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  • Alcohol Stakeholder Group minutes 18 May 2016

    Meeting details

    Venue: ATO Office, Franklin Street, Adelaide

    Date: 18 May 2016

    Start: 2.15pm (ACST) Finish: 4.30pm (ACST)

    Chair: Tom Wheeler

    Secretariat: Rowena Troth

    Attendees:

    Tom Wheeler

    ATO

    Andrew McIver

    ATO

    Michelle Nourse

    ATO

    Caraline Hill

    ATO

    David Pullen

    Treasury

    Sasha Billett

    Department of Immigration and Border Protection (DIBP)

    Jeremy Watkinson

    Australian Border Force (ABF)

    Sam Haggan

    Metcash

    Tony Battaglene

    Winemakers' Federation of Australia

    Warwick Billings

    Cider Australia

    Phil Doyle

    Wilmar

    Priyanka Nagpaul

    Lion

    Michael Shearer

    Coopers Brewery

    Bob Smart

    Samuel Smith & Son Pty Ltd

    Chris Callen

    Coca-Cola Amatil

    Connell Breton

    Pernod Ricard

    Phil McClintock

    Gage Roads Brewing Co

    Dean Crichton

    Vok Beverages

    Brad Rogers

    Stone & Wood Brewing Co

    Doug Brooke

    Craft Beer Industry Association

    Chris Parton

    Alepat Taylor

    Jorge Jimenez

    Brown Forman Australia

    Neil Owen

    Woolworths

    Tim Reardon

    Brewers' Association of Australia and New Zealand

    Rowena Troth

    ATO - Secretariat

    Apologies:

    Debbie Forster

    Manildra Group

    Robert Pelton

    Tarac

    Stuart Gregor

    Australian Distillers' Association

    Gordon Broderick

    DSICA

    Kylie McPherson

    Diageo

    Sandra Przbilla

    The Drinks Association

    Allan Lewis

    CUB

    Steven Logan

    Asahi

    George Nikolaou

    Coles

    Steve Guy

    Wine Australia

    John Angove

    Angove's Pty Ld

    Annalisa LoBasso

    Accolade Wines Australia Limited

    Kieran Williams

    Treasury Wine Estates

    Discussion Summary

    Disclaimer

    The Alcohol Stakeholder Group agendas, minutes and related papers are not binding on the ATO, DIBP or the other bodies referred to in these papers. 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 papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    Agenda item 1 - Welcome

    Outcome: The minutes of the meeting held on 20 May 2015 had been previously endorsed and published online. All action items had been completed. No conflicts of interest were declared by members. Tom Wheeler advised members of the current Caretaker Period and associated conventions.

    Tom Wheeler welcomed all members to the meeting, including some new members. ASG membership had been recently reviewed to ensure suitable representation across industry. He advised that meetings were held annually, with consultation taking place out of session as required. He reaffirmed the value of the ASG has a key consultation forum for the ATO on excise and wine issues. The Statement of Intent and other previous communication can be found on the ASG page of ato.gov.au.

    Members discussed the issue of potential safe harbours (from Action Item List). Safe harbours are a means of simplifying the taxation process, within the bounds of reasonable risk. Members were encouraged to provide any suggestions for potential safe harbours at any time.

    Agenda item 2 - Compliance focus areas for 2016/17

    Outcome: Members noted the report by Andrew McIver advising that a focus area for excise and other indirect taxes for 2016/17 would be Wine Equalisation Tax (WET), in particular producer rebate and taxable values. A number of cases had been referred to the CDPP as a result of audits carried out during 2015/16, with several other cases under investigation. The Excise Product Leadership Branch had carried out a data cleanse of WET registrants to check inactive registrations, targeting those who had not lodged in Labels 1C and 1D for the last three years. It is expected that nearly 1,200 registrations will be cancelled.

    With regard spirits, a number of adjustments from cases have resulted from classification issues where entities have treated products as being applicable to WET rather than excise. Over 2016/17 the ATO will continue to examine instances of cheap spirits in the marketplace when detected, looking at where the product is sourced and confirming that GST and excise is being paid.

    The ATO has also introduced a “New to Excise” support program, where support will be provided to all new licensees to ensure they are aware of their excise obligations and conditions, with follow up contact as well. It was noted that “New to Excise” education has also been carried out for new entrants to the beer and spirits markets, including presentations made by ATO at educational institutions.

    Concessional spirits is another area of focus for 2016/17. Work commenced in 2015/16 in contacting a number of resellers regarding non-lodgment of excise returns. A number of cases are also underway regarding concessional spirits used for fortification. The ATO is also looking at essence manufacturers and payment of related excise.

    During 2015/16, the ATO undertook an education campaign regarding illicit spirit distillation. This was a successful campaign with 30,000 hits on the video and significant mention on related blogs. Sales of stills on e-bay reduced, with e-bay changing their website information policy on the sale of stills in Australia.

    During 2016/17, checks on excise equivalent goods warehouses will be made and several audits and reviews will be undertaken.

    The ATO is continuing its’ tax gap program. Updated gaps will be published in the ATO Annual Report. The ATO will be commencing a “New to WET” support program, where staff will contact new registrants either by phone or in person, to ensure that they are aware of ATO requirements. Follow up contact will again be made after six months. Testing of new WET registrations will also occur to ensure they require a WET role and are correctly registered.

    Tom Wheeler advised that planned activities across the ATO are based on the client’s risk, compliance choices/behaviour, and transparency. The approach used by the ATO will be tailored accordingly.

    Agenda item 3 - Reinventing the ATO

    Outcome

    Update regarding the Excise Client Experience - Tom Wheeler updated members of the work being progressed as part of the ATO’s Reinvention program. The ATO is looking to streamline processes in order to be a more contemporary service organisation. Some examples of this work include the updated ATO website, the release and expansion of the ATO app and greater use of new tools by staff including ipads across the organisation. Voiceprint technology has been implemented for identify authentication and myTax is being expanded this year. A similar service will be put in place for business, along with a myGov service for businesses in the future.

    The ato betaExternal Link site is used to co-design and test new processes and systems with the community. Tom encouraged members to subscribe to this site to be involved in testing new ideas and features that the ATO are considering introducing.

    A handout was provided to members setting out some achievements in improvements to the Excise Client Experience over the last year. It was suggested that ATO consider extending remissions pre-approval process, particularly for returned stock out of date.

    The Business Portal and issues with Auskey were discussed along with the work the ATO is developing in relation to these services.

    Members commented favourably on the improved search function on the ATO website.

    Revised client eco-systems - The client eco-systems for brewing and distilling were provided to members. A draft of these had been provided at the 2015 ASG meeting. The eco-systems are an attempt to stand in the client’s shoes and detail the various requirements required for these businesses. The ATO is keen to receive any feedback on these documents.

    Capability - Excise Product Leadership Branch is currently working on improving capability in excise and other indirect taxes across the ATO for staff working on these products. Excise capability for both ATO staff and external stakeholders had been raised as an issue at the October Client Experience Workshop. This work is currently being scoped however the ATO is keen to hear of any particular capability needs for industry or any opportunities to partner with the ATO to address this need. A set of FAQs of areas of interest for new entrants, which are not on the website or in guidelines, was suggested.

    Action item 18052016-3-1 - Members to consider any areas where industry requires certain skilling or development and potential areas where industry and the ATO could partner to provide education to external stakeholders.

    A discussion was held about the distribution of information about excise rate increases. The information is now placed on the ATO website as one primary source, with communication and prompts issuing via newsletters, direct email, and social media. It was observed that email addresses are not always current. To assist, as the ATO contacts clients, email addresses are being updated which will improve the communication flow for that channel.

    One member requested the rates were continued to be provided in a PDF document to facilitate sharing across their organisation, while others were happy with the website link to the duty rates page directly.

    Agenda item 4 - Industry / member updates

    Outcome:

    Volume 10 Guidelines – Members were asked about advice needs, noting some had enquired about the previously published Australian Customs and Border Protection Service’s Volume 10 excise equivalent goods warehouse guidelines. Feedback indicated that they were keen for these to be updated and made available in a user friendly format, and were also keen for direct DIBP contacts. Sasha Billett advised that the Department of Immigration and Border Protection was undertaking a project to review website content and accessibility for users and advised that she would provide this feedback to the area looking at warehouse related content. Sasha also advised that as part of the Accredited Trusted Trader Program, approved companies will have client managers.

    Indexation advice – Members raised the short timeframe in notification of indexation rates. Tom Wheeler explained that once the ATO has received the relevant information from the Australia Bureau of Statistics (ABS), the law requires five day implementation period. Tom expressed that the ATO attempts to calculate and communicate the new duty rates to members on the day of receiving the indexation data. The ATO understands pressures on companies being asked for prices many months out from indexation and additional work to change systems to reflect new prices.

    DIBP Licensing Review – Sasha Billett provided an update of the comprehensive review of the licensing process being carried out by DIBP, which was due by June 2016. At the request of industry members, the review has been extended eight weeks, with the final report and recommendations due to the Comptroller of Customs by 31 August 2016. 27 submissions were received and draft recommendations will be released for industry comment at the end of July.

    DIBP Trusted Trader Programme – Sasha Billett provided an update about the Australian Trusted Trader ProgrammeExternal Link (ATT). The ATT will be fully operational from 1 July this year, following the completion of the successful pilot phase. Further details about the ATT can be found on the DIBP website (Trusted trader ResourcesExternal Link). A Fact Sheet providing more information about the accreditation process will be published on the DIBP website shortly. The benefits of the programme included enhanced client service through dedicated points of contact and priority service.

    Action item 18052016-4-1 - Upon publication of the DIBP Trusted Trader Fact Sheet, Sasha Billett to provide a copy to Rowena Troth for distribution to ASG members.

    DIBP Industry Engagement Strategy – Sasha Billett advised that DIBP have launched their industry engagement strategyExternal Link relating to how the DIBP deals with the trade community, travellers etc.

    Australian Border Force (ABF) Compliance update – Jeremy Watkinson advised that the ABF was undertaking some targeted compliance activities relating to misclassification of alcohol. A new Compliance Branch has been established in the ABF who will be responsible for the planning and conduct of compliance activities. There is currently a focus on revenue, however the ABF will be conducting other thematic based compliance campaigns in the future and there are currently two activities underway – one focussed on timeliness and accuracy of cargo reporting errors and the other on misuse of Tariff Concession Orders.

    Agenda item 5 - ATO update

    Outcome

    Alcohol Boundary Products – Members noted the update provided by Michelle Nourse regarding work on boundary products – or grape alcohol beverages. This is a product classification issue relating to the tax treatment of certain grape alcohol-based products. A discussion paper was issued in late 2014 and since then, the ATO has consulted with key manufacturers and has published further website content and has undertaken a targeted email campaign to fortifiers. The issues have also been addressed in ATO audits and concessional spirits reviews to ensure a level playing field.

    Distributor Margin Issues – Michelle Nourse provided an update on the ATO’s work on distributor margin (or taxable value) issues. This relates to the taxable value attributed to a wholesale sale (made under quote) from a producer to a distributor / wholesaler. The producer’s rebate is calculated on the taxable value, which is these circumstances, is the price for which the wine is sold. The ATO is looking at cases where the ‘price’ of the wine sold is relatively high (increasing the producer’s rebate claim) and the wine is then sold by the distributor for little or even no mark up. The ATO view can be found in WET Ruling 2009/1 – paragraphs 118 – 125.

    Excise Technical Issues - Michelle Nourse advised that the ATO are currently looking into the allowances of a permit for fortifying wine. This forms part of the review current legislative instruments which are due to expire (sunset) in October 2015, including concessional spirits approval guidelines and denatured spirits formulas. The ATO will be consulting industry as these instruments to streamline and make appropriate clarifications in the updated instruments.

    Agenda item 6 - Other business

    Outcome:

    ATO Call Centre – Michelle Nourse advised that telephone enquiries relating to WET are flowing into the ATO call centre. Where required, technical experts are available to address complex matters that cannot be resolved through this channel.

    ATO Relationship Managers – Michael Shearer noted the importance and value of the role of the Relationship Manager for industry dealing with the ATO.

    There was no other business.

    The meeting concluded at 4.15pm (ACST).

      Last modified: 21 Sep 2017QC 53354