Show download pdf controls
  • Australian Banking Association Steering Group key messages 22 February 2019

    Disclaimer

    ABA/ATO Steering Group agendas, minutes and related papers are not binding on the ATO or any of the other bodies referred to in these minutes. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These materials reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change. It is strongly recommended that where a formal ATO view does not exist for an issue contained in these Minutes that, for the abundance of clarity and certainty, Private Rulings be sought.

    1. Welcome and introductions

    The Chairperson opened the meeting and welcomed attendees.

    2. Confirm draft minutes and action items of previous meeting

    The draft minutes from the last meeting on 15 November 2018 were confirmed.

    There were no outstanding action items from the previous meeting.

    3. Opening messages

    Opening messages were made by Rebecca Saint as new Deputy Commissioner of Public Groups, and Sandra Farhat, as new Assistant Commissioner, Banking and Finance (B&F) Strategy.

    Priorities for 2019

    The priorities and programs of work for this financial year were discussed:

    • Tax Avoidance Taskforce - continued implementation of justified trust methodologies in one-on-one engagement with the Top 100 and Top 1000 large clients. There will be a particular focus this financial year on analysing key findings to inform our approach and investment decisions for the Taskforce and follow up actions for Top 1000 assurance cases where necessary.
    • Risk cluster strategies - continued investment in our risk cluster strategies such as those related to the hybrid mismatch and branch mismatch rules. For the B&F industry there will be a focus on research and development claims, in particular those related to software development, and branch attribution issues such as the calculation of cost and methodologies adopted by banks in allocating head office and/or regional expenses.
    • Taxpayer engagement with the office - in particular, in relation to information gathering. As mentioned in the last National Tax Liaison Group (NTLG) meeting, there are concerns around the appropriateness of Legal Professional Privilege (LPP) claims in response to formal notices. A sub-working group has been established with ATO officers and nominated NTLG members to discuss concerns regarding the use and understanding of LPP, and to work together on potential solutions.

    Changes to Public Groups and International

    • Rebecca Saint advised that a broad realignment of the Client Engagement Group will be occurring with effect from 12 March 2019. The moves are designed to help better align the ATO's organisational structure to client market segments, and to help the ATO take a more holistic view of our clients and their interactions across the tax and super system.
    • The realignment will initially involve a straight 'lift and shift' of functions out of and into different business lines.
    • For the Public Groups and International (PG&I) B&F industry there will be some changes to the administration of GST. Broadly:
      • the Indirect Tax (ITX) Public Groups Engagement branch and Financial supplies risk work will move to the Public Groups business line;
      • the International function currently sitting in Indirect Tax will move to the International business line.
       
    • For the Top 100 taxpayers, the changes will mean a single point of contact for GST and income tax issues, enabling key issues to be prioritised. It will also mean that the point of contact for the escalation for GST risks will now follow the normal escalation channels within PG&I. There will be no business line changes to TCN.
    • ABA members raised concerns that, at present, the ABA's GST working relationship with the ATO is not congruent with the ABA's income tax working relationship. It was foreshadowed that PG&I's organisational changes is likely to result in changes to the terms of reference of the PG&I ABA/ATO Steering Group. The ATO advised it would welcome suggestions on how best to improve pain points in the industry as the ITX and PG&I business lines are integrated over the coming weeks.

    Action item

    Action item details below.

    Action item

    28022019-3-1

    Due date

    On-going

    Responsibility

    ABA

    Action item details

    Provide suggestions to ATO on how ITX and PG&I could be integrated, including ways to better improve the ATO-ABA's working relationship across indirect and income tax matters .

    4. Top 100 and Top 1000 programs

    Pathway to High Assurance in our TAR and STAR products

    • Discussion was had around how taxpayers can achieve a high level of assurance for the years reviewed under the Top 100 and Top 1000 programs.
    • The ATO will be conducting a series of presentations and consultation shortly to provide guidance on how taxpayers can achieve a high level of assurance, and what it means for taxpayers if this is met. The ATO, led by Belinda Darling, will work with banks on developing a future assurance plan by 2020. It is expected that 'high assurance' will lead to a lighter touch experience in future compliance interactions with the ATO.
    • Broadly the ATO does not consider that new or complex business operations should detract taxpayers from getting to a high level of assurance under the Top 100 and Top 1000 programs.

    Update on book-to-tax reconciliation standardised approach

    • The ATO is developing a standardised expectations statement for the banks which will assist in moving to a light touch due diligence approach to the book-to-tax reconciliation review process for the Major Banks.
    • Meetings have been held with a number of banks to discuss their book-to-tax reconciliation process in the preparation of their tax returns. Discussions have also been held with software provider Wolters Kluwer, CCH, to discuss the capabilities of CCH Tax Integrator software for data collection and corporate tax reporting.
    • It was agreed that a short term sub-working group would be established between the ATO, CCH and ABA members to improve the use of CCH Tax Integrator to map data better and allow the ATO and banks to more efficiently review the book-to-tax process.

    Action item

    Action item details below.

    Action item

    28022019-4-1

    Due date

    ASAP

    Responsibility

    ATO

    Action item details

    ATO to arrange a subcommittee on work regarding the development of a standardised approach to book-to-tax reconciliation.

    5. Emerging issues and trends in banking and finance

    • The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry final report was noted. ABA members advised that they would welcome further guidance on the tax treatment of compensation payments if needed.

    6. Update on AFI subsidiary exemption

    • Targeted consultation with affected taxpayers on the draft TD on the interpretation of the second limb of the term ‘financial intermediary business’ for the purposes of subsection 449(1) of the ITAA 1936 has completed. The draft TD will now undergo public consultation and is expected to be published shortly.

    7. Other business

    • The next ABA/ATO Steering Group meeting is scheduled for Thursday 30 May 2019, 2:00pm – 4:00pm.

    The meeting concluded at 3:00pm.

    Attendees

    Attendee details are listed below.

    Organisation

    Attendees

    Australian Banking Association

    Aidan O'Shaughnessy

    Essam Husaini

    Australia and New Zealand Banking Group

    Darren Norman

    Bank of Queensland

    Dominic Grimson

    Bendigo and Adelaide Bank

    Ben Edwards

    Commonwealth Bank of Australia

    George Spathis

    National Australia Bank

    Steve Southon

    Westpac Banking Corporation

    Michael Barbour

    ATO

    Rebecca Saint

    Sandra Farhat

    David White

    James Campbell

    Dean Lynch

    Jonathan Tang

    Arya Heryanto

    Yoke-Cheng Vaile

    Melanie Sinn

    Apologies

    Attendee apologies are listed below.

    Organisation

    Members

    Macquarie Bank

    Ernest Chang

    Suncorp Bank

    Kate Locke

      Last modified: 17 Jul 2019QC 59682