GST Stewardship Group minutes 19 March 2019

Meeting details

Venue: Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria (to coincide with OECD Global Forum event)

Date: 19 March 2019

Start: 9.30 am Finish: 13.30 pm

Chair: Tim Dyce

Secretariat: Monique D'Zilva, Indirect Tax; contact phone: 03 9275 2441

Members

Guest attendees

Apologies

Agenda summary

• Welcome
• ATO Realignment
• Treasury update
• Update on new measures
• Performance measures
• Current International trends in VAT/GST and the implications for business
• Other business and close

Discussion summary

Welcome – Tim Dyce

Tim Dyce opened the meeting and welcomed all attendees including members from BIAC (Business and Industry advisory committee to the OECD). The BIAC members are in Melbourne attending the fifth meeting of the OECD Global Forum on VAT co-hosted by the Australian Taxation Office. It is a great opportunity to have BIAC present to this group on International trends in VAT/GST and the implications for business.

There were no action items from the 14 November 2018 meeting.

ATO Realignment – Tim Dyce

The ATO recently announced an internal realignment of our Client Engagement Group to continue improving the client experience by aligning functions across the Client Engagement Group to our key markets.

This realignment is effective from mid-March and has been designed to help align our structure into market segments that will enable us to take a more holistic view of our clients and their interactions across our tax and super system.

Summary of the changes include:

Five of our existing ITX branches are moving to Small Business under Deputy Commissioner Deborah Jenkins to form an indirect tax hub which is directed at ensuring that we retain a centralised specialist risk and program management function within the client engagement group.

Three of our existing ITX branches are moving to Public Groups and International:

• Indirect Tax Public Groups Engagement,
• Indirect Tax Internationals and
• GST Financial Services

For the GST Stewardship group, the changes mean that Deborah Jenkins will take over as Chair from Tim Dyce.

Key points raised by members:

• ATO needs to ensure access to GST specialists continues (it was confirmed that the tax counsel network will continue to maintain a core group of indirect tax specialists).
• ATO should be clear on who is the first point of contact under the realignment.
• ATO needs to continue to consult with industry and communicate changes.

An updated picture of our structure and leadership group across the ATO is available in our organisational chart.

Treasury update – Bede Fraser

Bede Fraser (Treasury) provided an update on the following matters:

• GST regulations

The A New Tax System (Goods and Services Tax) Regulations 1999 (1999 Regulations) are due to sunset and be remade before 1 April 2019. The exposure draft regulations were released in December 2018 for public consultation with one public submission received.

Update post meeting

New GST regulations took effect from 1 April 2019, replacing the 1999 GST regulations which are now repealed.

• Removing GST from feminine hygiene products

From 1 January 2019, feminine hygiene products are exempt from GST. The ACCC has been directed to monitor the prices and a report is due back to Government by 31 March 2019.

Update post meeting

The ACCC released its reportExternal Link on 29 March 2019. The ACCC found that 'The vast majority of retailers sampled were well prepared for the removal of the GST, and reduced retail prices of menstrual products by the expected 9.1 per cent.'

• ‘Levelling the playing field’ for online hotel bookings

The Bill has been introduced into Parliament.

Update on new measures – Ian Ayrton

Ian Ayrton (ATO) provided an update on the GST measures recently implemented including:

• GST at Settlement

As of 1 July 2018, GST withholding at time of settlement now applies to most new residential premises and sales of potential residential land.

As at 28 February 2018:

The ATO had been notified of approximately 22,900 property transactions to which a withholding obligation would apply on settlement, and received approximately 20,200 payments in respect of transactions that had settled.

The ‘GST property credits’ withholding account is now viewable via ATO online services for individuals and sole traders and the Business Portal. The account will be viewable via online services for agents by early April 2019.

We are continuing to communicate with industry on common mistakes.

• GST on low value imported goods

As of 1 July 2018, Australian GST now applies to most sales of low value goods from overseas businesses to consumers into Australia.

We have had high levels of compliance with the measure and the revenue results received are exceptional compared to the estimate of $70 million.

We are following up with a small number of businesses that have not registered.

• GST on online hotel bookings

The Bill, Making Sure Multinationals Pay Their Fair Share of Tax in Australia and Other Measures, was introduced to Parliament in September 2018 with the online hotels booking forming schedule five (5) to the Bill.

The Bill was subject to review by the Senate Economics Legislation Committee. Whilst the Committee supported the GST schedule, it recommended deferral of the Bill until further analysis is undertaken.

• GST Regulations

The current GST regulations are to be repealed with effect from 1 April 2019 and the new A New Tax System (Goods and Services Tax) Regulations 2019 will then take effect. Some sections will be renumbered along with their associated tables and item numbers.

These changes will not affect the meaning or operation of the regulations. We are updating our web content to provide guidance in respect of the changes and communicate this to tax agents and other stakeholders.

Performance measures – Kelly Canavan

Kelly Canavan gave a presentation on ATO Performance measures including an analysis on the number of cases that do not meet the service standard for timeliness for rulings, objections and audit cases.

• There is a growing focus on client experience and getting the case right. This is reflected in the downward trend in objection cases received.
• Where cases have failed the service standard they are addressed as part of active case management.
• Complexity will often result in a case exceeding the standards.
• The ATO undertakes quality checks on samples of cases to identify issues such as timeliness.

Current International trends in VAT/GST and the implications for business – Karl Heinz Haydl, Jessica Dove, Nathalie Bidal and Chiu Ming Man

BIAC is the Business and Industry advisory committee to the OECD. BIAC members Karl Heinz Haydl, Jessica Dove, Nathalie Bidal and Chiu Ming Man gave a presentation on International VAT/GST trends.

BIAC supports the work of the OECD´s Working Party 9 and the OECD´s Global Forum on VAT via its Technical Advisory Group (TAG). Additionally; it supports policy-makers at a domestic level with international business practical input from a global VAT/GST perspective.

Global trends include:

• Globalised economy
• Digital economy
• Growing importance of VAT
• Outdated tax rules
• VAT/GST compliance reporting
• Need for consistency

Safeguarding VAT revenues and ensuring a level playing field is highly important for business too.

Key elements for this to be achieved are:

• Destination and neutrality principle.
• Simplicity, consistency, feasibility and proportionality when it comes to VAT/GST collection.
• Admin cooperation and exchange of information between tax administrations to ease compliance.
• Efficient use of modern technology – based on a
  • globally consistent VAT/GST framework
  • cooperative compliance regimes and
  • a common data set.
   
• OECD VAT/GST work and its globally consistent implementation.
• Global Forum highly important to share experiences and good practices and lead the way.

Other business and close – Tim Dyce

The items listed as other business were not discussed and will be carried over to the next meeting.

The members thanked Tim Dyce for his role as chair of the stewardship group and wished him well.

The meeting concluded at 13.30.

The next meeting will be held on 30 May 2019 in Sydney.