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  • GST States and Territories Industry Partnership minutes 21 March 2018

    The Goods and Services Tax (GST) States & Territories Industry Partnership (STIP) meeting was held on Wednesday 21 March 2018.

    A summary of topics discussed is provided below

    1. GST STIP minutes

    Presented by Hayden Breen, ATO

    The minutes from the last GST STIP meeting held on 20 September 2017 have been published.

    Meeting discussion

    Publishing of minutes is undergoing changes on the ato.gov.au website. We will provide further advice in relation to the publication and distribution of minutes of this meeting.

    2. ATO Indirect Tax Government Strategy for 2018–19

    Presented by Hayden Breen, ATO

    Meeting discussion

    Indirect Tax (ITX) are working on a government strategy for 2018–19. The strategy will focus on supporting and working with the government sector to help them meet their GST obligations. Feedback can be provided to assist us with any specific issues via GSTRSGovtNFP@ato.gov.au.

    3. ATO updates

    Unimproved land

    Presented by Dany Johnson, ATO

    The ATO received a neutral evaluation on 15 April 2015 which supported the Commissioner’s position in relation to notional GST and unimproved land and the application of section 38-445 of the GST Act.

    A second neutral evaluation involving notional GST and unimproved land was received on 24 May 2017. It considered the application of item 4 of the table in subsection 75-10(3).

    The ATO is updating GSTR 2006/6 Goods and services tax: improvements on the land for the purposes of Subdivision 38-N and Division 75 via an addendum.

    Meeting discussion

    ATO advised that they are seeing various queries from government in relation to unimproved land. The ATO is currently working on updating GSTR 2006/6 using examples to provide clarity around the application of the law. Issues in relation to subterranean land have emerged with unimproved land and this is currently being worked through. The updated ruling is expected to be published in draft by mid way through the year.

    Improving the integrity of GST on property transactions

    Presented by James Francis, ATO

    On 9 May 2017 the government announced that it will strengthen compliance with the GST law by requiring purchasers of newly constructed residential properties or land in new subdivisions to remit the GST directly to the ATO as part of the settlement process.

    This new measure is scheduled to commence from 1 July 2018 and will affect purchasers of newly constructed residential premises, or vacant land in new residential subdivisions.

    Under the current law (where the GST is included in the purchase price and the developer remits the GST to the ATO), some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs. As most purchasers use conveyancing services to complete their purchase, they should experience minimal impact from these changes.

    Exposure draft legislation and explanatory material was released for public consultation on 6 November 2017, submissions closed on 20 November 2017 and the Treasury Laws Amendment (2018 Measures No. 1) Bill 2018External Link was introduced into Parliament on 7 February 2018.

    The measure has a two-year transitional arrangement to provide certainty for existing contracts. Contracts entered into before 1 July 2018 will not be affected by this change as long as the transaction settles before 1 July 2020.This will provide certainty for contracts that have already been signed.

    ATO is in the process of developing a Law Companion Ruling which will be published in draft for public comment. It will be finalised as a public ruling after the Bill receives Royal Assent and is intended to assist impacted property developers and purchasers with implementation of this new legislation.

    Meeting discussion

    A member raised concerns as to impacts for state governments in relation to GST on settlement. ATO advised that the GST is paid at or before settlement and may be done as part of the conveyancing process. There is no change to the Office State Revenue (OSR) process.

    A member also raised an issue if non-monetary consideration was included in the GST paid at settlement. ATO advised that the GST to be remitted is 1/11 of the contract price if the contract specifies a price. If there is no contract price specified the GST to be remitted will be 1/11 of the consideration for the supply which will include the market value of any non-monetary consideration. This also needs to be notified to the purchaser and the relevant GST amount needs to be paid at settlement.

    If the margin scheme is applied to the sale the amount to be remitted by the purchaser is 7% of the relevant amount.

    A member also asked a question in relation to GST- free land where it is exchanged with the developer building residential property ie where the title goes to the developer and then back to the government entity. ATO advised that the liability for GST is not altered and that this measure is changing who makes the payment of GST to the Commonwealth. The state would need to report the sale on the BAS.

    A private ruling can be sought where necessary.

    The ATO is working with the Law Society and conducting seminars from 1 July 2018.

    Penalties under section 2B of the TAA 1953

    Presented by Len Doo

    The new section 2B of the Taxation Administration Act 1953 does not allow the Commissioner to impose administrative penalties, general interest charges or shortfall interest charges on entities with crown immunity. MT 2011/1 Miscellaneous taxes: application of penalties and interest charges to the Commonwealth, States, Northern Territory and Australian Capital Territory and PS LA 2011/26 Administration of penalties and interest charges in relation to the notional liabilities of the States both have notes added to advise they are under review to consider implications for section 2B.

    Meeting discussion

    A member asked about the background to Section 2B and the updated documents. Section 2B of Schedule 1 to the TAA came into effect on 25 February 2015 and says that the Crown is bound by the TAA, but it is not liable to a penalty or to be prosecuted for an offence. The commonwealth, state and territory bodies that enjoy Crown immunity are now no longer liable for some GIC, SIC and uniform penalties under Part 4-25 of Schedule 1 to the TAA. However, those bodies may still be liable for penalties or interest where liability is imposed by an Act other than the TAA (subject to other exemptions from penalties or interest).

    MT 2011/1 sets out the Commissioner’s view on the application of the uniform penalty regime and interest charges to the commonwealth, state and territory bodies, including where section 114 of the Constitution is relevant. An addendum to MT 2011/1 has been drafted to also include the Commissioner’s view on the application of penalties and interest charges to a commonwealth, state or territory body which enjoys Crown immunity.

    Once the content of MT 2011/1 has been finalised we will provide a flowchart that will assist an entity to determine if it is entitled to Crown immunity, and also a list of the penalties that entities with Crown immunity are no longer liable for.

    An email issued to members on 16 February 2018 asking for feedback on the revisions by close of business 6 April 2018 to mailbox ATO Receivables Policy.

    A member asked whether a territory enjoyed the same immunity of the Crown as States? Yes – the same immunity is available for a territory as the states and the same tests for determining whether an entity will enjoy Crown immunity will apply.

    The members were asked how far they have progressed with notifying the ATO in relation to Crown entities, as per the earlier request for them to provide this to Martyn Lyons. A member advised a response had been sent and a decision was made to follow up with Martyn on his return.

    Action item update

    Action item

    21032018/1

    Due date

    ASAP

    Responsibility

    Hayden Breen

    Follow up responses received from states & territories regarding the list of crown entities.

    4. Single Touch Payroll

    Presented by Natascha Bowett, ATO and Andrew Ednie, ATO

    ATO will provide an update on the implementation of Single Touch Payroll and impacts for government employers. An update on how is the ATO implementing Single Touch Payroll.

    Meeting discussion

    The ATO provided a Single Touch Payroll (STP) project update. STP will apply to employers with 20 or more employees from 1 July 2018. STP means you will be able to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from your payroll software when employees are paid.

    There is no delay on the mandated start date; however exemptions or deferrals have been built into the implementation of STP. The ATO has been working with digital service providers (DSP), intermediaries and employers on the implementation of STP via emails, letters, and information on ato.gov.au (including fact sheets, checklists, webinars and other documentation which can be downloaded). Application for deferral will be reviewed based on circumstances and DSP product development stage. DSPs releasing products after 1 July 2018 transition provisions have been included to provide flexibility with implementation. The ATO advised members to talk to their DSPs to find out when their STP-enabled software will be ready then they can determine whether they’ll need a deferral (or whether their provider is seeking a deferral).

    An update was also provided on how the ATO is implementing STP. The ATO has been working closely with DSP provider to implement STP with existing software SAP. STP will provide real-time reporting and employees can see their details on MyGov. ATO is also working on implementing governance processes, streamlining processes and a three way reconciliation process with payroll systems. ATO is revisiting Quality Assurance (QA) processes to ensure the correct tax amounts are being deducted and reconciled to the general ledger. QA process is being aligned to current SAP payroll system. Data analytics is being used to ensure the payroll configuration is correct as superannuation guarantee will now be reported on. ATO is also undertaking planning process and consultation with internal stakeholders, tax management teams, IT support, payroll and ATO People Helpline to communicate STP messages/intranet changes. SAP pilot build and testing phase is underway and the ATO’s own readiness tracking is being completed via project documentation.

    If you require any further information, email singletouchpayroll@ato.gov.au

    5. Taxable Payments reporting for Government entities

    Presented by Robert Muscat ATO, Leesa Armstrong ATO and Marcus Chew ATO

    ATO will discuss Taxable payments reporting for government entities which commenced on 1 July 2017.

    Government entities need to report payments and grants they make on the Taxable payments annual report which is due by 28 August each year. The first annual report for government will be for the 2017–18 financial year.

    Meeting discussion

    ATO provided an update in relation to Taxable payments reporting for government entities. From 1 July 2017 government entities at the federal, state, territory and local levels are required to report total payments they make to an entity wholly or partly for providing services. Federal, state and territory levels also need to report grants paid to people or organisations that have an ABN. These payments need to be reported in the Taxable Payments Annual Report which is due by 28 August 2018 for the 2017–18 financial year. Local government entities do not report grants.

    The ATO has been working with government entities on what needs to be reported. Certain classes of government entities and certain types of transactions have been excluded from reporting.

    See also:

    A member asked if reporting was on a cash or accrual basis. The ATO advised that you're required to report payments and grants you make in the financial year in which they're actually made (cash basis).

    A member asked, what does the ATO do with the data collected? The ATO advised that the data is used in its compliance activities to identify businesses that don’t lodge tax returns, don’t declare all their income in lodged tax returns and identify those who do not met GST obligations. The data is also made available in its Prefill service to assist clients prepare and lodge their tax returns.

    A member asked a question on classification of grants. The ATO advised grants can take a variety of forms and include subsidies, rebates, sponsorships and similar arrangements.

    Some factors that indicate a transaction is a grant include:

    • grants may be explicitly tied to a government policy or goal
    • grants may be disbursed on a one-off or longer term basis, but aren't provided as ongoing, permanent funding
    • recipients are usually required to submit applications to receive grants
    • grants typically, but do not always, have conditions attached, such as reporting obligations or the requirement to include government logos on marketing materials
    • unlike loans, grants typically don't have to be repaid.

    The ATO further advised that you can refer to your jurisdiction’s financial management guidance on what grant programs are currently considered to be grants. For example, federal government entities may refer to the Commonwealth Grants Rules and Guidelines.

    Government entities need to report grants paid to a person or organisation with an ABN. More information is available at Government entities.

    A member also raised an issue in relation to payments made and Machinery of Government (MoG) changes, where different entities are involved prior the change. ATO advised that where this situation occurs to write to us at tparGov@ato.gov.au detailing the circumstances.

    A member raised an issue as to what the ATO will do with issues it identified with the data that is being reported? ATO advised that they will follow-up with the relevant government entity directly.

    A member also asked is anything further that was required from the states and territories’ members. The ATO advised that they will follow-up any issues individually directly with the government entity.

    The ATO asked each state and territory to provide an update on their readiness to report. The STIP members at the meeting provided an update. The members were encouraged to send any TPRS questions to the ATO at tpargov@ato.gov.au.

    The ATO provided an update on the results achieved in the building and construction industry. For the 2013 year, an additional $2.3b in revenue was raised. Compliance activities include desk and field reviews with payers, following up non-lodgment of income tax returns and identifying businesses that under declare income. Raising awareness of a number of self-help tools including the ABN lookup tool is also promoted. ITX area is also using TPRS data in their modelling and has achieving good compliance results.

    See also:

    Enquiries can be emailed to tparGov@ato.gov.au.

    6. GSTR 2017/1 and cross-border supplies to Australian consumers

    Presented by Jonathan Purcell, ATO

    Discussion on ATO administration of GSTR 2017/1 Goods and services tax: making cross-border supplies to Australian consumers.

    Meeting discussion

    ATO provided an update on GSTR 2017/1 and cross-border supplies to Australian consumers and confirmed that it is not really relevant for supplies of accommodation in Australia by Online Tour Companies (OTC’s) because it is a supply of rights over real property not services (focusing on the merchant model).

    As a member had raised an issue in relation to a lack of tax invoices when bookings are made for accommodation online the ATO discussed in more detail, OTC’s and invoicing.

    OTCs are entities that enable consumers and businesses to book hotel accommodation services and other related activities through an online platform.

    Following a law change in early 2005 which had expanded the reach of GST law to Foreign Tourist Operators (FTOs), a generous turnover concession was introduced which sought to remove FTOs from being drawn into the Australian GST system when they had no presence in Australia. For this reason, some non-resident OTCs do not need to charge and remit GST on supplies of Australian hotel rooms they make to Australian customers. Broadly, this is the case if they have no (or an insufficient) Australian presence. As these OTCs are not registered for GST, they are not issuing tax invoices when customers book and pay for accommodation online. An option to consider is paying for the hotel on checkout so that a tax invoice can be obtained.

    Another reason a customer may not obtain a tax invoice is when they book accommodation in serviced apartments. Hotels and serviced apartments have different operating models that result in different GST outcomes on the supplies made. Supplies of accommodation in commercial residential premises such as hotels are taxable, the operator makes the supply of accommodation in their own right and GST should be collected on that supply to guests. In contrast, supplies of serviced apartment accommodation may be input taxed supplies of residential premises and tax invoices are not issued. The operator of a serviced apartment enterprise acts as an agent on behalf of each individual apartment owner in the premises when supplying short or long term accommodation.

    7. Tax invoice issues resulting from cancellation of an ABN

    Presented by Hayden Breen

    Question

    1. If the recipient of a supply claimed input tax credits when issued with tax invoices by a supplier who issued the tax invoices over a period when the supplier’s ABN was cancelled, is the recipient of the supply required to amend their BAS over that period and repay the input tax credits?
    2. Would ATO’s response to question1 be the same if the supplier’s ABN and GST registration had been restored from the date of cancellation prior to the recipient of the supply amending their BAS?

    Background

    Refer to item 2 of the minutes from the last GST STIP meeting held on 20 September 2017. That item concerned the No-ABN withholding requirements when a supplier issues a tax invoice at a time when their ABN and GST registration are cancelled but did not consider the situation where input tax credits had been claimed for a period when the ABN was cancelled.

    Question 1

    It is the practice of the payer to obtain a supplier’s ABN and GST status at the time a supplier first makes a supply to the payer. The ABN and GST status are confirmed with the ABR before entering the details into a vendor file contained in the accounts payable module of the payer’s accounting system. The information contained in future tax invoices from the supplier are checked by the system and will register an error if the ABN or GST status do not match the information contained in the vendor file. That is, the ABN needs to be the same and GST included in the invoice if the supplier is registered for GST.

    A situation may arise where the ABN registration or GST status for a supplier may change on the ABR but the supplier continues to issue tax invoices as if the same ABN was active and the supplier continued to be registered for GST.

    Paragraph 120 of TR 2002/9 states that a payer is not required to check the validity of an ABN on the ABR unless the payer has reasonable grounds to believe the ABN is incorrect. I assume this would also be the case regarding the GST registration status of a supplier. The payer, having verified the ABN and GST status previously, has no reason to suspect that the ABN or GST status has changed if the supplier continues to submit tax invoices on the same basis as previously. This may continue for some time before the payer becomes aware of the changed details on the ABR and may have claimed input tax credits during the period the supplier’s ABN was cancelled.

    Section 11-20 of the GST Act states ‘You are entitled to the input tax credit for any creditable acquisition that you make.’ However, subsection 29-10(3) allows an input tax credit to be claimed only in the tax period that the payer holds a tax invoice.

    ATO’s response to question 4 of item 2 in the STIP minutes dated 20 September 2017 included '….. although a supplier is not registered for GST, they may be required to be registered and should, therefore, be required to issue tax invoices although not registered on the ABR.' This recognises that an entity carrying on an enterprise can be required to issue tax invoices although not registered.

    ATO’s response to question 4 also states 'As the recipient has checked the ABR and identified that the ABN quoted had been cancelled, they would have reasonable grounds to believe that the tax invoice is not a valid one. Therefore no input tax credits can be attributed until the ABN is reinstated (subsection 19(3) of the ABN Act) and the invoice held is a valid tax invoice.' This applies once the payer is aware that the supplier’s ABN has been cancelled.

    Paragraph 8 of the PSLA further states 'Where an entity or its associate misuses an ABN by holding themselves out and identifying themselves by using a cancelled ABN they commit an offence under the ABN Act, which can incur two years imprisonment.'

    Member conclusion

    The recipient of the supply should not be required to repay input tax credits claimed during a period they were unaware that the supplier’s ABN and GST registration had been cancelled. The ABN Act provides a penalty for the supplier. To require the recipient to repay the input tax credits would be a penalty on the recipient because they would be denied input tax credits to which they would otherwise be entitled.

    However, the payer should not claim input tax credits from the time they became aware of the supplier’s ABN and GST registration having been cancelled. The payer at that time had control over the payment and could have withheld payment until the matter had been settled.

    Question 2

    Would ATO’s response to question1 be the same if the supplier’s ABN and GST registration had been restored from the date of cancellation prior to the recipient of the supply amending their BAS?

    The payer holds tax invoices that were issued at a time when the supplier’s ABN and GST registration were cancelled. However, the invoices are not valid at the date of issue. If the ABN and GST registration are reinstated from the date of cancellation, the tax invoices issued during cancellation should be valid without the supplier being required to re-issue those tax invoices.

    Paragraph 9 of PSLA 2016/3 provides for an ABN to be reinstated if satisfied it should not have been cancelled. The date of reinstatement is the date of cancellation. This recognises that an ABN may have been cancelled in error.

    Member conclusion

    In these circumstances, the supplier provided tax invoices at a time when their ABN and GST registration had been cancelled. The ABN and GST registration are restored from the date of cancellation which would the tax invoices previously issued. The supplier should not be required to re-issue previous invoices and the payer should not be required to amend their BAS.

    Reference to other states and territory

    Similar situations most likely arise nationally.

    Technical references

    • TR 2002/9
    • PS LA 2016/3
    • A New Tax System (Goods and Services Tax) Act 1999

    Impact on clients

    Loss of input tax credits

    Priority

    Low

    Has previous advice been sought from the ATO?

    No

    Has this issue been discussed at any other consultative forum?

    Not to my knowledge

    ATO response

    Question 1

    Yes. The recipient was not entitled to the input tax credits.

    The recipient of a supply is entitled to input tax credits for any creditable acquisition they make. However, an acquisition needs to be a taxable supply by the supplier to be a creditable acquisition to the recipient. To be a taxable supply the supplier needs to be registered, or required to be registered. The recipient is required to hold a valid tax invoice to enable them to claim the input tax credit. When the supplier’s ABN is cancelled they will not be making a taxable supply to the recipient and therefore the recipient is not entitled to claim input tax credit. Furthermore, the tax invoice issued by the supplier after the date of cancellation of their ABN would be an invalid tax invoice.

    In this situation, if a recipient has claimed an input tax credit for a supply where the supplier’s ABN has been cancelled the recipient is required to correct the debit error on their activity statement or on a later activity statement depending on value and time limits as soon as they become aware of the cancellation of the supplier’s ABN. Refer to Correcting GST errors.

    Although a supplier is not registered for GST, they may be required to be registered and should, therefore, be required to issue tax invoices. In this situation it should be noted that since it is the recipient making the creditable acquisition, the onus is on them to ensure that the supply made to them is taxable. Where the supplier is not shown as registered for GST on the ABR, we would expect the recipient to take reasonable steps to satisfy themselves that the supplier is in fact required to be registered.

    Meeting discussion

    ATO update provided and no questions raised by members

    Question 2

    No. The recipient will not have a debit error therefore no corrections are required.

    If the supplier’s ABN and GST registrations are backdated from the date of cancellation, the recipient will not have a debit error as the supply to the recipient would satisfy the requirements of a taxable supply. The suppler is not required to re-issue the tax invoices.

    Meeting discussion

    A member raised issue that a tax invoice issued two weeks ago and then the ABN is cancelled; can input tax credits be claimed? ATO advised that input tax credits can be claimed in BAS where at the time the invoice issued the ABN and GST registrations were active. ATO advised that the date of the effect of cancellation of ABN may be an issue for backed dated cancellations. The ABN lookup tool can be used to check validity of ABNs. ATO advised that an ABR update can be provided for the next GST STIP Meeting to assist with further information on ABN/GST Registration and the ABN Lookup Tool.

    Action item:

    21032018/2

    Due date:

    Next GST STIP Meeting

    Responsibility:

    Hayden Breen

    ABR Update to be organised for the next GST STIP meeting.

    8. Re-zoning of land and implications for valuations under the margin scheme

    Presented by James Francis, ATO

    Question

    1. Are commercial structures located on land that has been re-zoned from commercial to residential disregarded in the valuation of the land?
    2. If the response to question 1 is negative, does the value of the commercial structures only apply to the land upon which they stand?

    Background

    Land that has been owned by the government since prior to 1 July 2000 is the basis of a land development agreement with a developer. The land has been used by the government as a farming research centre of mostly vacant land but contains a number of commercial buildings such as offices and research facilities. These buildings have existed on the land since prior to 1 July 2000. The land is currently zoned as commercial and is being re-zoned to residential. The commercial buildings located on the land are required to be demolished as a requirement for re-zoning and for the residential development.

    The development agreement requires the developer to develop the land as residential lots to be sold to the general public by the developer. Title to lots will be transferred to the developer in stages as each stage is completed in return for the development services which is to include parkland to be retained by the government. It is intended that the margin scheme be applied to the lots transferred to the developer with the margin being the difference between the valuation as at 1 July 2000 and the value of land at the date of transfer to the developer determined in accordance with paragraphs 68 to 73 of GSTR 2015/2.

    Question 1

    Are commercial structures located on land that has been re-zoned from commercial to residential disregarded in the valuation of the land?

    Subsection 75-10(3) of the GST Act requires a valuation to be made as at 1 July 2000.

    Taxation ruling GSTR 2006/6 discusses improvements on the land for the purposes of Division 75 of the GST Act. Paragraph 29 recognises that a building that once enhanced the value of the land may have deteriorated to such an extent that it is uninhabitable and a detriment to the land. In this case it is the re-zoning that has made the buildings uninhabitable at the time the development commences but the buildings were not uninhabitable at the valuation date of 1 July 2000.

    Paragraph 9 of MSV 2009/1 requires, in these circumstances, that a valuation of the interest in existence at the valuation date be made. The valuation date is determined as 1 July 2000 and the interest in existence at that date included the buildings situated on the land.

    Conclusion

    The valuation for applying the margin scheme would be the property in existence as at 1 July 2000 including buildings located on the land.

    Question 2

    If the response to question 1 is negative, does the value of the commercial structures only apply to the land upon which they stand?

    Paragraph 50 of GSTR 2006/6 states that the application of the improvements test to land that is supplied. This implies that lots upon which there is a building may have a different value to other lots created from vacant land notwithstanding that all lots are created from the same parcel of land.

    Paragraph 39 of GSTR 2006/7 states 'In the context of subdivisions, if land that is part of the original Broadacres is used for public purposes, such as, roads, parklands or utilities ('lost land'), the valuation of the entire Broadacres is apportioned to the total number of subdivided lots, so that the sum of the apportioned amounts equals the valuation for the Broadacres (including the 'lost land').'

    Paragraph 105 of GSTR 2006/7 states 'If an approved valuation is required to work out the margin for the taxable component of a supply, the valuation is to be obtained for the entire real property supplied. The valuation is then apportioned on any fair and reasonable basis to ascertain the part of the valuation that relates to the taxable component of the supply.' This refers to the land being supplied which is consistent with paragraph 50 of GSTR 2006/6 but does not consider the ‘lost land’ referred to by paragraph 39 of GSTR 2006/7.

    Conclusion

    It is considered that the entire parcel of land be valued as at 1 July 2000, including all structures situated on the land, and apportion the value between the lots transferred to the developer on a fair and reasonable basis.

    Reference to other states and territory

    Similar situations are likely to arise nationally

    Technical references

    • A New Tax System (Goods and Services Tax) Act 1999
    • Goods and Services Tax Ruling GSTR 2006/6
    • Goods and Services Tax Ruling GSTR 2006/7
    • Goods and Services Tax Ruling GSTR 2015/2
    • A New Tax System (Goods and Services Tax) Margin Scheme Valuation Requirements Determination MSV 2009/1

    Impact on clients

    Valuation for applying the margin scheme may affect the calculation of GST

    Priority

    Low

    Has previous advice been sought from the ATO?

    No

    Has this issue been discussed at any other consultative forum?

    Not to my knowledge

    ATO response

    Question 1

    If a valuation is required as at 1 July 2000 for the purposes of applying the margin scheme the valuation should include any improvements on the land or premises.

    Paragraph 35 of the GSTR 2006/6 explains that whether an intervention enhances the value of the land should not be determined by reference to use or intended use by either the supplier or the recipient. For example, real property with a building on it that is not condemned enhances the value of the land even though the recipient may intend to demolish the building and construct some other building in its place.

    Please note that the issue of whether there are improvements on the land is a question of fact, it may be prudent to engage a professional valuer to establish this.

    Question 2

    As explained in question 3, the valuation should include all the structures situated in the land.

    Meeting discussion

    ATO provided an update on Re-zoning of land and implications for valuations under the margin scheme. Commercial structures are not be disregarded. The value of the land is at a point in time at the date of valuation. Margin Scheme and apportionment for large pieces of land will need to occur across the sub-division. The method used must be reasonable. In relation to Government Land rezoned and the land being onsold from developers, includes whatever is on the land as at valuation date. Near Maps can be used to show you what was on the land at a particular point in time.

    9. GST Technical Update

    Presented by Dany Johnson, ATO

    Meeting discussion

    ATO has updated the GST Digest and will distribute via email. The GST Digest update includes:

    • Treasury Laws Amendment (2018 Measures No.1) Bill 2018 to strengthen compliance with GST on property settlements.
    • Law Companion Rulings:
      • LR 2018/1– GST on low value imports,
      • LCR 2018/2 – GST on supplies made through electronic distribution platforms,
      • LCR 2018/3 – When is a redeliverer responsible for GST on a supply of low value imported goods?
       
    • ATO news publications: Should I be GST registered if dealing in property?
    • Compliance issues.

    A member asked if the ATO could elaborate on current compliance issues in the government sector. ATO advised that risk planning is currently underway in relation to the focus areas for our client engagement teams in 2018–19. We generally focus on Integrity of Business Systems which considers reporting and classification issues (how and what has been reported). We continue to focus on unimproved land and applying a consistent approach across engagements. We are working on apportionment issues in respect of residential property – appropriations. We are also focusing on infrastructure arrangements and infrastructure participants to track compliance.

    10. General business

    Removing irritants and better support

    Presented by Hayden Breen

    We would like to continue to work with the states and territories to identify irritants for government agencies and receive suggestions on how the ATO can better support the government sector.

    Future GST impacts for states and territories

    Presented by Hayden Breen

    We would like the states and territories to consider the following questions for discussion at the meeting.

    • What issues from a GST perspective do the states and territories anticipate in the future?
    • How will the states and territories be equipped to respond to these impacts?
    • What challenges to sustainability of compliance do the states and territories face over the next few years?
    • How effective (easier, contemporary, cost effective, more tailored) is the design of existing ATO systems for the administration of GST?
    • How can any deficiencies be shaped to become more effective?

    Meeting discussion

    The ATO welcomes any feedback from the GST STIP members and this can be sent to the GSTRSGovtNFP@ato.gov.au. The following issues were raised by members:

    • Could the ATO provide at future meetings more specific issues which the states and territories need to address and what are the challenges for the ATO? It was agreed that an update will be provided at future meetings.
    • The service provided by the Client Relationship Managers was most valuable in past years. How will the ATO provide this service in the future? The ATO advised that a Government Hub is being considered as part of the 2018–19 strategy as a point of contact for government entities.
    • There have been issues with receipts for lodgments and payments, and reiterated the importance of having a link or contact point for government entities. ATO advised to send enquiries and issues to the above mailbox.
    • An update from the ABR and the ABR lookup is required for the next meeting, as there have been issues with changes in registration and there appears to be no audit trail. Any changes are overridden and historical data is lost including payment information.
    • In relation to the Private Ruling Database, is this being moved and why?

    Action item:

    21032018/3

    Due date:

    As soon as possible

    Responsibility:

    Dany Johnson and James Francis

    Follow up and respond back to members with status of Private Ruling Database.

    Hayden Breen asked members to forward any specific feedback or issues to the mailbox noted above so this can be sent for actioning to the relevant area within the ATO and a response provided.

    Next GST STIP Meeting

    Presented by Hayden Breen

    The members decided that the next meeting should be hosted in Brisbane. Telepresence will be organised for the next GST STIP on 20 September 2018.

    Meeting wrap up and close. Meeting was closed at 1.40pm

    Attendees

    Organisation

    Members

    ACT Government

    Robert Enright

    NT Government

    Harold Glenwright

    NT Government

    Michael Kwong

    QLD Government

    Liza Gordon

    SA Government

    Justyna Carlier

    SA Government

    Tracey Scott

    NSW Government

    Joan Cram

    NSW Government

    Amu Premadas

    NSW Government

    Adam McIntosh

    WA Government

    John Watts

    WA Government

    Christine Crasto-Carvalho

    Commonwealth Department

    Christine Havas

    Commonwealth Department

    Alice Walker

    ATO (Secretariat)

    Hayden Breen

    ATO (Minutes)

    Chemaine Uranie

    ATO

    Dany Johnson

    ATO

    James Francis

    ATO

    Len Doo

    ATO

    Natascha Bowett and Andrew Ednie

    ATO

    Robert Muscat, Leesa Armstrong, Marcus Chew

    ATO

    Jonathan Purcell.

    Apologies

    Organisation

    Members

    ACT Government

    Desley Croker

    Victorian Government

    Peter Stibbard

    TAS Government

    Rachel Johnston

    ATO

    Martyn Lyons

      Last modified: 30 May 2018QC 55583