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  • Fuel Schemes Stakeholder Group key messages 10 July 2019

    Welcome and introductions

    Tony Poulakis welcomed members to the meeting and advised members that he had recently taken up the role of Assistant Commissioner for the recently renamed “Excise Centre”.

    No conflicts of interest were declared. Minutes of the meeting of 7 June 2018 had been finalised and published on the ATO website. There were five action items from that meeting that had all been completed.

    Compliance focus areas

    • Results from 2018–19 – Siau Goh

    Members noted the update provided by Siau Goh and Michael Hughes. Siau advised that there were 240,000 FTC clients, of which 200,000 were in Small Business, 30,000 from Privately Owned and Wealthy Groups and 2,800 from Public and Multinational Businesses. The total claimed was approximately $6.8b in 2017–18. The published tax gap was a small negative figure of 0.3% made up of the net amount of over and under claims. ATO strategies were generally around assisting clients to claim the correct amount.

    Most adjustments to claims in 2018–19 were in the transport industry, followed by agriculture, forestry and fishing, and mining. These related to incorrect backclaims with multiple issues, miscalculation and clerical errors including transposition. In mining, there were also issues around apportionment.

    Small Business clients had a higher error rate and more case work was carried out in this area. 58% of errors were made by clients and 40% by tax agents/bookkeepers. Other common errors included back claims, incorrect timing and out of time credits. Drivers for errors included a lack of governance or controls in record keeping and claiming processes, incorrect advice from agents, use of GPS / telematics technology which was not assured and incorrect use of safe harbours. The ATO was doing further work to assist including encouraging use of engine diagnostic reports to determine fuel consumption rates, working with intermediaries to develop calculation methods to suit their client base, working with Geoscience Australia and the Department of Infrastructure, Transport, Cities and Regional Development to improve understanding of GPS / telematics technology, as well as reviewing ATO web content to make it easier for clients to find relevant FTC information.

    FSSG members were encouraged to share this information with association members. Claudia Bianco invited members to contact her via the FSSG secretariat if they would like tailored articles for their specific industry.

    • Focus areas for 2019–20 – Michael Hughes

    The focus for 2019–20 would be on gaining assurance of GPS / telematics based software, promoting the use of safe harbour or benchmarks to assist clients, particularly those in small business and managing the outcomes of litigation decisions.

    The ATO had worked this year to gain an understanding of GPS-based technology and its limitations to assist in claims for FTCs. Michael provided further detail about specific areas of relevant ATO considerations, including the use of unsubstantiated fuel consumption data, incomplete or inaccurate fleet lists and lack of reality testing data against source business records to verify the data based claims were accurate.

    The ATO was working on the development of an online BAS check which would build in functionality when the BAS was lodged to alert the lodger that there may be an issue that required review. While not holding up the process for lodgment, it would ensure that clients were aware of potential inconsistencies.

    There were several issues under litigation, and it was expected that there would be some resolution of these during 2019–20.

    Members discussed how the ATO was administering the law in relation to backclaims over four years pending a final AAT decision. Michelle Scott advised that the current ATO view was in Draft Miscellaneous Taxation Ruling MT 2018/D1. It applied to FTC and GST and that under Division 47 of the Fuel Tax Act, an entitlement to a fuel tax credit ceased unless they had been taken into account within the time limit. It was common practice for the ATO to maintain a view until a litigation outcome required that view to be changed. Work was being undertaken to flag specific cases which may be impacted by a subsequent decision in these matters.

    ATO updates

    • Fuel Tax Credits (FTC) Update – Michelle Scott

    Michelle Scott advised of recent FTC rate changes. There had been rate changes to the excise duty affecting FTCs for biodiesel and ethanol on 1 July 2019. Details were on the ATO’s website. The CPI was expected to be announced on 31 July 2019, with the rate change for fuel excise and FTCs taking place on 5 August 2019. Communications would issue to this group at that time.

    There had been no change to the road user charge (RUC) for 2019–20.

    A Practical Compliance Guideline (PCG) had issued in March 2019 to provide assistance to farmers in disaster circumstances – PCG 2019/2 Fuel tax credits – practical compliance methods for farmers in disaster affected areas. This applied to farmers who have a business or residential address in one of the identified impacted postcodes (in a disaster area).

    As the draft Miscellaneous Tax Ruling relating to time limits for claiming entitlements was progressing, status updates of advice under development could be found on ATO’s website – Advice under development program.

    • Overview of myGovID and Relationship Authorisation Manager (RAM) – Claire Miller

    Claire Miller advised members of digital identity changes by the ATO to improve how clients access whole of government services on behalf of business. From March 2020, AUSkey would be replaced by myGovID. This is an app which individuals can download and have their identify approved which would then allow access to business information. The RAM is able to store business authorisations and had been built with input from business clients. Currently myGovID is available on IOS and is being rolled out in Android in August 2019.

    Claire referred to improvements in the new systems including the need to only prove identification once; and a comparison of myGovID taking five steps to authorise employees whereas AUSkey uses 25 steps for the same process.

    Kathryn Traczyk provided an update on the Contemporary Excise Experience funding to upgrade the excise and excise equivalent goods payment system which would be provided in 2020–21. This work would move paper to online lodgement. The ATO had commenced work on a design build, with a three year IT build expected. Excise systems would be brought online, followed by claims and then authorisations. While it was noted that FTC claims were made using the BAS, some FTC clients may also be excise clients.

    • ATO Communications Update – Claudia Bianco

    Claudia Bianco provided a summary of communications activities over the previous year, which had focused on help and educate activities to assist clients to get their claims right.

    Communications to FSSG regarding indexation would issue as soon as rates were announced including email advice, articles and social media updates. Another set of communications would issue to coincide with the September BAS to remind clients.

    Communications had also issued throughout the year to support clients where errors/common mistakes had been made. This included tailored articles for industry and tax professionals. The ATO was currently reviewing content on ato.gov.au relating to fuel tax credits to ensure it meets the needs of clients. Members were asked to provide any feedback on the current website. Usability testing would also be conducted.

    The ATO used various forms of media to communicate with clients, including social media (Facebook, Twitter, LinkedIn) and ATO Newsrooms (Small Business and Tax Professionals) as well as communications to this group. Industry association members were asked to continue to share ATO messaging. ATO communications could also provide articles for industry newsletters.

    Tax Time toolkits have been compiled to assist taxpayers and were also targeted at specific industries. A Tax Time toolkit had been put together relating to the transport industry which may be useful for some FSSG members, as well as one relating to workers in the mining, building and construction industries. A toolkit for Small Business covered income tax expenses and running a business from home.

    • Update on ATO consultation surveys – Rowena Troth

    Rowena Troth provided an update of two ATO requests relating to stakeholder group feedback.

    The first related to a request in August 2018 from the previous Chair, Raj Srikhanta, to members asking for feedback on the ATO and the stakeholder group meetings and arrangements. Responses from the four external stakeholder groups had been collated and worked through by excise centre staff to identify potential solutions to any issues raised. Generally, responses had been very positive on the working relationship with the excise centre and the ATO more broadly.

    In March 2019 a separate request had been sent to members of external stakeholder groups seeking feedback on consultation across the ATO. Responses had been collated and would be used to provide an effectiveness measure of ATO consultation. Individual stakeholder group responses would not be provided to secretariats. It was expected that the outcome of this survey would be published in the ATO Annual Report.

    Industry association business insights

    • Australian Trucking Association (ATA) – Samuel Marks

    Samuel Marks provided members with information about the ATA. He advised that it was the peak industry body for road trucking, with NatRoad a member. The body mainly represented small businesses, with ABS stats showing approximately 53% were non-employing businesses and 45% had less than nine employees. They operated in a complex business and regulatory environment governed by a 633 page Heavy Vehicle National Law. This was currently being reviewed. Businesses were required to adhere to complex regulations with the example given of a mid-sized operator being required to undergo 14 audit processes in any one year for accreditation, safety standards etc.

    The main message for the ATO relating to fuel tax credits would be to keep it as simple as possible. Due to the complexity of regulations, many in the industry relied on third party advice. Economics research had indicated that the industry was growing and had steady demand; had intense competition with tight profit margins. The bottom quarter of industry had flat or negative margins. Industry was expected to consolidate to some extent. Freight was increasing and the number of trucks was expected to increase. By international standards, current fleets were quite old. Samuel noted the review of the heavy vehicle law and heavy vehicle road reform agenda as regulatory changes on the horizon for industry. He also noted that any move from road fuel base to distance based charging would not have industry support at the current time, however it was not expected for several years.

    • Association of Mining and Exploration Companies (AMEC) – Darryl Daisley

    Members noted the update by Darryl Daisley. He noted that AMEC represented small to medium size producers in mining and exploration. He advised that the industry continued to experience financial and economic pressures, fluctuating commodity prices, structural adjustment, significant international competitiveness, tight capital markets, and investment being allocated to offshore and competing projects.

    Darryl referred to a report sponsored by a number of Government, academic and industry bodies, including AMEC, which had been released in October 2017 which provided a long term outlook for the gold industry and key commodity groups, Long term forecast of Australia’s mineral production and revenue. The outlook for gold: 2017–2057'.

    The report highlighted the need for exploration to discover future mines, noting that the average delay between discovery and development was 13 years. Industry supported removal of Government red tape particularly where it would streamline barriers to fast track development. There was a growing number of international jurisdictions with mineral resources competing with Australian producers with Australia’s share of global exploration spend reducing from 23% to 12% over the last decade.

    Looking to the future, it was estimated that this industry would have an overall decline in fuel excise'/FTCs claimed due to use of renewable energy solutions, particularly in remote sites with solar and battery technology.

    • National Farmers’ Federation (NFF) – Pru Gordon

    Pru Gordon noted that several issues mentioned by others impacted equally in agriculture. The NFF is a peak organisation made up of approximately 28 organisations including state farming bodies and commodity groups, with aquaculture the only one not represented. This represented 85,000 farms and business in Australia, predominantly family run and predominantly small businesses, despite assumptions that Australian agriculture was becoming more corporatised.

    In terms of road transport, the NFF were involved in RUC and heavy vehicle reform. This related to both transport from farm to market as well as the movement of agricultural vehicles on public roads. The NFF had recently completed a two year process to get a change in permits required by farmers for vehicle movement.

    The key issue for the NFF was managing the impact of the drought and noted that prices for commodities were holding principally due to exports.

    Industry technical - Compliance issues

    Richard Calver raised the issue of the Fuel Tax Act and the burden placed on the heavy vehicle industry in relation to the maintenance requirements and environmental criteria in the Act. Nat Road had also raised this issue with the Department of Infrastructure, Transport etc.

    Members discussed the small numbers of vehicles in use manufactured prior to 1996. The issue of heavy vehicle uses on toll roads with vehicles paying the Road User Charge as well as tolls paid was also discussed (the Linfox case), however it was noted that toll roads and pricing were a state government issue.

    Treasury would be looking at the road use issue from a holistic view and the ATO would provide support with information as required.

    Other business

    • Amendment requests to ATO Business Portal – Michelle Scott

    Michelle Scott encouraged members to promote the use of online services when lodging fuel tax credit amendments. This would not only be easier but was more efficient for the ATO to process than written communication to the office. Michelle also noted that fuel tax credits were to be included as part of the assessable income for income tax purposes, and where amendments were undertaken, they were also to be included in assessable income. Where a client was using a BAS agent or tax intermediary for fuel tax credit claims, they would need to advise the client about the income tax obligations regarding fuel tax credits.

    • Update re safe harbour re light vehicle use in mining – Siau Goh

    Siau Goh provided an update to members about consideration of a safe harbour in mining which had been raised at last year’s FSSG meeting by Darryl Daisley. The ATO had considered data relating to the various factors including a mine’s distance from the town centre, the size of the mine, the number of vehicles and arrangements in terms of vehicle use. To date there had not been any strong correlation identified however further work would be undertaken, particularly to assist smaller companies.

    • Benchmark for fuel consumption rate – Siau Goh

    Siau Goh advised members that the ATO would be consulting with industry to ascertain a benchmark for a fuel consumption rate to be adopted in claims for fuel tax credits. The ATO would work to find a rate/s that was supported by industry and tax agents noting that the rate varies depending on vehicle type, heavy vehicle loads etc. Siau will be carrying out scoping work to commence this work.

    • Sunsetting regulations – Susan Bultitude

    Susan Bultitude advised members of regulations relating to the product stewardship for oil program which were due to sunset at the end of 2019 – Product Grants and Benefits Regulation. It was not expected that significant amendments would be made.

    Tony Poulakis encouraged members to share key messages from this forum with their association members.

    Action item update

    Action item

    10072019-3-1

    Due date

    1 August 2019

    Responsibility

    Rowena Troth

    Action item details

    A copy of the presentation and relevant links relating to the myGovID and RAM agenda item will be provided to members following the meeting.

     

    Action item

    10072019-6-1

    Due date

    When issued

    Responsibility

    Rowena Troth

    Action item details

    Members to be advised when the Product Grants and Benefits Regulation was released for public consultation.

    Attendees

    Attendee details listed below.

    Organisation

    Attendees

    ATO

    Tony Poulakis (Chair), Excise Centre, Private Wealth

    ATO

    Michelle Scott, Excise Centre, Private Wealth

    ATO

    Michael Hughes, Excise Centre, Private Wealth

    ATO

    Siau Goh, Excise Centre, Private Wealth

    ATO

    Claudia Bianco, ATO Corporate

    ATO

    Kathryn Traczyk, Public Groups International, Advice and Guidance

    ATO

    Rowena Troth (Secretariat), Excise Centre, Private Wealth

    AMEC

    Darryl Daisley

    Australian Trucking Association

    Samuel Marks

    Caltex Australia Petroleum Pty Ltd

    Grace Leung

    Deloitte

    Chris Sant

    EY

    Simon Whyte

    KPMG

    David Sofra

    Maritime Industry Australia Ltd

    Suzannah Rowley

    Minerals Council of Australia

    Sharon Jackson

    National Farmers' Federation

    Pru Gordon

    NatRoad Limited

    Richard Calver

    Pitcher Partners Advisory Pty LTd

    Peter Quattrocchi

    PWC

    Paul Cornick

    Shine Wing Australia Pty Ltd

    David Wilson

    Treasury

    Andrew Boland

    Treasury

    Susan Bultitude

    Apologies

    Member apologies listed below.

    Organisation

    Members

    APPEA

    Noel Mullen

    Bioenergy Australia

    Lisa Fontane

    Civil Contractors Federation

    Chris Melham

      Last modified: 11 Jun 2020QC 62846