• NTLG minutes, September 2014

    Meeting details


    Function Room 12.720

    ATO Latitude East building

    52 Goulburn Street, Sydney


    18 September 2014






    Chris Jordan, Commissioner of Taxation


    Andrea Allen


    03 9285 1132


    Neil Olesen (Acting Deputy Chair)


    Debbie Hastings


    Andrew England


    Jeremy Hirschhorn


    Peter Coakley


    Deepti Paton


    Andrea Allen (Secretariat)


    Rob Heferen


    Tania Constable


    Keith Clissold

    Association of Taxation and Management Accountants

    Mark Morris

    CPA Australia

    Greg Nielsen

    CPA Australia

    Sue Williamson

    CPA Australia

    Frank Drenth

    Corporate Tax Association

    Michelle de Niese

    Corporate Tax Association

    Michael Croker

    Chartered Accountants Australia and New Zealand

    Grant Wardell-Johnson

    Chartered Accountants Australia and New Zealand

    Andrew White

    Chartered Accountants Australia and New Zealand

    Tony Greco

    Institute of Public Accountants

    Lance Cunningham

    Institute of Public Accountants

    Mark Friezer

    Law Council of Australia

    Adrian Varrasso

    Law Council of Australia

    Rodney Wilson

    National Tax and Accountants Association

    Mark Chapman

    Taxpayers Australia

    Robert Jeremenko

    The Tax Institute

    Michael Flynn

    The Tax Institute

    Stephen Healey

    The Tax Institute

    Stephanie Caredes

    The Tax Institute (Professional Association Bodies Agenda submissions coordinator)


    Andrew Mills


    Andrew O'Bryan

    CPA Australia

    Guest discussion leads (in order of appearance)

    Katie Welsh


    Martin Jacobs


    Erin Holland


    Andrew Watson


    Jane King (by phone)


    Will Day



    NTLG agendas, minutes and related papers are not binding on the Australian Taxation Office (ATO) or any of 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. These minutes have been formally endorsed by the members.


    Meeting Open

    • Neil Olesen (Acting Deputy Chair) opened the meeting and noted new members, alternates and apologies, including:
      • New members Jeremy Hirschhorn (ATO’s Chief Tax Counsel), Tania Constable (Treasury) and Rodney Wilson (for the NTAA).
      • Apologies for Andrew Mills (substituted for by Acting Second Commissioner, Debbie Hastings) and Andrew O’Bryan, CPA Australia (substituted for by Sue Williamson).
    • Neil noted the 30 year anniversary of the National Taxation Liaison Group.

    Commissioner’s opening remarks

    The Commissioner provided members with an update on recent happenings at the ATO, including:

    • Support for G20 plans to address base erosion and profit shifting, and related domestic compliance and policy initiatives.
    • Ongoing work to Reinvent the ATO and drive cultural change, as demonstrated through recent efforts by the ATO’s Perth office to connect with local stakeholders and build meaningful relationships.
    • The progress of the ATO’s redundancy program and the capacity to work collaboratively within the ATO and with the private sector to restore any resulting loss in corporate knowledge.
    • The importance of the ATO / tax practitioner relationship and the efforts currently underway to resolve a number of practitioner concerns such as the 85% electronic lodgement on-time standard, the transition from Electronic Lodgment Service (ELS) to Standard Business Reporting (SBR) and the operation of the Tax Agents Portal.

    The Commissioner noted that he wants the NTLG to be an exemplar of a government agency and the community working in partnership, and that he was pleased to note the increasing trend towards joint ownership of issues at this forum.

    Open action items

    • Members agreed with the status of various open action items as set out in the relevant attachment.
    • Members expressed a preference for the dissemination of NTLG documents via email rather than govdex (an alternate electronic system currently being trialled), but were comfortable with both systems being run in parallel until December 2014.

    Segment 1 - Issues of significance in the tax law interpretation, policy and law design space

    1.1 Progress of announced but un-enacted tax measures

    • Rob Heferen (Treasury) provided members with an update on the progress of the ‘to proceed’ announced but un-enacted measures as per the then Assistant Treasurer’s press release of 14 December 2013.
    • Rob noted that efforts are currently underway to consider the breadth of resources available inside and outside Government to progress these measures.
    • Treasury is prioritising resources to ensure measures of significant importance such as the Investment Manager Regime reforms are addressed as a matter of priority.
    • Members noted the capacity and willingness of the private sector to assist in progressing some of these measures, such as by providing background information or reviewing drafting instructions. Treasury acknowledged the value of assistance already provided in relation to some GST measures.
    • Members noted industry’s general preference that measures take effect on a prospective basis, i.e. from date of Royal Assent. Rob agreed that this was also generally Treasury’s preference, though retrospective application may be more appropriate in some circumstances, for example when a measure is beneficial to taxpayers.

    Action item NTLG 189/1

    Treasury to consider capacity for NTLG members to provide assistance to progress announced but un-enacted tax measures.

    End of example

    1.2 Preparing for the Tax White Paper

    • Rob Heferen (Treasury) noted that the Government had committed to producing a White Paper on tax reform by 2015, and that this paper would likely be preceded by a Green Paper and an Issues Paper designed to facilitate consultation.
    • Rob noted that the Tax White Paper process was likely to focus on pragmatic, achievable reform options similar to the A New Tax System process.
    • Treasury has sought secondments from the private sector to bring a broader range of expertise and perspectives to bear on this process.

    1.3 Australia’s 2014 Presidency of the G20

    • Rob Heferen (Treasury) noted recent developments by way of the OECD’s release of seven reports representing the September 2014 deliverables under the OECD’s Action Plan to address Base Erosion and Profit Shifting.
    • Rob noted that acknowledgment was spreading that there is no ‘silver bullet’ available to address base erosion and profit shifting, and that any ‘solution’ would need to be multi-faceted. Rob noted that the G20 was focussing on potential administrative as well as legislative avenues.

    Segment 2 – Red tape reduction

    2.1 Progressing NTLG-member initiatives/ideas

    Draft discussion paper on safe harbours

    • Michelle DeNiese (Corporate Tax Association) provided an overview of the draft discussion paper on safe harbours produced by a Working Group of representatives of NTLG member associations, including:
      • The impetus for the project i.e. to actively contribute to the NTLG’s objectives, work program and the resolution of significant issues in the tax system.
      • The Working Group’s approach to the concept of safe harbours i.e. as a potential tool to reduce the costs of compliance and reduce red tape in the tax system in a way that does not undermine the integrity of the tax system.
      • Potential areas for the development and application of ‘safe harbours’, identified and prioritised by the Working Group.
      • The role of the discussion paper, i.e. as a starting point for further consideration / development of the identified potential safe harbours and any other related ideas that may be raised via an iterative consultation and implementation process.
    • Members noted and were broadly supportive of the development of the draft discussion paper on safe harbours by the Working Group.
    • The ATO and Treasury acknowledged that safe harbours could be a useful tool in managing costs of compliance as well as the risk of non-compliance.
    • Members agreed that this project should be advanced through a structure consisting of:
      • A ‘Steering Group’ to oversee the project, consisting of senior decision makers within the ATO and Treasury, a NTLG member representative from the large business sector (Michelle DeNiese) and a NTLG member representative from the small business sector (to be nominated by Michelle DeNiese).
      • Specific purpose working groups consisting of subject matter experts focussed on developing individual ideas.
      • ATO support to co-ordinate the project.

    Action item NTLG 189/2:

    • ATO and Treasury to consider the most appropriate appointments to the Safe Harbours Steering Group.
    • Once the Steering Group is formed, it should plan and drive a program of work to progress the ideas in the draft discussion paper, as well as other ideas that may be raised and fit within the scope of this project.
    End of example

    Progressing red-tape reduction ideas raised at June NTLG meeting

    Members agreed that the following ideas that were first raised by NTLG members at the June meeting should be considered / progressed as part of the broader project on safe harbours:

    • Considering whether the ATO should be setting base case levels under which the veracity of a deduction would not be considered.
    • The capacity for the ATO to provide guarantees on primary tax (rather than penalties and interest only) where taxpayers have relied on ATO tools (such as the employee/contractor tool) in good faith and in line with the facts and circumstances of their case.
    • Further exploring the capacity for the ATO to set parameters in which taxpayers will be ‘deemed to comply’.
    • Capacity to simplify requirements in relation to the capital allowances schedule, especially the delineation between repairs and maintenance and improvements.

    Members agreed that the following idea should be considered / progressed as part of the Reinventing the ATO program of work:

    • Capacity for the ATO to further rely on advisors to undertake quality assurance work in relation to (for example) details on CGT schedules especially cost base calculations.

    Members noted that the mytax cover page should include a warning to the effect that pre-filled data may be neither reliable nor complete, and that taxpayers are responsible for the accuracy and completeness of information included on their income tax return at lodgment.

    Action item NTLG 189/3:

    ATO to investigate the need to include a warning in relation to the reliability and completeness of pre-filled data on the mytax website.

    End of example
    • Andrew Watson (ATO) noted the release of the ATO’s Statement of IntentExternal Link (PDF 370KB) in relation to deregulation.
    • The update from the other stewardship committees in relation to deregulation efforts in each relevant market segment was noted.

    Segment 3 – Strategic ATO and Treasury initiatives

    3.1 Managing impact of changes in ATO and Treasury operations: organisational restructures and redundancy programs

    Jane King (ATO) provided a short update on the progress of the ATO’s redundancy program, including:

    • The net impact of the 2014–15 Federal Budget requirement to bring forward the 2015–16 staff reduction of 1,600 into the 2014–15 year means that the ATO is required to implement a net reduction of total reduction of 3,000 ATO staff from 1 July 2013 to 31 October 2014.
    • In order to achieve the government commitment, a further Expression of Interest (EOI) Voluntary Redundancy process (Round 2) ran from 23 May to 3 June 2014. A total of 2,366 EOIs were received, with a further 1,316 offers of redundancy approved.
    • In the course of fulfilling government commitments, the maintenance of revenue collection and services are primary considerations for the ATO. As such, the ATO has focussed on the following areas to meet this commitment:
      • reviewing and restructuring back office functions;
      • flattening and de-layering management structures;
      • increasing spans of control;
      • reviewing classification levels to ensure roles are appropriately classified;
      • reviewing isolated teams and team members; and
      • corporatisation of various support functions (i.e. plan and manage, marketing and communications, etc.)
    • After the redundancy process is complete, a dedicated project team will manage potential workforce imbalances. With regards to staff leaving the ATO, efforts are being made to transition ‘corporate knowledge’.
    • Efforts from NTLG members to assist in preserving or replenishing corporate knowledge that could otherwise be lost as a part of this process are welcome.

    Rob Heferen (Treasury) provided a short update on organisational restructures within Treasury’s Revenue Group and the Treasury redundancy program, specifically:

    • Treasury’s Revenue Group has recently undergone a restructure to maximise the application of available resources to meet current and anticipated future demands on the department.
    • Revenue Group is now organised into:
      • Three market-segment focussed divisions, i.e. the Corporate and International Taxation Division, the Small Business Tax Division and the Personal and Retirement Income Division;
      • Two function-based divisions that support the market-segment focussed divisions, i.e. the Tax Analysis Division (quantitative analysis) and Law Design Practice (development of legislation); and
      • The Tax White Paper Taskforce Division.
    • In order to meet government requirements to apply an efficiency dividend to Treasury operations, the department has undergone three rounds of a Voluntary Redundancy process, and one round of an Involuntary Redundancy process. As a consequence, Revenue Group staffing numbers have reduced from over a thousand staff in 2013 to around 750 Treasury staff in September 2014.
    • This change in Treasury resourcing is part of a broader cultural shift being encouraged by management – away from a model focussed on performing key functions within the department, towards a greater focus on collaborating with stakeholders and considering alternative methods to access resources (e.g. secondments from the private sector and closer working relationships with the ATO).
    • Efforts from NTLG members to assist in preserving or replenishing corporate knowledge that could otherwise be lost as a part of these changes are welcome.

    Action item NTLG 189/4:

    NTLG members, ATO and Treasury to consider how resources available within and through the NTLG membership could assist in preserving or replenishing corporate knowledge following recent redundancy processes.

    End of example
    • Members noted that it may be worthwhile clarifying comparative savings that are sought to be achieved via the redundancy process (as compared to relying on natural attrition to reduce staffing costs).

    3.2 Reinventing the ATO

    The future of the ATO / tax practitioner relationship

    Michael Croker (CAANZ) provided an overview of:

    • Current views within the tax profession as to the impact and rationale for the ‘Reinventing the ATO’ program, e.g. some practitioners feel the ‘Reinventing the ATO’ program is primarily designed to benefit the ATO and other government agencies and will ultimately result in reduced taxpayer reliance on tax agents.
    • The changing operational models of software developers and the increasing need for the ATO, tax practitioners and software developers to work collaboratively to manage the impact of the ‘Reinventing the ATO’ program – including but not limited to the transition from ELS to SBR.
    • The evolving ATO/tax practitioner/client relationship as perceived by the profession, and the resulting change in models of service delivery by tax practitioners.

    Members discussed whether the current ‘opt-in’ model for the transition to SBR was likely to have the desired results or whether a mandated approach coupled with more direct government involvement (for example, at the Ministerial level) was likely to yield better results for the tax system.

    Members agreed to refer this discussion to the ATO Consultative Working Group meeting to be held on Wednesday, 24 September at which the professional associations, tax practitioners, software developers and the ATO will consider the transition from ELS to SBR, the function and future of the Tax Agents’ Portal and the future of the ATO / tax practitioner relationship in more detail.

    Members agreed with Treasury’s request that the Workshop should also consider and revert on any advice for the government on this matter.

    The progress of the ‘Reinventing the ATO’ program

    Katie Welsh and Martin Jacobs (ATO) provided a short overview of current work in relation to the ‘Reinventing the ATO’ program, including:

    • The ‘design principles’ which underpin this program, in particular that in the future state:
      • It will be easy to get things right;
      • Users’ experience of the tax and superannuation systems will be tailored;
      • The ATO will have a commitment to service;
      • Relationships in the tax and superannuation systems will be fair and respectful; and
      • Services will be delivered in the most effective way.
    • Outcomes from recent workshops held with individuals, small businesses and tax practitioners to co-design how the future client experience will look and feel for each of these market segments, in line with the design principles.
    • Plans to hold similar workshops in coming weeks with other market segments e.g. public groups.

    The ATO invited consideration of how NTLG members would be interested in engaging with this work within the ATO on a tax-system wide basis (i.e. as opposed to from a sector-specific perspective).

    Action item NTLG 189/5:

    NTLG members to consider how the forum should engage with the ‘Reinventing the ATO’ program on a tax-system wide basis.

    End of example

    3.3 Health-check of the ATO’s consultation arrangements

    • Members noted that ATO’s consultation arrangements were progressing satisfactorily.
    • Members noted that the agenda-setting process in relation to the NTLG had improved since the March workshop.

    Confidentiality in consultations

    • Members noted that confidentiality in the course of consultation should be the exception rather than a matter of course and should be imposed only when necessary.
    • Members agreed that there may occasionally be a need for a degree of confidentiality to enable free discussion.
    • Members agreed that consultations that related to compliance initiatives (rather than changes in law) should generally be conducted openly.
    • Members agreed to further explore recent examples of confidential consultations (e.g. in relation to structuring of professional practices and Project DO-IT) at a future NTLG meeting with a view to defining best practice for consultation in various contexts e.g. government decision making vs. compliance initiatives.

    3.4 On-line security during tax time

    • Members noted the update provided ahead of the meeting in relation to current ATO activities to address and prevent tax-time scams, information crimes and identity theft including education campaigns, press releases and communication via social media channels on keeping taxpayer information secure and reporting attempts at fraud.
    • Members noted that the ATO’s activities in this space were thorough and appropriately targeted.
    • However, some members expressed the view that messages delivered by the Australian Federal Police (‘AFP’) in response to reports of tax fraud may serve to undermine community confidence in the tax system. These messages are of the effect that the authorities are unable to apprehend or punish those involved in perpetrating identity crime / tax fraud.

    Action item NTLG 189/6:

    ATO to:

    1. Share input from NTLG members with the AFP and other relevant bodies via standing liaison channels; and
    2. Work with the AFP to revise messaging in the case of reports of identity crime / tax fraud, if appropriate.
    End of example
    • Members queried if there was any evidence that tax practitioners’ data management systems were potentially a weak link in the protection of taxpayer data.

    Action item NTLG 189/7:

    ATO to investigate and revert with any concerns in relation to the effectiveness of tax practitioners’ data management systems in protecting taxpayer data against identity crime.

    End of example

    Segment 4 – In-depth focus areas

    4.1 Review of public advice and guidance products

    Jeremy Hirschhorn (ATO) noted that the ATO was currently in the process of reviewing ATO public and advice and guidance to examine whether current products and processes could be improved to better support willing participation by taxpayers and meet community expectations.

    Jeremy noted that the review would examine (among other matters):

    • The capacity to develop systems for earlier identification of issues on which ATO guidance should be produced i.e. prior to issues being identified via ATO compliance action.
    • The capacity to produce administrative solutions based on a mutual understanding of the approaches that are low-risk in the ATO’s view (i.e. where taxpayers can safely ‘swim between the flags’).
    • Consideration of ways in which “enabling” public guidance can incorporate concepts of mutual risk mitigation to allow the ATO to provide more useful guidance while managing its risks: this could include concepts such as sunset clauses, restricted reliance to classes of taxpayers or conditions on reliance (such as reporting / attestation requirements).
    • The capacity to review and clean-up the existing suite of ATO advice and guidance (for example, rulings) to ensure that there are fewer out-dated or irrelevant rulings cluttering up the systems and that existing areas of guidance remain useful.
    • How to produce ATO guidance that enables rather than curbs taxpayer activity (in the appropriate circumstances).

    Members queried whether the ‘alternative view’ in a ruling could constitute a safe harbour for taxpayers in certain circumstances, in recognition of the fact that the underlying issue is contentious.

    Grant Wardell-Johnson (CAANZ) provided an overview of NTLG member views on the current suite of guidance, including:

    • While consultation processes in relation to rulings are thorough, additional pre-release consultation to collaboratively identify the ‘issue’ in question could be beneficial.
    • Certain process improvements could assist in making rulings more user-friendly. For example, the inclusion of more targeted key words to search by and debrief structures to ensure feedback is captured and relayed.
    • A short, easy to understand summary for investors in class rulings.
    • Significant improvements to the search function via ato.gov.au

    Members noted that there was a need to consider the status of highly utilised / accessed ATO IDs and edited versions of private binding rulings, in recognition of the fact that such documents have high precedential value.

    Members noted that rulings that may not be supportable at law can sometimes be of greater value to taxpayers as the capacity to rely on such rulings had a material impact on tax risk.

    Members noted their interest in participating in the review and feeding in the above input and additional comments.

    Action item NTLG 189/8:

    ATO to provide further details as to the process for members to provide input into the review of ATO advice and guidance.

    End of example

    Special focus: Taxpayer Alerts

    Michael Flynn (The Tax Institute) acknowledged the information provided ahead of the meeting on the process for producing Taxpayer Alerts and noted that:

    • Taxpayer Alerts are occasionally written very broadly so that it is difficult to identify the mischief that the ATO is seeking to target.
    • Such Alerts can cause consternation and increase compliance costs for taxpayers whose behaviour is not in contravention of the law.
    • The current process for the production of Taxpayer Alerts set out in PS LA 2008/15 should include some consultation / review / user-testing before release.

    Will Day (ATO) noted:

    • The role of Taxpayer Alerts, i.e. as an early warning system, rather than a considered ATO view of the law;
    • The ATO’s willingness to receive feedback on possible topics and content for taxpayer alerts as well as appropriate follow up on engagement and assurance activities; and
    • The potentially adverse impact that a Review Panel may have on the capacity to produce Taxpayer Alerts quickly. However, a less formal process for obtaining external input (for example via targeted consultation or user-testing) could result in more effective Taxpayer Alerts.

    Members agreed to feed such input into the broader review of ATO advice and guidance.


    Other business

    ATO policy on emailing information

    • Members reported the invoking of differing practices with regards to email interaction with the ATO in relation to formal communications. 
    • Some members reported being asked to acknowledge in writing that email was not an authorised form of communication, while other members reported that a verbal acknowledgement had been sufficient. 

    Action item NTLG 189/9:

    ATO to clarify the current policy with regards to email interaction in relation to formal communications.

    End of example

    Next meeting

    The next NTLG meeting will be held on Wednesday, 3 December 2014 in Sydney.

    There being no further business, the Acting Deputy Chair closed the meeting at 3.00 pm.

      Last modified: 17 Nov 2014QC 43136