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  • GST Advisory Group minutes 19 February 2015

    Meeting details

    Venue: ATO Offices, Level 9 Chenoweth Conference Room, 747 Collins Street, Melbourne

    Date: 19 February 2015

    Start: 9.15am Finish: 3.20pm

    Chair: James O'Halloran

    Secretariat: Alison Zeitlhofer, Indirect Tax; contact phone: (02) 6216 1013


    James O’Halloran

    Deputy Commissioner, Indirect Tax, ATO

    Gordon Brysland

    Assistant Commissioner, Tax Counsel Network, ATO

    Kathleen De Kleuver

    (Acting) Assistant Commissioner, Indirect Tax, ATO

    Jessica Mohr

    (Acting) Manager Indirect Taxes and
    Not-for-Profit Unit, the Treasury

    Paul Suppree

    Assistant Director, Corporate Tax Association

    Chris Plakias

    Head of Tax, GST and Technology Westpac, Member Australian Bankers’ Association

    Ken Fehily

    Principal, Fehily Advisory, Member CPA Australia

    George Nikolaou Manager

    GST WET and Excise, Coles Finance

    Michelle de Niese

    Assistant Director, Corporate Tax Association

    Andrew Howe

    Director, Greenwoods and Freehills Pty Ltd, Member Property Council of Australia

    Matthew Nicholls

    Executive Director, Ernst and Young, Member The Tax Institute

    Andrew Sommer

    Partner, Clayton and Utz, Member Law Council of Australia

    John Corlis

    States and Territories Representative

    Giles Wilmer

    Director, Commonwealth Taxes Unit, Queensland Treasury (for John Corlis)

    Guest attendees

    Ian Read

    Senior Assistant Commissioner, Indirect Tax, ATO

    Steve Howlin

    Assistant Commissioner, Indirect Tax, ATO

    Ann Hurst

    Assistant Commissioner, Indirect Tax, ATO (item 4 via phone)

    Andy Ditchfield

    Senior Director, Indirect Tax (item 4)

    Donna Bagnall

    Senior Tax Advisor, Chartered Accountants Australia and New Zealand

    Jessica Chui

    Analyst, Indirect Taxes and Not-for-Profit Unit, the Treasury


    Peter Strong

    Executive Director, Council of Small Business of Australia

    Michael Croker

    Institute of Chartered Accountants in Australia

    Agenda summary

    • Information requests from the ATO with a focus on reasonableness and timeliness
    • New developments – peer-to-peer lending and others
    • Deregulation opportunities for safe harbours
    • Board of Taxation: Review of Tax Impediments Facing Small Business
    • GST administration performance report
    • Reinventing the ATO
    • Consultation opportunities

    Discussion summary


    The Chair welcomed members and guests to the first meeting of 2015.

    There were no conflicts of interests to declare.

    All action items from the 15 October 2014 meeting have been actioned, with the update on Reinventing the ATO forming part of agenda item 6.

    GST remains a topical issue in the public domain. This group can offer valuable insights into future GST administration because of the cross section of representatives from business, community, ATO and the Treasury. The ability to operate in the system and provide contemporary experiences requires a number of perspectives. It is important that we have active representation from all sectors including small business representation at the meetings.

    It is recognised that the membership needs to be refreshed and rotated from time to time so that the group stays energised.

    New members Paul Suppree and Giles Wilmer were introduced along with the two Treasury representatives who attended the meeting.

    A replacement is being sought for the academic member Rebecca Miller, before the next face to face meeting 21 May 2015 in Sydney. Rebecca has played a strong and worthwhile role within the group.

    Information Requests from the ATO with a focus on reasonableness and timeliness

    Andrew Sommer provided further content on issues in relation to timeliness of information requests that he supplied ahead of this meeting. A number of examples were discussed where it appeared that the ATO had not taken into account the taxpayers individual circumstances. There was a suggestion by the Law Council of Australia that some of these issues might relate to the introduction of section 8AAZLGA. One issue cited involved requests for tax invoices within a 7 day timeframe or less, sometimes made via an informal email. For larger taxpayers the timeframes are not just impacted by obtaining the invoice but also the internal processes including authorisation. In some cases the document being sought might not exist or the information being sought might be available from an alternative source.

    The ATO explained the timing needs for information requests in relation to the type of audit activity being undertaken. Refund integrity is high volume and quick turn over where the focus is to issue the refund as quickly as possible. At the other end of the spectrum, serious evasion cases take much longer due to the complexity of the entities structures and issues involved. The timeframes for information requests are determined by the level of complexity of audit case work, generally we seek three to seven days for refund integrity, fourteen days for post issue cases and position papers and 28 days for serious evasion cases. It was recognised generally in the meeting that if a request for an extension of time to provide information was sought, that the ATO granted all reasonable requests.

    The Reinventing the ATO program of work has refocused our efforts to ensure we are very much focused on the client experience. One example were the ATO has improved the client experience is the informal review process, which is working well and GST objections have reduced significantly. Long term mind sets within the ATO are being challenged, the high level of graduates are increasing the pace of change moving towards intelligent judgment calls rather than following strict guidelines.

    There was general consensus that the ATO culture was undergoing positive change, officers were more focused, seeking to understand, and explain reinventing.
    Reinventing reminds us that we have trained a sector how to react; as the ATO changes, so too will those around us.

    New developments – peer-to-peer lending and others

    Discussion on what new operating and business models are emerging behind the scenes (digital or otherwise) will assist the ATO to proactively provide businesses with a view and demonstrate that the ATO is on the front foot. The ATO is striving to release material in the public domain even if in embryologic stage to benefit the tax community – crowd funding is a recent example of this practice. By acting in a responsive way we can help facilitate start-ups or stop bad business practices.

    Other new developments raised included:

    • shared economy
    • green field developments
    • innovation incubators.

    The key feature of peer-to-peer lending is that it brings together people that are sometimes not in the GST system, including non-residents. From an investor / borrower perspective, the considerations and GST treatments are the same as those which apply to financial dealings and with other types of managed investment schemes generally. The GST implications and treatments for investors and borrowers involved in peer-to-peer lending are not dissimilar to those faced by investors/borrowers dealing in traditional investments/loans involving banks as follows.

    • In both circumstances, the investors and borrowers are making input taxed financial supplies and are generally denied creditable purpose on related acquisitions.
    • The use of brokers and facilitators in relation to investment and lending products is widespread in the finance industry. The GST treatments for
      peer-to-peer platform operators will be determined on a case by case basis by the nature of their activities and supplies made.

    Deregulation opportunities for safe harbours

    The GST Safe Harbour Working Group (SHWG) has been established to examine opportunities and approaches in the GST product that are appropriate for safe harbours. Implementation of safe harbours will deliver on reduced compliance costs, improved certainty and genuine red tape reductions. Membership will be finalised in the first week of March.

    The benefits of safe harbours are expected to be one or more of the following:

    • compliance savings for taxpayers
    • compliance savings through reduced dispute or litigation and need for advice
    • additional certainty for taxpayers
    • encouraging and enabling compliance where black letter application of the impractical or too costly
    • avoiding trapping the unwary
    • diminishing inequities between ‘aggressive’ and ‘conservative’ taxpayer approaches
    • aligning tax, accounting and commercial reality.

    The ATO has done some initial brain storming to look at what could be explored for safe harbours. Ideas include simplifying transactions, apportionment and providing certainty on valuations. However, they are merely examples to be used for future discussion and exploration.

    Board of Taxation: Review of Tax Impediments Facing Small Business

    On 20 January 2015, the Government announced the release of the Board of Taxation's report on its review of tax impediments facing small business and the Government's response to the Board's report. Refer to Attachment A which provides a summary of the recommendations and suggestions for the ATO to consider.

    Two recommendations that may be of particular interest to the group are:

    • Recommendation 4.6 – Activity Statements - reporting obligations
    • Recommendation 5.1 – Small business entity threshold.

    GST Administration Performance Report

    The GST administration annual performance report 2013–14 was tabled. The report is published on as a genuine sign of the ATO’s transparency. Refer to Attachment B which provides a high level overview of the report.

    Reinventing the ATO

    The GST Advisory Group’s continued involvement is critical, and feedback received has helped shape and validate the blueprint design. The ATO will publicly release the blueprint on 19 March, prior to Commissioner Chris Jordan’s speech at the Tax Institute of Australia’s 30th National Convention.

    There are six programs that will progress the detailed design, they are:

    • Contemporary digital services
    • Smarter data
    • Working with our partners in the tax and super system
    • Tailored engagement and support
    • Optimise workforce capability and culture
    • Governance, design and evaluation.

    It’s critical that the ATO has effective, practical, governance arrangements in place to make the reinvention successful. The ATO is developing a balanced governance framework and success measures that will allow the ATO to sustain an improved client and staff experience.

    The GST Advisory Group will continue to be provided with updates.

    Consultation opportunities

    The following GST matters have just been finalised or are currently being consulted on.

    • GST refund verification processes submitted by the Tax Institute.
    • Development of financial supplies guidance products with the Australian Bankers' Association and the Australian Financial Markets Association.
    • New apportionment assurance product for financial supply providers to help reduce compliance burden.
    • GST treatment of motor vehicle incentive payments with the motor vehicle industry.
    • Proof of identity procedures for non-residents.
    • Draft invoices for GST purposes.

    The Single Touch Payroll discussion paper is available on there is an opportunity to lodge written submissions on the issues raised by Friday, 6 March 2015.


    Other major events impacting on GST:

    • The OECD’s Committee on Fiscal Affairs (CFA) is developing International VAT/GST Guidelines (Guidelines) to address double taxation and unintended non-taxation issues resulting from inconsistencies in the application of VAT to international trade. The first three chapters of these Guidelines were approved by the CFA in January 2014 and were endorsed as a global standard at the second meeting of the OECD Global Forum on VAT on 17–18 April 2014 in Tokyo. Public comments are now invited on two new draft elements of these Guidelines. The CFA Working Party No 9 is expected to complete this work by the end of 2015.
    • The Government is expected to release the Inspector-General of Taxation‘s Management of Tax Disputes reportExternal Link, at end February or early March.
    • On 19 February 2015, Justice Davies decided against Rio Tinto Services Limited's (Rio Tinto) arguments that it was entitled to claim GST refunds for input tax credits related to acquisitions acquired in constructing, leasing, and maintaining remote accommodation for its workforce. We are waiting for the appeal period to conclude before any further comment.
      Last modified: 14 Jul 2015QC 45241