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  • GST Stewardship Group key messages 3 March 2020

    Welcome and introduction

    Deborah Jenkins opened the meeting with an acknowledgment of country, welcomed members, noted apologies and gave an overview of the scheduled agenda.

    Deborah discussed the status of action items arising from previous meetings.

    A range of written updates were circulated with the agenda. Topics included:

    • justified trust reviews
    • practical compliance guidelines and financial services
    • staff training.

    Natural disaster relief

    The meeting went through the support the ATO is providing to the community and specific affected areas, with tax relief, GST deferrals and changed GST reporting periods.

    Several ideas were provided on how the ATO can better support the community, including:

    • engaging with university tax clinics and others as ‘intermediaries’
    • spreading information through organisations with large client bases or associations
    • taking a broader approach – businesses may not be in an affected area, but there may be downstream financial impact
    • proactively pushing simple, practical guidance to small businesses and individuals
    • focusing on cash flow impacts
    • focusing on opportunities for small businesses to move their records to digital
    • considering broader implications, for example, what is the status of people working remotely in Australia for foreign organisations due to COVID-19 travel bans?
    • understanding that travel bans may lead to delays in providing information to the ATO
    • understanding large scale impacts such as when an employer tells everyone to work remotely from home, or a delivery service that cannot deliver – are there downstream impacts on interactions with the ATO?
    • understanding how tax debt is treated and how it might be treated differently under disaster circumstances.

    Agency updates

    The Treasury updated the group on recent legislation.

    Members sought definitional clarification on concepts contained in the following legislation:

    • Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act 2019
    • Treasury Laws Amendment (2018 Measures No. 2) Bill 2019.

    The ATO provided an update on key issues related to GST. Members discussed the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020, the black economy expansion into the sharing economy, electronic invoicing and GST at settlement.

    Members asked about the myGovID uptake replacing AUSkey from 28 March 2020. The ATO continues to provide assistance to those who need help transitioning. A process will be made available for those who cannot use Australian identification for credentialing.

    Significant litigation including the gold refining case

    Members were provided with an update on significant litigation, including:

    • ‘Artificial’ gold bullion recycling arrangements
    • Melbourne Apartment Project – [2019] FCA 2118.

    Modernisation and simplification of business registries

    The ATO is modernising business registers, bringing together 31 ASIC registers and the ABR onto a single platform that will also support the introduction of Director Identification. Topics discussed included the program overview and scope, the future state of Director Identification and how it will strengthen the ABN System.

    Future changes for ABN qualification include a requirement that ABN holders meet their tax obligations and are also responsible for the accuracy of the ABN data record.

    The ATO is working with the Australian Securities and Investments Commission to support the implementation of the new Registry.

    Member discussion included:

    • the processes of the application for an ABN and supporting evidence
    • how a person can have one Director Identity but be connected to multiple ABNs
    • that a Director Identity will lapse after 12 months if not connected to an ABN
    • how company secretaries will need to work more closely with their tax department.

    Deputy Commissioner Michelle Crosby asked the group to consider a broader question: reflecting on 20 years - how well the ABR/ABN has served GST and how can it continue to do well into the future from a GST perspective?

    Member discussion

    Members raised a range of matters including:

    • As income tax and GST are in different pieces of legislation, this can lead to different treatments in guidelines and rulings, for example, the difference between employees and contractors. It was suggested that this approach can lead to inconsistencies in treatments and compliance actions.
    • An entity’s individual circumstances are the only variable for treatment and members should contact the ATO if they see inconsistencies of treatment.
    • The expansion of the use of ‘Residential Rent Input Tax’ and various emerging structures behind that - ‘build to rent’, ‘build to sell to rent’. There may be value in revisiting how this is defined.
    • Non-residents’ experience with interacting with the ATO – tricky for myGovID.
    • The emerging view of international digital transactions and taxation. There is a perception of double taxing with GST, although it is a different cost base.
    • Further guidance on the ‘four year rule’ will be published.
    • Non-residents bidding for Australian government contracts sometimes underestimate the length of time it takes to get an ABN and a Statement of Tax Record

    Public Advice and Guidance Strategy for GST and food

    The ATO talked about the Public Advice and Guidance Strategy for GST and food and proposed consultation with a range of large taxpayers regarding proposed changes to the Detailed Food List and the inclusion of a principles–based approach. This is because of the emergence of new food types and food delivery methods since 2000. Members agreed to engage in the consultation.

    Dashboard – GST update

    The ATO spoke to members about the potential for a dashboard that provides a regular check–up of issues across the GST system, including the ATO performance time on rulings as well as insights on emerging issues and risks (GST and other).

    Members were asked to review a draft given to them and provide feedback.

    GST: Twenty years on

    Members broke into groups to consider ‘GST: Twenty Years on’ reflecting on what’s been done well, what could have been improved and how GST administration can continue to develop in coming years. The following were summary ideas from brainstorming:

    Reflections

    • Making prices ‘tax inclusive’ was a good approach
    • Early ATO support including education visits and the use of relationship managers helped to ease the introduction of GST in 2000
    • Early strong investment in Public Advice and Guidance and foundation rulings was important. BAS instructions were simple and clear
    • Given the need to consult with states and territories, GST legislation is very stable, but also hard to change
    • The provision of free computer software vouchers helped many small businesses
    • Strong accountability to states and territories works well
    • Carve outs bring complications and complexities to administration.

    Ideas for the future and priority work

    • Identifying a range of approaches that could be used, including the greater use of digital technology, to help reduce administration costs and allow clients to more easily meet their obligations
    • Exploring faster ways to resolve disputes
    • Ongoing technical capability building and maintenance – for whole of system; ATO, Treasury and community
    • Digital transformation – ongoing enhancements of myGovID, pre-filling and other digital improvements – get the infrastructure and frameworks
    • Identify grey areas or areas of confusion to eliminate/clarify. Work out faster ways to progress law changes when really needed and a focus on administrative solutions if laws are hard to change.

    Proposed client engagement in Private Wealth

    The ATO spoke to members about how it is proposing to further integrate income tax and GST elements of engagements and reviews of taxpayers in the Private Wealth market.

    The ATO sought advice and feedback from members about the range of practical considerations it should take into account from both a taxpayer and an adviser perspective.

    Members shared the following insights:

    • Although industries lent themselves to types of structures, each private group was unique, requiring GST expertise by the reviewers.
    • Outside the top 5000, private group structures are simpler and the ATO takes a more risk-based approach.
    • Taxpayers want to discuss every aspect of the case with a single ATO contact point, rather than dealing with different people for different taxes.

    Wrap up and close

    In closing the meeting, Deborah Jenkins mentioned the following.

    • The Superannuation Guarantee Amnesty legislation passed parliament and is awaiting Royal Assent, so members can expect more information on that.
    • If any assistance is required from their associations for the AUSkey switch-off, the ATO will provide a contact number.
    • Kevin O’Rourke was thanked for his service as co-chair. Andrew Howe will take up the role from the next meeting.
    • The ATO will canvass additional members for the group from other industries.

    Attendees

    Attendees are listed below

    Organisation

    Members

    ATO

    Deborah Jenkins (Co-chair), Small Business

    Chartered Accountants Australia and New Zealand

    Kevin O’Rourke (Co-chair)

    ATO

    Andrea Wood, Small Business

    ATO

    Amy James-Velagic, Private Wealth

    ATO

    Brendan O'Shea, Enterprise Strategy and Design

    ATO

    Emma Tobias, Small Business

    ATO

    Hoa Wood, Tax Counsel Network

    ATO

    Kasey MacFarlane, Private Wealth

    ATO

    Mario Rinaudo, Small Business

    ATO

    Michelle Crosby, Commonwealth Business Registry Service

    ATO

    Peter Horton, Small Business

    ATO

    Rebecca Saint, Public Groups International

    ATO

    Rowan Fox, Policy, Analysis and Legislation

    ATO

    Sue Goodear, Small Business

    Australian Banking Association

    Chris Plakias

     

     

    Coles Finance

    George Nikolaou

    Corporate Tax Association

    Paul Suppree

    CPA Australia

    Ken Fehily

    Law Council of Australia

    Andrew Sommer

    Property Council of Australia

    Andrew Howe

    Queensland Treasury

    Giles Wilmer

    The Tax Institute

    Bastian Gasser

    Treasury

    Jamie Roberts

    Treasury

    Susan Bultitude

    University of New South Wales

    Michael Walpole

    Apology

    Apology listed below.

    Organisation

    Member

    ATO

    Gordon Brysland, Tax Counsel Network

      Last modified: 21 Apr 2020QC 62248