Private Groups Stewardship Group special briefing 17 September 2020
Commercial Deals Service Offer
Members were provided with an overview of the Commercial Deals Service Offer that is available to private groups. It is an opportunity for clients to engage early for significant commercial deals and restructure events. The service provides practical certainty for significant events while they are being planned or before lodgment.
Where that ATO has reviewed a commercial deal, and an agreement is reached and lodgment received as per the agreement, a review or audit for the commercial deal transaction will not be conducted unless the ATO becomes aware of new information. This enables the client to choose to engage with the ATO via a 'Service' channel as opposed to potential future compliance.
The ATO further noted:
- the program has been very successful with an increase in client-initiated engagement which is indicative of the trust and confidence being built in the market with the ATO for reliable advice and the Commercial Deals Service
- as expected, there has been significant downturn in clients using the service in the last 6 months
- major transactions noted in the market related to restructuring and re-evaluation of asset holdings, notably in the commercial property market
- the service is available for transactions valued at $10 million or greater.
Various members provided positive feedback in relation to their own experiences with using the Commercial Deals Service.
Recommencement of engagement activities across ATO programs of work
During the last six months, the ATO proactively contacted clients to offer assistance and temporarily defer engagements where clients advised of COVID-19 impacts for an agreed timeframe. Most clients requested that we continue to progress our engagements during this time.
The ATO continues to work with private group clients in a sensitive and emphatic way, tailoring engagements to their circumstances. The ATO will shortly commence new cases and a variety of approaches will be taken:
- In early August a Top 500 check-in strategy commenced which offered support and assistance. Insights gained from this process will form the basis for how the ATO engages for the rest of this year. New cases will commence from October but will be staggered and tailored to the client’s circumstances. For all recommencing and new engagements with private wealth clients, the ATO will have a discussion with the client to gain an understanding of any COVID-19 impacts.
- For the Next 5,000 program the ATO has undertaken presentations with advisers to raise awareness on the program and the post COVID-19 transition optional approach. We have received valuable feedback as part of this process. New cases will commence in October. We will utilise this feedback and the insights from profiling to inform COVID-19 impacts on clients and tailor our engagements moving forward.
A transition option is available which reduces the original notification period but provides a longer period for clients to respond to the request for information. While the client has time to prepare under both the normal and transition approach, the advantage for the client under the transition approach is that they will be preparing their response based on a tailored request for information received shortly after notification.
- The Medium and emerging private groups tax performance program will recommence cases from early to mid-October 2020. The insights from profiling will be utilised to inform COVID-19 impacts on clients and tailor our engagements moving forward.
Superannuation and Employment Obligations
The ATO outlined the current state regarding the superannuation guarantee amnesty.
Further communication was conducted in August which proved extremely effective with significant increases in website visits, phone calls and downloads of forms in the final 5 weeks prior to end of the amnesty on 7 September 2020. Given the volume of forms received in the limited time period, we are still working through the forms, importantly once the disclosure is lodged by 7 September 2020, the amnesty applies regardless of when the ATO finalises the processing of the form.
During COVID-19 impacts, the ATO focussed on progressing compliance work for Superannuation Guarantee where the client requested it continue. However, now that the amnesty is over, our compliance work is to recommence. The ATO released a draft Law Administration Practice Statement PS LA 2020/D1 Remission of additional superannuation guarantee charge. The ATO is reviewing any submissions received and will finalise the practice statement shortly.
Members noted that there have been several recent decisions considering the issue of ‘employer v. contractor’ which are relevant to Superannuation guarantee. Members were interested in the ATO’s next steps regarding updated guidance on the issue. The ATO is carefully considering its position and has not finalised any views yet.
The ATO noted that across all Stewardship Groups a standardised charter is being implemented. The standard charter has been adapted for this group. Members should note the requirements for confidentiality and membership refreshes.
The last membership refresh of this group was in 2019 and we will be undertaking a membership refresh process shortly.
Out of session support for adopting the charter will be sought from members.
ATO to seek out of session support from members for a new group charter.
The ATO's attention has been on balancing integrity of the measure and making payments to eligible applicants. There has been a shift in focus from pre-payment interventions to post-payment integrity mainly looking at decline in turnover and satisfaction of the wage condition. There were low levels of non-compliance with the majority determined to be ineligible being inadvertent mistakes and not deliberate errors.
Entities do not need to re-enrol but will need to satisfy the decline in turnover requirement each quarter. The ATO is encouraging employers to use single touch payroll, which will provide payments quickly to the employer. The ATO will be supporting applicants with pre-filling information it holds about an entity, for example the G1 amount from the relevant previous business activity statement (BAS) where the information is available, to assist in determining eligibility.
Public Advice and Guidance is under development in relation to thresholds, the alternative test and our approach to the actual decline in turnover test.
Compliance for JobKeeper 2 will continue to look at eligibility with a strong focus on decline in turnover, employee eligibility, and satisfaction of the wage conditions. An early campaign is anticipated at the end of September which will focus on entities that have not lodged the required BAS; significant global entities to ensure the correct application of the right turnover test; encouraging employers to be using single touch payroll; and where a significant amendment to BAS was undertaken after 7 August 2020 for a comparison period.
Members indicated that they are comfortable with the volume of information being distributed through this forum.
The ATO is working towards releasing an interim report regarding the findings from the Top 500 program. During the next financial year an interim report is planned to progress on the Next 5,000 program. These reports will explain what the ATO is seeing from our engagements and will be useful for clients and advisers who are or will be engaged under these programs.
Members noted that there is not much being raised in the market about the extension of the Reportable Tax Position (RTP) schedule to private groups. ATO noted all large private companies that are required to lodge the RTP schedule and had lodged their 2019 income tax return as at 22 May 2020, have been notified of that requirement. The ATO is also preparing a second round of RTP schedule notifications to send to a small number of clients who met the RTP lodgment criteria but had not lodged their income tax return by this date. A marketing and communications strategy will begin for this reporting year to raise further awareness.
Corporate Tax Transparency – Work is progressing through the list of clients who meet the Corporate Tax Transparency requirements. As with prior years, letters have now issued to all clients who meet the requirements. The purpose of the letter is to inform the client of our intention to publish the relevant details in the Corporate Tax Transparency report this year.
As many of our clients may be working from home due to COVID-19 restrictions, we will be issuing a follow up email to be sent two weeks after the letter issues to ensure clients are notified.
As with prior years, we anticipate that the Corporate Tax Transparency report will be published in December 2020.
ATO to engage with Chartered Accountants Australia and New Zealand to raise awareness of obligations of the RTP Schedule with their members/clients.
An update was provided to members on the following action item from the 24 July meeting:
Summary of key topics discussed at the Private Groups Stewardship Group special briefing 17 September 2020
2407-1 Next 5000 program
Action item details
ATO to provide members with a link to the request for information material on ato.gov.au once it is published.
A link to the Next 5,000 web content has been provided to members.
Action item closed.