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  • Fuel Schemes Stakeholder Group minutes 14 September 2016

    Meeting details

    Venue: ATO Office, 26 Narellan Street, Canberra

    Date: 14 September 2016

    Start: 1.30pm Finish: 4.00pm

    Chair: Anthony Barnard

    Secretariat: Rowena Troth

    Attendees  

    Anthony Barnard

    ATO

    Michael Hughes

    ATO

    Carlene August

    ATO

    Siau Goh

    ATO

    Claudia Bianco

    ATO

    Paul Cornick

    PWC

    Sam Mohammad

    KPMG

    Peter Gibson

    Deloitte

    David Wilson

    EY

    James Sorahan

    Minerals Council of Australia (MCA)

    Bryan Mundy

    NatRoad

    Samuel Marks

    Australian Trucking Association

    John Kilgour

    Civic Contractors Federation (CCF)

    Renee Vajtauer

    Commonwealth Fisheries' Association (CFA)

    Peter Quattrochi

    Pitcher Partners Advisors Pty Ltd

    Cate Kemp

    Small Business Financial Ops (SFBO)

    Rowena Troth

    ATO - Secretariat

    Apologies  

    Tom Wheeler

    ATO

    Darryl Daisley

    AMEC

    Noel Mullen

    APPEA

    Michael Apps

    Bus Industry Confederation (BIC)

    Bill McKinley

    Australian Trucking Association

    Gary Dutton

    PWC

    Mark Sutton

    Biofuels Association

    John O'Halloran

    Russell Kennedy Pty Ltd

    Scott Kompo-Harms

    National Farmers' Federation (NFF)

    Discussion summary

    Disclaimer

    The Fuel Schemes Stakeholder Group agendas, minutes and related papers are not binding on the ATO 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 and introductions

    Outcome: It was noted that the minutes of the meeting of 21 May 2015 were previously endorsed and have been published online. Out of session contact with FSSG members has also been published online. All action items from the May meeting were completed.

    Since the last meeting, a review of membership has been conducted to ensure the FSSG is representative of ATO clients in the fuel tax credit area.

    Anthony welcomed Cate Kemp, representing BAS agents and Renee Vajtauer, representing the Commonwealth Fisheries' Association.

    No conflicts of interest were declared by members.

    Agenda item 2 Compliance focus areas for 201617 and compliance strategy update

    Outcome: Members noted the report by Michael Hughes regarding compliance focus areas for 201617. Approximately 2000 activities have been scheduled. Michael explained that these were selected by risk profiling using ratios, data matching, claim pattern analysis etc. Focus areas for 2016/17 will include:

    • back claims related to fuel used in auxiliary equipment on heavy vehicles to check calculations, use of correct rates and evidence for the basis of apportionment where the client has not relied on the ATO’s percentages;
    • a number of risk workshops will be conducted with large claimants to ensure that their claims are correct;
    • the ATO will also be looking at tax agents and BAS agents with a high rate of adjustments per number of clients to ascertain what issues may exist, and whether there is any further support the ATO can provide to reduce errors and adjustments in future; and
    • scoping work will be carried out across large agricultural and mining enterprises where there are changes in operations eg. where companies are undertaking care and maintenance or where the companies are being wound up, to determine if any risks are present.

    Michael also referred to a letter campaign nudging clients to check their claims as they appear to be out of step with similar businesses.

    Siau Goh provided an update to members of a Research Audit Program carried out last year to compare current compliance levels to that experienced when fuel tax credits were introduced in 2007/08. During that time several changes have occurred: the carbon charge; road user charge (RUC); biannual indexation; etc. This has informed the ATO where and how errors were being made; and who clients were going to for assistance etc. The findings will also assist in the ATO better tailoring assistance for our clients.

    Errors included:

    • taxpayers not using the current rate;
    • incorrect apportionment;
    • claiming off road for on road use;
    • claiming for ineligible vehicles or activities;
    • record keeping; and
    • it was found that some agents provided incorrect advice, and that a large number of agents each represent less than 10 fuel tax credit clients.

    32% of clients reviewed used the fuel tax credit calculator. Further findings will be provided to FSSG members out of session as they become available.

    Members were surprised that only 32% were using the FTC Calculator. The ATO had run a social media campaign to have more FTC claimants use the calculator, which ensures the current rates are used. Claudia Bianco and Cate Kemp will discuss further offline.

    Further to this, the ATO has endeavoured to make claiming easier for the vast majority of claimants by publishing safe harbours in May 2016 that provide, among other things, simpler ways to determine the appropriate rate and keep records.

    Agenda item 3 Every Year Counts

    Outcome: Anthony Barnard provided an overview of the ATO’s work on Every Year Counts commitments. The 201516 commitments included the statement that the ATO would make it easier to claim FTCs and make it easier to apportion. Safe harbours are continuing to be considered across the ATO for any tax practices where the ATO and Treasury will partner with industry to make it easier for clients to comply. Anthony Barnard and Carlene August are members of the Excise Safe Harbour Working Group, as well as other ATO members and four external members. Anthony explained that as excise and other indirect taxes have a small client base, FTCs were the biggest opportunity to make a difference for our clients. Irritants were identified around multiple rates, claims constructed using litres, apportionment etc. 80% of FTC claimants claim less than $10,000 per annum. To assist FTC clients, the ATO have released three Practical Compliance Guidelines (PCGs). These were the first safe harbours released by the ATO and were the first Practical Compliance Guidelines issued by the ATO.

    A Post-Implementation Review will be conducted in November to assess the effectiveness of the safe harbours published in March 2016. Anthony provided more information about the PCGs. With regard to apportionment for incidental travel by off road vehicles, the ATO is open to consider adding different types of vehicles to this section if appropriate.

    The third element of the commitment involved the redesign the FTC calculator and eligibility tool. These new versions were released in mid-May 2016. There is now a single page application and the system is more user friendly – scaling to different devices. These are both also available in the ATO app.

    Agenda item 4 Public advice and technical matters update

    Outcome: Carlene August referred to ATO guidance documents that were released on 8 September. These included:

    • fuel tax determination 2016/1 (FTD 2016/1) referring to the FTC rate being reduced by the road user charge for fuel used in a heavy vehicle for idling on a public road or powering the air conditioning unit of the vehicle’s main cabin when travelling on a public road.
    • the explanation of ‘public road’ was clarified in fuel tax ruling FTR 2008/1.
    • practical compliance guideline PCG 2016/11 replaces PSLA 2013/4 (GA) and is a guide to methods that claimants can use to apportion fuel used in heavy vehicles to power auxiliary equipment.

    Carlene advised that Item 5 in the PCG now stipulates equipment that is covered. This is to be an exhaustive list rather than the previous non-exhaustive list. If members require amendments to this list, they should advise Carlene August. Should the equipment be approved, clients would not be disadvantaged and would be able to claim if within the period of review.

    Members discussed how the safe harbours are to be used where a rigid refrigerated truck also has a trailer. The ATO confirmed that the safe harbour for refrigerated trailers (10%) could only be claimed once (ie regardless of the number of trailers).

    However if the truck used fuel for the sleeper cabin, then the 5% safe harbour can also be claimed.

    Action Item 14092016-4-1 The ATO to review PCG 2016/11 regarding whether the ATO needs to clarify the note relating to eligibility to claim for multiple items.

    Members also discussed consultation regarding advice products. In this case, the advice products mainly related to known factual or legislative issues however members expressed interest in providing feedback on future documents.

    Carlene advised that the ATO is willing to consider further safe harbours and would welcome input on possible suggestions for safe harbours. Members asked whether the 2013 Safe Harbour on apportionment for auxiliary equipment would be revisited. While Carlene advised there are no current plans to revise the safe harbour, she advised that if feedback were provided, the ATO would consider revision of the percentages. Any change to the percentages would require consultation and any change would be prospective.

    Members discussed how other international jurisdictions dealt with air conditioning and buses.

    Carlene advised members that industry and accounting firms have sought clarification from the ATO on roads. The Commissioner’s view is that ‘public road’ for the purposes of the Fuel Tax Act 2006 takes its ordinary meaning.

    Members also discussed managing revisions within the four-year period of review time limit. Reference was made to FTE 2013/1 relating to correcting mistakes, and that section 105-55 can no longer be used to stop the clock for revisions. Members discussed the option of lodging an objection.

    Action Item 14092016-4-2 ATO to provide clarification about the effect of an objection in terms of preserving the four year period.

    Action Item 14092016-4-3 Anthony Barnard to provide advice as to where objections should be lodged - contact details.

    Agenda item 5 Industry/member updates

    Outcome: Members discussed various issues, including complimenting the ATO on the work on safe harbours.

    Action Item 14092016-5-1 Claudia Bianco to follow up with Cate Kemp to discuss promoting the fuel tax credit calculator or the rate changes in lodgement software.

    Members noted that the information provided in the ATO’s Taxation Statistics publication was useful; however some of the definitions relating to broad industries were not clear. For example there appeared to be a lot of claims for Professional, Scientific and Technical Services but it is unclear how these entities would use the fuel. Michael explained that the classification of clients to broad industries was based on the broad industry of the GST reporting entity and not the entity which was actually using the fuel. This can result in these unusual industries appearing to claim fuel tax credits. Michael also confirmed that Taxation Statistics reports on the number of claims lodged by each broad industry and not on the number of actual claimants.

    Action Item 14092016-5-2 Members to provide Michael Hughes with details of the different categories of data from the Tax Stats figures that would be of use to them / their members.

    Action Item 14092016-5-3 Anthony Barnard to provide relevant extracts of the Explanatory Memorandum to members for their reference regarding the intent of fuel tax credits.

    Members discussed guidance around the use of technology. The ATO has published a class ruling in this area on the LogBookMe technology. Members suggested elaborating about use of ‘other technology’ in the reference to ‘fair and reasonable’ in the PCG on apportionment.

    Action Item 14092016-5-4 Rowena Troth to include State contacts of CCF in email distribution list.

    Members were advised of work being carried out by the ATO to ascertain what external training was currently available and whether the ATO could provide any further educational products to improve external capability around excise and other indirect taxes.

    John Kilgour advised that CCF members often participate in webinars and this would be a good forum for a session on FTCs. Members also commented that the results of the research program would be an interesting webinar for members.

    Action Item 14092016-5-5 Members to provide suggestions to Rowena Troth of any areas where the ATO could provide educational support to clients.

    Members held a general discussion about the road user charge and whether there might be any other ways of funding road maintenance.

    Agenda item 6 Other business

    There was no other business.

    The meeting concluded at 4.00pm.

      Last modified: 19 Sep 2017QC 53321