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  • Alcohol Stakeholder Group minutes 6 July 2017

    Meeting details

    Venue: ATO Office, 747 Collins Street, Docklands

    Date: 27 April 2017

    Start: 10.00am Finish: 12.15pm

    Chair: Rajitha Srikhanta

    Secretariat: Rowena Troth

    Attendees:

    Rajitha Srikhanta

    ATO

    Michael O'Rourke

    ATO

    Margaret Whelan

    ATO

    Marisa Hewitt

    ATO

    Caraline Hill

    ATO

    David Pullen

    The Treasury

    Mitchell Dunn

    Department of Immigration and Border Protection (DIBP)

    Sabine Wolff

    Carlton and United Breweries

    Michael Shearer

    Coopers Brewery Ltd

    Steven Logan

    Asahi Holdings

    Chris McNamara

    Craft Beer Industry Association

    Chris Callen

    Coca-Cola Amatil Ltd

    Victoria Angove

    Angove's Proprietary Ltd

    Sam Haggan

    Metcash Trading Ltd

    George Nikolaou

    Coles Finance

    Tony Battaglene

    Winemakers' Federation of Australia

    Priyanka Nagpaul

    Lion Ltd

    Chris Parton

    Alepat Taylor

    Gus Kelly

    Cider Australia

    Phil Doyle

    Wilmar Bioethanol (Australia) Pty Ltd

    Robert Pelton

    Tarac Australia Pty Ltd

    Bob Smart

    Samuel Smith & Son Pty Ltd

    Rowena Troth

    ATO - Secretariat

    Apologies:

    Steve Guy

    Wine Australia

    Brett Heffernan

    Brewers' Association of Australia and New Zealand

    Erin Dale

    Australian Border Force (ABF)

    Debbie Forster

    Manildra Group

    Connell Breton

    Pernod Ricard

    Stuart Gregor

    Australian Distillers' Association

    Phil McClintock

    Gage Roads Brewing Co

    Rebecca Tolhurst

    Vok Beverages Pty Ltd

    Alec Wagstaff

    DSICA

    Rachel Wormald

    The Drinks Association

    Brad Rogers

    Stone & Wood Brewing Company Pty Ltd

    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

    Introductions, review of action items and previous minutes - Raj Srikhanta 

    Outcome: The minutes of the meeting held on 18 May 2016 had been finalised. An action item regarding the Australian Trusted Trader (ATT) Program was outstanding. Mitchell Dunn undertook to follow up the action and provided a verbal update to the meeting. Members noted that following the launch of the ATT on 1 July 2016, there were 32 accredited Trusted Traders as of 1 July 2017, with 420 Expressions of Interest received. DIBP were also progressing Mutual Recognition Arrangements with key trading partners which is a significant body of work providing additional benefits to ATTs.

    Action item 06072017-1-1 - Mitchell Dunn to provide members with feedback received to date from accredited Trusted Trades on the ATT Program.

    Agenda item 2 - Compliance focus areas

    Results from 2016/17 - Marisa Hewitt 

    Outcome: Members noted the update provided by Marisa Hewitt. With regard to WET, several initiatives had been undertaken including WET Tax Gap cases; New to WET client contacts; risk based WET audits and Complex audit cases.

    WET Tax Gap cases – commenced in 2016/17 with close to 200 audits carried out. Full analysis is still being finalised, however issues had been identified in 30% of cases. Of those 30%, approximately half were revenue neutral. Issues included use of incorrect calculation methods; not accounting for WET in application for own use; producer rebate issues; incorrect quoting or not holding quoting documents; boundary product issues; claiming producer rebate for exports.

    “New to WET” contacts – approximately 400 contacts for clients who were either registering for the first time or had alterations to their registration, for example change in partnership arrangements etc. The program is to assist clients in ensuring they understand their obligations. Initial contact was by phone to all new clients with tailored advice to that business, followed by an email with references to key information – rulings etc. Raj reminded members that any suggestions in how the ATO can assist clients to understand and meet their tax obligations are always welcomed.

    Risk based audits and complex audit cases – findings were similar errors to those found in WET Tax Gap cases. The more complex cases mainly related to structures put in place to maximise the producer rebate benefit which were within the letter of the law but not strictly the intent. The new WET reform eligibility and reduced value of the rebate would assist in alleviate some of those issues.

    Members agreed that the new legislation would provide an opportunity to provide more education around WET, particularly the quoting system.

    Excise Alcohol - with regard to excise alcohol, a similar approach was taken with “New to Excise” clients, however these were contacted by Relationship Managers (RMs), given the complexity of excise. More than 80 new clients were contacted and it was found that not all were commencing production immediately. Contacts were tailored to the specific industry, acknowledging that there was a large variety of businesses paying alcohol excise, and specified good compliance behaviours, including record keeping.

    Approximately 70 audits and reviews were undertaken with common issues being incorrect and non-reporting or incorrect and non-payment. Other risks included failing to meet licence obligations such as disposal / destruction without approval, no notification of changes in Directors / key personnel etc.

    Approximately 30 regional visits were conducted by RMs this year. These were to Tasmania, Griffith, the Hunter Valley and Margaret River. Where clients required assistance relating to WET, this was provided, however the visits were to focus on alcohol excise.

    Action item 06072017-2-1 - Marisa Hewitt to provide a one-page information sheet to members providing learnings from audits and cases undertaken in 2016/17.

    Focus areas for 2017/18 - Marisa Hewitt 

    Outcome: Marisa Hewitt provided a summary of compliance focus areas for WET and excise alcohol for 2017/18.

    The focus for WET is to finalise the analysis of findings from WET Tax Gap cases; early intervention in non-compliance behaviour and increased coverage of the WET population with the aim of building external capability.

    The focus for excise alcohol is around concessional spirits and the supply of bulk spirit; to build external capability and compliance levels with refinements to the New to Excise and regional visit programs; and to build internal capabilities. The ATO will be addressing illicit operations, particularly manufacture of illicit alcohol and diversion activities. Behavioural insights would be used in correspondence with clients encouraging them to examine their lodgement and payment obligations. These insights will be used in other communication, particularly relating to show cause letters, insolvent trading, settlement of outstanding debts, etc. The illicit stills campaign that was conducted in 2015 will be revisited with further communications via social media, promotion of the ATO video and other public relations activities. Members were encouraged to discuss any instances of illicit activity with the ATO to ensure a more level playing field in this industry.

    Action Item 06072017-2-2 - Rowena Troth to provide contact details for members to contact the ATO in relation to illicit activity or suggestions to curb instances of illicit activity.

    Agenda item 3 - ATO updates

    Contemporary Excise Experience Collaboration Workshop - update - Michael O'Rourke 

    Outcome: Michael O’Rourke provided an update of the work being carried out on the Contemporary Excise Experience to replace systems for excise returns and claims. A workshop had been held in November 2016 with representatives from industry. From that workshop, a list of seven design features had been agreed. Further work was undertaken to develop a high level design by ATO Design staff, which was incorporated into a business case being considered by the ATO Integration Forum. This is being considered along with other ATO priorities such as Tax Time, Single Touch Payroll, ABR and systems issues. At this stage, EPL are awaiting advice as to when this might be rolled out.

    Action item 06072017-3-1 - An infographic relating to the Contemporary Excise Experience work to be circulated to members.

    WET New Measures - Margaret Whelan 

    Outcome: Members noted the background and update to the WET Producer Rebate provided by Margaret Whelan. Key changes will take effect from 1 January 2018, transitioning to the majority of elements coming into effect on and from 1 July 2018. The ATO’s Marketing and Communications team have a communications strategy to inform the public of these changes in January 2018 regarding transition arrangements and prior to the changes taking effect, ie May / June 2018. Direct email /mail updates will be sent to all WET clients, updates will be made to relevant entries on ato.gov.au, articles will be published in various ATO newsletters and roadshows will occur. The ATO will be working with key industry associations, particularly relevant members of this group and are also looking to partner with industry to assist in reaching as many clients as possible. The WFA indicated that they would be pleased to partner with the ATO for this work. Webinars are also being considered to reach large and remote groups. The WFA are consulting with their members in August and will pass on relevant issues to the ATO. Sam Haggan highlighted the importance of providing notice for entities to make relevant changes to their systems.

    Other members also discussed and sought background on implementation aspects, including aspects of better linking the rebate to the WET being paid and trademark requirements. Treasury provided an overview of the key design elements and background on previous public consultation processes. Members acknowledged it was too late in the process now to seek to change the legislation that had been introduced and the focus was on clarifying arrangements to achieve compliance.

    Distiller's Refund - Margaret Whelan 

    Outcome: Margaret Whelan advised members that this is an extension of the brewery refund scheme and is Australian based. A refund of 60% of excise duty paid by distillers and manufacturers, up to a maximum of $30,000 each financial year can be claimed. Manufacturers must ferment or distil at least 70% by volume of the alcohol content of the beverage. The Regulation changes had not yet been approved by the Executive Council, however changes will to take effect from 1 July 2017. The ATO will be contacting all licensed manufacturers to advise them of the change.

    Caraline Hill clarified that changes impacting on sales from manufacturing premises removed the requirement for sales to only be made from the licensed premises. To claim the refund, sales may take place from any site. David Pullen advised that the policy intent was to provide more flexibility for clients, particularly given the large number of craft brewers entering the market.

    Agenda item 4 - Industry / member updates

    DIBP Contacts – Chris Callen inquired as to whether DIBP would have a contact role similar to the RM role in the ATO. He advised that it would be a great benefit to members for following up on particular issues. Mitch Dunn advised that DIBP are using the Australian Trusted Trader Program as their means of providing tailored services to large clients.

    Potential safe harbours – Chris McNamara raised the possibility of a safe harbour around automatic remissions currently available to larger brewers being extended to smaller brewers. This related to occasions where product was required to be destroyed, however the brewer was required to wait for a remission approval to be granted by the ATO. For some smaller brewers, this can relate to a whole vat of product which might be the majority of their entire stock. Raj Srikhanta advised that the issue of auto-remissions is currently being looked at.

    Action item 06072017-4-1 - EPL staff working on the potential of a safe harbour for automatic remissions to include consideration of the extension of automatic remissions from large brewers to small brewers.

    Raj Srikhanta encouraged all members to pass on any ideas for safe harbour consideration.

    Action item 06072017-4-2 - Practical Compliance Guidelines relating to fuel tax credit safe harbours are to be distributed to members for information.

    Agenda item 5 - Other business

    Members discussed an out of session meeting to discuss issues relating to the WET new measures changes.

    Action item 06072017-5-1 - Raj Srikhanta to follow up and advise members if a separate out of session discussion would be arranged to discuss WET new measures impacts.

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

    There was no other business.

    The meeting concluded at 12.15pm.

      Last modified: 21 Sep 2017QC 53355