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  • GST Advisory Group minutes 21 May 2015

    Meeting details

    Venue: ATO Offices, Level 12 Conference Room, 52 Goulburn Street, Sydney

    Date: 21 May 2015

    Start: 9.15am Finish: 3.00pm

    Chair: James O'Halloran

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

    Members

    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

    Professor Michael Walpole

    Professor and Associate Head of School (Research) School of Taxation & Business Law UNSW

    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

    Paul Nielsen

    Chairman, Board of Directors, Council of Small Business of Australia

    Kevin O'Rourke

    Indirect Tax Committee, Chartered Accountants Australia and New Zealand

    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 Utz, Member Law Council of Australia

    John Corlis

    States and Territories Representative

    Giles Wilmer

    Director, Commonwealth Taxes Unit, Queensland Treasury

    Guest attendees

    John Dardo

    (Acting) Deputy Commissioner Customer Service & Solutions

    Steve Howlin

    Assistant Commissioner, Indirect Tax, ATO

    Ann Hurst

    Assistant Commissioner, Indirect Tax, ATO (via phone - deregulation for safe harbour)

    Andy Ditchfield

    Senior Director, Indirect Tax, ATO (via phone - deregulation for safe harbour)

    Rajitha Srikhanta

    (Acting) Assistant Commissioner, Tax Counsel Network, ATO

    Tinus Gerber

    Executive Director, Indirect Tax, ATO

    Kate Preston

    The Treasury

    Apologies

    George Nikolaou

    Manager, GST, WET and Excise, Coles Finance

    Jessica Mohr

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

    Agenda summary

    • Information requests from the ATO with a focus on reasonableness and timeliness
    • New developments – including shared economy and collaborative consumption
    • Technical assessment of the self-assessment regime
    • Approach to mitigating asymmetry risks in public rulings
    • Consideration of extending current waiver of tax invoice requirements
    • OECD development of VAT/GST guidelines
    • Reinventing the ATO - contemporary digital services
    • Tax discussion paper
    • Deregulation opportunities for safe harbours
    • Consultation opportunities

    Discussion summary

    Introduction

    The Chair welcomed members, guests and introduced three new members:

    • Professor Michael Walpole, UNSW
    • Paul Nielsen, COSBOA
    • Kevin O’Rourke, CAANZ

    These additions ensure a good cross section of expertise and perspectives.

    There were no conflicts of interests to declare.

    Action items

    All action items from the 19 February 2015 meeting have been actioned, with Steve Howlin providing a verbal update on the action item for the ATO to provide the sequence of events that leads to requesting information from third parties.

    There are many circumstances where we would make enquiries from third parties, including:

    • General information as in data cross checking from one department to another. For example, property sales data.
    • Specific information in relation to third party knowledge/activities on certain matters. EG checking a supplier has accounted for GST on a particular sale. EG Gathering information on supplies made by another taxpayer EG checking whether a taxpayer is in a particular target group.

    All third party enquiries are done as discreetly, efficiently and with least intrusion as possible.

    As part of the ATO desire to engage directly with the business and professional representatives on matters of GST, the ATO took part in a series of national CCH webinars, ATO Tax Risk Management – A regulators observations It included case studies that highlighted tax governance concerns observed by the ATO that attract the attention of the ATO and is available at the following link:

    https://www.youtube.com/watch?v=02W3Vb8xQCIExternal Link.

    The ATO is happy to share material and be party to similar engagements with other taxpayer groups.

    New developments – shared economy and collaborative consumption

    The ATO aims to provide the community with certainty around future and emerging business models to allow decisions to be made aware of the possible taxation implications.

    Members advised they were impressed with the speed of the ATO’s decision in relation to collaborative consumption. Discussion occurred on the increasing likelihood of individuals undertaking activities that made use of excess capacity / spare resources, cutting out traditional intermediaries. Since technology has enabled these new business models to emerge it may be technology that offers the solution of how we manage the tax responsibilities going forward.

    The ATO needs to keep a watchful eye on the relationships between participants in these business models as they may evolve into new forms of enterprise and the ATO needs to be well positioned to provide certainty on the application of the law.

    Hearing and sharing information on newly introduced or potential business models within our economy makes this discussion immensely valuable.

    Technical assessment of the self-assessment regime

    With the first period of review [section 155-35 of Schedule 1 to the TAA] ending next August, it is timely that we ask:

    • Administratively is the self-assessment working as intended?
    • Is there a risk to revenue in the system?
    • Can we do anything to improve the client experience?
    • Are there weaknesses or gaps in the self-assessment environment?

    The ATO has identified certain areas where clients could benefit from further education or assistance; including:

    • signing the declaration in a paper BAS
    • correctly completing BAS labels
    • reminder about how the period of review works – neither the taxpayer nor the Commissioner can 'stop the clock', unlike under the self-actuating regime.

    Matters requiring proactive guidance were also identified.

    Members suggested that the best way to educate the 2.1 million small business operators is not to focus on the owners but rather to talk directly to the bookkeepers and their associations.

    There is a need to be careful of how language is used, ie the term compliance obligations is often associated with hard edged activities such as prosecution. Focus on how the ATO can help, not what might punishment might occur if clients get it wrong.

    Mitigating asymmetry risks in GST public rulings

    The GST law contains a number of provisions which operate to restore symmetry in relation to supply. The ATO has also considered asymmetry in the following adjustments, including the following public rulings:

    • GSTR 2009/19
    • GSTR 2001/4
    • GSTR2009/3
    • GSTR 2014/1

    The ATO put forward a proposal for addressing asymmetry in public rulings. The ATO is also currently investigating if Division 142 can apply to GST adjustments, and is utilising ‘Let’s Talk’ an online engagement tool to gather feedback from tax professionals.

    Members can assess ‘Let’s Talk’ via the link and Register nowExternal Link

    Working with credit providers – tax invoice requirements

    Under subsection 29-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), a GST-registered entity cannot claim an input tax credit until such time as they hold a tax invoice. Waiver of Tax Invoice Requirement (Corporate Card Statements).

    Legislative Instrument (No 1) 2008 [WTI 2008/1: allows corporate credit and charge card holders to claim input tax credits without holding a tax invoice provided their corporate card statement meets certain requirements. The waiver of tax invoice requirement only applies to those who have a corporate credit card, therefore individual sole traders and partnerships are unable to make input tax credit claims using their personal credit cards statements in lieu of holding tax invoices. With technological advances, GST data from point of sale systems is also becoming more available and could be reflected on card statements.

    Members were asked the following:

    • Should waiver be extended to include all credit cards where point of sale information is provided?
    • Should the waiver also be extended to debit card statements where point of sale information is provided?
    • What should be put in place to protect risk of claiming for domestic claims?

    The general consensus was that it would be good for business, good for accountants; and it would assist in cutting down red tape. The ATO will be consulting further on this issue.

    GST and international development OECD

    The ATO has two representatives on the OECD Committee on Fiscal Affairs Working Party 9 (WP9) on consumption taxes, Jo Drum and Ian Ayrton. It is a policy forum which Treasury attends in its role in providing policy advice. The ATO is involved as an administrator to collaborate on international developments.

    The final version of the draft Business-to-consumer (B2C) guidelines were presented to WP9 members at the recent April 2015 Paris meeting. This included a discussion on the outcomes of the public consultation, which closed in February 2015, and some changes that had been made to account for the views of the respondents.

    The WP9 session approved the guidelines to move the next stage of consolidation with previously approved elements and to progress to the next stage of endorsement. The guidelines will be included in the Base erosion and profit shifting report to be presented to Finance Ministers at the G20 meeting in October this year and then to G20 Leaders in November. They will also then be tabled for endorsement at the Global VAT Forum in Paris in November 2015.

    The WP9 endorsed a proposal for further work to continue on the development of a paper from the low value goods task team that will outline strategies governments could adopt. Work is to be completed by July 2015.

    Options were discussed for compliance mechanisms for registration in relation to the 2015–16 Budget decision to ensure digital products and services provided to Australian consumers receive equivalent GST treatment, regardless of whether they are provided by Australian or foreign entities. It is expected that major suppliers involved who are familiar with and comply with the existing European model will comply with Australian requirements.

    Treasury will be consulting to gather ideas from the community. Some GSTAG members expressed a willingness to be involved.

    Reinventing the ATO – contemporary digital services

    Contemporary digital services supports whole of government initiatives by building on existing online services to provide clients with better ways to engage with the ATO.

    Through contemporary digital services, the ATO aims to maximise the use of myGov as the authentication platform for online services. This supports the digital by default strategy and enables the provision of better service delivery by leveraging off some of the options provided by myGov, including the ability to send personalised notifications to clients.

    There are two upcoming releases for 1 July 2015 coinciding with Tax Time and two updates to our ATO application. These releases are aimed at improving services for individuals and sole traders with a view to incorporate business entities in September 2015.

    While the ATO will expand its offering in the Online Service space, other service pathways will remain available for Tax Agent and Business Portal users.

    A transition and support strategy is currently being drafted, that will provide visibility of the new services to the community. Business readiness preparation has also commenced to ensure ATO staff can provide appropriate support for clients as they take up these services.

    The ATO reinvention programs are at various stages of development GST Advisory Group members will be continued to be informed as they continue to progress forward.

    Deregulation opportunities for safe harbours

    The GST Safe Harbour Group's purpose is to identify, assess and implement safe harbours within GST that deliver tangible and measurable red tape reductions and improve certainty for taxpayers.

    Tax discussion paper

    Kate Preston Treasury provided an update on the white paper process.

    There is a vast amount of in-depth material available on the Better Tax website.

    Members provided feedback that the current mix was too heavily weighted towards income tax and not GST.

    Associations are encouraged to input submissions, formal submissions must be lodged 1 June 2015.

    Consultation opportunities

    The following GST matters are currently being consulted on:

    • GST refund verification processes submitted by the Tax Institute
    • Development of financial supplies guidance products
    • New apportionment assurance product for financial supply provider to help reduce compliance burden
    • GST treatment of motor vehicle incentive payments with the motor vehicle industry
    • Draft invoices for GST purposes

    Currently there is not a lot of formal consultation occurring, there may be opportunities to bring forward discussion on matters arising out of the better tax exposure.

    Good feedback was received on the openness and transparency of the ATO in relation to unimproved land valuation process.

    Summary

    Members appreciated the open discussion and mix of topics that were explored.

      Last modified: 08 Sep 2015QC 46884