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  • Property and Construction Forum key messages – 23 October 2017

    The Property and Construction Forum meeting was held on 23 October 2017.

    Welcome

    Joanne Casburn welcomed the group and outlined the whole of ATO approach to the property and construction market.

    The ATO has a large investment in working with the industry, which features heavily in most high risk areas including uncollected debt and non-lodgment of income tax, GST and superannuation returns.

    The six additional projects being undertaken by the ATO were outlined with the objective of improving voluntary compliance within the sector. A discussion was held about the purpose of the forum, which is to share information and the issues we are seeing.

    Introductions

    Each of the members introduced themselves and their organisations.

    Phoenix strategy

    Sam Simpson and Brett Martin explained the ATO long-term focus on law reform.

    Current law reform initiatives are at the consultation stage and submissions are due by the end of the October.

    They outlined their early engagement strategy on large infrastructure projects.

    They talked about data matching initiatives applying to sub-contractors and the Phoenix Risk Model. Also discussed was the education and assistance provided on site to sub-contractors.

    The group discussed how property developers grow and sometimes don’t gain the requisite skills to deal with their tax and other obligations.

    The group discussed the administrative burden on developers and business. The importance of good governance was also raised.

    Brett and Sam invited members to contact them if they wanted to discuss their views on Phoenix strategy.

    Higher ATO visibility

    Michael Strong outlined the importance of ATO visibility in dealing with the black economy. The challenge is reaching as many people as possible with the messaging around meeting tax obligations.

    The group discussed ideas such as consumers insisting on receipts and emphasised the point that for a cash economy to work there has to be two parties willing to avoid tax.

    Members of the group shared their understanding of a current situation in Western Australia where gift cards are being provided to sale representatives as payment/incentive. $5000 gift cards are common and no invoices are being raised.

    This is a method of hiding commissions from the vendor, which is also a crime. This is inappropriate behaviour from developers or builders, on the part of agents.

    The group also discussed the importance of being aware of not creating unforeseen consequences, for example, undertaking visible interaction that leads to consumers shopping elsewhere.

    Encouraging sub-contractor compliance

    Joanne Casburn outlined the Head Contractor project being undertaken as part of the whole of ATO approach to property and construction.

    The project involves contacting the 15 largest (in terms of number of sub-contractors reported for Taxable payment reporting system (TPRS)) to have a discussion with them about how a range of indicators for their sub-contractor population (such of lodgment of returns, payment of debt, phoenix indicators) compare to other similar large contractors.

    The aim of the project is to assist with the development of good governance around sub-contractors and provide education and support to encourage improved compliance.

    She also briefly discussed the proposed Tax certificate that will be explained more fully in future meetings.

    The group discussed their knowledge of a large number of sub-contractors who are very small, not doing particularly well and who don’t have good governance or bookkeeping.

    Some members expressed concern about the effect on small builders of additional ATO reporting or compliance initiatives.

    The group agreed that the population required a variety of solutions, as they were often not computer literate.

    A conversation for the future is how we work with industry to support them becoming digital.

    We also know from the quantum of payments that this population employs other workers and should be reporting for TPRS.

    Some contractors are including employee costs in ‘cost of sales’.

    Members highlighted the level of red tape and regulation that building contractors are subjected to.

    The group was keen to be informed about potential initiatives at an early stage (prior to budget announcement) so they could participate in discussions and consider the impact on their clients or organisation.

    Education on tax matters

    Karen Anstis spoke about the education and support products that have been developed by Small Business for new entrants to business.

    The products have been extensively researched and tested and have been very well received by both business and practitioners using the product as a coaching tool.

    See also:

    Next meeting

    The next meeting will be held in April 2018. 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)

    Brett Martin

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

    Leassa Armstrong

    ATO Director, Employee Obligations SMB

    David Kasmarik

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

    Michael Strong

    ATO Director, Cash Economy

    Sam Simpson

    ATO Director, Phoenix

    Maurice Manno

    ATO Director, Risk Manager Property ITX

    Troy Whelan

    ATO Director, Property and Construction Risk Manager Private Groups

    Peter Darlaston

    Regional Manager Eastern, Australian Building and Construction Commission (ABCC)

    Brett Bassett

    Commissioner, QBCC

    Jim Ormiston

    Manager, Compliance Business Taxes Revenue NSW

    Kristin Brookfield

    Chief Executive, Industry Policy, HIA

    David Humphrey

    Senior Executive Director, Business, Compliance and Contracting, HIA

    Matthew Pollock

    National Manager – Economics and Housing, Master Builders Australia

    Belinda Ngo

    Executive Director – International & Capital Markets
    Property Council of Australia (PCA)

    Kathryn Tomkins

    General Manager Taxation, Frasers Property Australia

    Yvonne Fell

    In-house Accountant, Metricon

    Elizabeth Ellett

    Deputy Group Head of Tax, Lendlease

    Elizabeth McNamara

    Director PWC

    Apologies

    Tim Dyce

    ATO Deputy Commissioner, Indirect Tax (ITX)

    George Holton

    ATO Assistant Commissioner, Small Business (SMB)

    Rob Bonaccorso

    Built

    Michael Croker

    Tax Leader – Australia, Chartered Accountants Australia New Zealand (CAANZ),

    Martin Musgrave

    CEO, Commercial and Economic Planning Association

    John Avery

    Consultant, Greenwoods & Herbert Smith Freehills Pty Limited

      Last modified: 06 Feb 2019QC 57854