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  • Petroleum Stakeholder Group minutes 6 July 2017

    Meeting details

    Venue: ATO Office, 747 Collins Street, Docklands, Melbourne

    Date: 6 July 2017

    Start: 2.00pm Finish: 3.10pm

    Chair: Rajitha Srikhanta

    Secretariat: Rowena Troth

    Attendees

    Rajitha Srikhanta

    ATO

    Andrew McIver

    ATO

    Wendee Mundy

    ATO

    Anthony Barnard

    ATO

    Chris Brennan

    ATO

    Dale Rizzuto

    ATO

    Tony Martiniello

    ATO

    Mitchell Dunn

    Department of Immigration and Border Protection (DIBP)

    Nathan Dickens

    Australian Institute of Petroleum

    Massarra Hassan

    BP Australia Pty Ltd

    Grace Leung

    Caltex Australia Petroleum Pty Ltd

    Helen Curran

    Viva Energy

    Rod Geer

    Exxon Mobil

    Grace Abinoja

    Exxon Mobil

    Rowena Troth

    ATO - Secretariat

    Apologies

    Mark Gall

    BP Australia Pty Ltd

    Susan Bultitude

    Treasury

    Jenny Park

    Caltex Australia Petroleum Pty Ltd

    Erin Dale

    Australian Border Force (ABF)

    Sasha Billett

    Department of Immigration and Border Protection (DIBP)

    Discussion summary

    Disclaimer

    The Petroleum 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 and introductions

    Outcome: It was noted that the minutes of the meeting of 20 September 2016 had been circulated and were finalised. All action items have been finalised. No conflicts of interest were declared by members.

    Agenda item 2 – Compliance focus areas for 201718

    Outcome: Members noted the report by Andrew McIver of the ATO’s Compliance Plan for 201718. Cases will include a focus along similar lines as 2016/17 focusing on low to medium tier clients.

    Andrew provided an update about the Justified Trust Program being put into place by the ATO. At this stage, it is likely that two excise paying clients will form part of the initial group of cases however details of those clients had not been finalised. The program will include looking at organisational tax governance, systems used to calculate and pay tax, controls over those systems and how they are maintained, how excise returns are constructed, how inventory systems are connected to the preparation of returns, how fuel is measured amongst other checks. Excise is largely focused on the storage, movement and control of goods. The program of issues for consideration is being finalised.

    Discussions have been held with DIBP regarding their compliance program, which will be looking at similar issues with regard to low to medium tier clients.

    Members discussed working with DIBP to improve industry knowledge. Mitchell Dunn advised that the ABF had recently conducted operational activity in Queensland which had provided the opportunity to re-familiarise staff with the sector and gain a better understanding of business processes. Mitchell passed on ABF appreciation of the assistance provided by industry. DIBP continually review DIBPNs (DIBP Notices) to ensure customs requirements are well known. It was acknowledged that current staff had limited experience in compliance operations in this industry; however, activities such as the recent operation provide opportunities to build knowledge.

    The ATO will also be looking at biodiesel coming across the border to ensure that the correct rate is being applied.

    Aviation is another area the ATO will focus on with regard to the supply chain when companies on sell aviation fuels post the point where duty has been paid. The ATO is interested in how that fuel may be subsequently used.

    Routine work for the ATO will centre on monitoring trends and those who fail to lodge returns.

    The meeting heard that compliance activities occurred more in other areas of excise and that any leakage of revenue from petroleum excise was quite minimal. Members referred to the tax gap findingsExternal Link around fuel and energy published each year in the ATO’s Annual Report.

    Raj Srikhanta put forward a proposal for consideration by industry of a meeting attended by PSG members, various areas of ATO and DIBP to discuss technical and compliance issues. This would be a one-off workshop with a capability building / education sharing component. Industry agreed that this would be a useful proposal, particularly if linked to existing meetings.

    Action Item 06072017-2-1 – The ATO to put together a proposal for a workshop with industry, ATO and DIBP participants to focus on petroleum industry technical and compliance issues to build knowledge of industry across agencies.

    Agenda item 3 Technical Updates

    Outcome

    Deregulation - bunker fuel – Anthony Barnard 

    Anthony Barnard provided an update regarding potential deregulation of bunker fuels to reduce compliance costs and reporting. All members of this group and the Shipping Association have been consulted. The ATO are still working on parameters for a form of exemption or auto remission. Options of regulation change versus amendments to the Act to manage risk were discussed. It was noted that this is ultimately a matter for Government.

    Weekly Return Preparation – Anthony Barnard 

    Members noted the update by Anthony Barnard that the ATO are looking for opportunities to improve the client experience for weekly returns. The ATO have had approaches on a similar theme to try to reduce the amount of reconciliation work and obviate the need for immaterial adjustments. From the ATO’s perspective, there is no formal decision to be made rather it is a matter for clients to be comfortable with the robustness of their systems.

    Return to bond claims for lubricant additives / products – Mitchell Dunn 

    DIBP wrote to the AIP in March 2017, advising that it was continuing to explore solutions, in consultation with the ATO, within the current framework. If solutions weren’t forthcoming, subject to resourcing and prioritisation considerations, DIBP was open to exploring options for regulatory reform of the current legislative framework to minimise the regulatory burden and avoid circumstances where clients were paying tax twice.

    In mid-June 2017, Mitchell Dunn provided further advice to the AIP that an option has been identified under the current framework to licence (under the Customs Act) the premises where the lubricants were stored on import. In terms of future regulatory reform, DIBP were not able to progress further in 2017/18 due to commitment of DIBP resources on other government initiatives. This issue will be revisited by DIBP ahead of the development of its 2018/19 work programme, including further engagement with the AIP. Mitchell undertook to pass on frustrations of industry regarding the need for a change of the definition of petrol within the customs framework, in order to find a solution to the double taxation issue.

    Members noted the update of DIBP trade-related priorities for 2017/18 around the Australian Trusted Trader Program; Customs Licensing Review – implementation of recommendations; modernisation of trade and any new initiatives announced by Government.

    Members reiterated their interest in receiving advice, where possible, to alert the group of any changes in policy, processes etc.

    Agenda item 4 – Project updates

    Outcome

    Customs Licensing Review – Mitchell Dunn 

    Mitchell Dunn advised that the final report of the reviewExternal Link was released on 24 May and can be found on the DIBP website. All 15 recommendations had been endorsed by the Comptroller-General of Customs. The first recommendation had been to retain the current licensing regime. DIBP were committed to the implementation of the remaining 14 recommendations and an Implementation Team working with the ATO and Department of Agriculture and Water Resources was putting together an Implementation Plan. The plan will be provided to stakeholders once signed off by the Comptroller-General of Customs. DIBP welcomed any queries or additional feedback – to be sent to licensingreview@border.gov.au.

    Agenda Item 5 - Industry/member updates

    Outcome

    Grace Abinoja raised an administrative issue relating to a number of joint venture entities where the GST refund is offset against excise liabilities of the joint venture operator. This is time-consuming to rectify. ATO staff advised that this was being resolved with our IT area and that the fix put in place was to be deployed in late June.

    Action Item 06072017-5-1 – ATO staff to follow up on the proposed fix to systems offsetting GST refund to excise liabilities and confirm deployment to PSG members out of session.

    Industry members discussed how they and ATO could assist in building knowledge of the petroleum industry in DIBP of existing staff. The ATO and DIBP are working closely, particularly on key pieces of work to ensure a shared understanding of the issues affecting these proposals.

    Helen Curran raised issues around different practices in Customs ports. Mitchell Dunn advised that DIBP and ABF have introduced a new Strategic Border Command which aims to ensure national consistency in relation to procedures and practices.

    Members discussed capability gaps in the industry. Expertise in the petroleum excise area is reducing as numbers employed in this area were also being reduced. Many staff engaged by major petroleum companies are also working on other taxes including income tax, GST etc. which leads to a wide range of issues on which to keep informed. Those new to the industry are required to learn many aspects in addition to how excise works including new systems, inventory, the supply chain, and so on. As this is a specialised area, the skills are not as portable as, for example, GST or income tax, which makes it a less attractive option for new employees. There is also a need for better excise knowledge in the second and third tiers of industry. The ATO provided details of the New to Excise initiative providing assistance and support to those entering the excise system for the first time – acknowledging that this related more to alcohol excise given the numbers of new entrants rather than petroleum.

    Members discussed the refining capacity in Australia. While some products were being imported more, other areas were positive about the future of refining in Australia.

    Members expressed their support for the service provided by their Relationship Managers and their inclusion in these meetings.

    Agenda item 6 – Other business

    Outcome

    There was no other business.

    The meeting concluded at 3.10pm.

      Last modified: 21 Sep 2017QC 53346