Brett emphasised the role of the right data to drive insights driven regulators. Staff require the right skills to complete increasingly complex tasks and as automation and robotics remove repetitive work, staff will move to more risk based work.

    Future of the property and construction industry

    Building processes

    • 3D buildings (printers) - leading to reduced labour requirements
    • Automated building processes
    • Prefabrication
    • New methods and materials
    • Aesthetics v. function
    • Retirement villages - changed models and increased demand
    • Robotics
    • Shortages of labour/materials
    • New skills required/shortage/transition
    • IP held / controlled offshore

    Economy

    • Digital economy – BAU
    • Economic cycle – boom may bust
    • Change from stamp duty to land tax (tax structure changes)
    • Gig economy expansion
    • Entry / expanded activity from international players
    • Older population
    • Immigration driving growth
    • Living/working hubs (satellite cities)
    • Increased competition for space / resources / food growing v. housing
    • Social wage
    • Affordability
    • Build to rent
    • Reduced use of cash
    • Mobile population
    • Bitcoin, cryptocurrency
    • Structure of big players in market may change
    • Midsize players may grow
    • Potential contraction of market players

    Types of developments

    • Larger more complex/dense
    • Multi dwelling constructions to use space
    • Increased social housing to cope with economic cycles / homelessness / affordability
    • Smaller blocks
    • Changed school models

    Labour

    • Greater flexibility (payment methods eg cashless)
    • Industrial relations
    • Increase in jobs servicing the industry, eg payroll

    Regulation

    • More/less/combined government agency regulation
    • Use of private vehicles
    • Increased infrastructure / public transport

    Tax

    • Increased non-compliance – renovation/alteration sector
    • Supply chain management issues
    • Record keeping / transactions changes in technology
    • Phoenix changes
    • Combined government services/recording/registration
    • Employee/contractor definitions aligned
    • Joint regulation
    • Transparency of data
    • Automated compliance
    • Agencies doing more with less resources
    • Automatic reporting.

    Next meeting

    The next meeting will be held on Wednesday 17 October 2018 in Sydney. We will contact members to discuss agenda topics.

    Attendees

    Joanne Casburn
    (Co-chair)

    ATO Assistant Commissioner, Private Groups and High Wealth Individuals (PGH)

    Katie Welsh
    (Co-chair)

    ATO Assistant Commissioner, Indirect Tax (ITX)

    Stephanie Lillywhite
    (Facilitator)

    ATO Design

    Keiron Galloway (Secretariat)

    ATO Secretariat
    (03) 6221 0448

    Aislinn Walwyn

    ATO Assistant Commissioner, PGH Refund Fraud and Phoenix

    Steven Atkins

    ATO Assistant Commissioner, Debt

    David Kasmarik

    ATO Director, Public Groups and International (PG&I)

    Troy Whelan

    ATO Director, Property and Construction Risk Manager PGH

    Scott Walker

    ATO Director, PGH

    Giulio Ambroso

    ATO Director, ITX

    Neil Dixon

    ATO Director, ITX

    Loretta Bishop-Spalding

    ATO Director, SB

    Peter Darlaston

    Australian Building and Construction Commission (ABCC)

    Brett Bassett

    Commissioner, QBCC (by phone)

    Jim Ormiston

    Revenue NSW

    Jill Lawrence

    Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

    Joe Zubcic

    Australian Securities and Investments Commission (ASIC)

    Keith Ryan

    Housing Industry Association (HIA)

    Melissa Adler

    HIA

    Belinda Ngo

    Property Council of Australia (PCA)

    Eli Braggins

    PCA

    Susan Cantamessa

    Chartered Accountants Australia New Zealand (CA ANZ)

    Yvonne Fell

    Metricon

    Kelly Wong

    Lendlease

    Michelle Le Roux

    PWC

    Apologies

    Tim Dyce

    ATO Deputy Commissioner, Indirect Tax (ITX)

    Matthew Bambrick

    Assistant Commissioner, Small Business (SB)

    Matthew Pollock

    National Manager – Master Builders Australia

    Kathryn Tomkins

    Frasers Property Australia

    Martin Musgrave

    Economic Planning Association

      Last modified: 06 Feb 2019QC 57855