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  • GST Stewardship Group minutes 25 May 2018

    Meeting details

    Venue

    ATO Offices, Level 12 Conference Room, 706, 52 Goulburn Street, Sydney

    Date

    25 May 2018

    Start

    9.30am

    Finish

    1.15pm

    Chair

    Tim Dyce

    Secretariat

    Rod Walker, Indirect Tax; contact phone: (02) 6216 6513

    Members

    Tim Dyce

    Deputy Commissioner, Indirect Tax, ATO (Co-Chair)

    Jeremy Geale

    Deputy Chief Tax Counsel, ATO

    Giles Wilmer

    Director, Commonwealth Taxes Unit,
    Queensland Treasury

    Susan Bultitude

    Indirect Tax and Not for Profit Unit, The Treasury

    Chris Plakias

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

    Ken Fehily

    Principal, Fehily Advisory, Member CPA Australia

    Bastian Gasser

    The Tax Institute

    Andrew Sommer

    Partner, Clayton Utz,
    Member Law Council of Australia

    Professor Michael Walpole

    Professor and Associate Head of School (Research),
    School of Taxation & Business Law, University of NSW

    Guest attendees

    Denis McCarthy

    Chartered Accountants Australia and New Zealand

    Amy James-Velagic

    Assistant Commissioner, Indirect Tax, ATO

    Rosie Cicchitti

    (Acting) Assistant Commissioner, Indirect Tax, ATO

    Tim Pulsford

    (Acting) Assistant Commissioner, Indirect Tax, ATO

    Apologies

    Kevin O'Rourke

    Chartered Accountants Australia and New Zealand
    (Co-Chair)

    Gordon Brysland

    Senior Tax Counsel, ATO

    George Nikolaou

    Coles Finance

    Andrew Howe

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

    Paul Suppree

    Corporate Tax Association

    Agenda summary

    • Welcome
    • Overview of 2018–19 Budget measures relating to GST administration
    • Discussion on Budget measures and GST administration impacts; potential for GST issues, if any, arising from other Budget measures
    • Update on progress of GST at Settlement new measure
    • Update on cross border issues and OECD Global Forum on VAT
    • Update on 2024 Vision of the GST Product
    • FSI Record Keeping and Governance Guide
    • Credit Card Apportionment Industry Guidance
    • FSI Strategy - Insurance industry consultations
    • Other business, Summary and Close

    Discussion summary

    Welcome - Tim Dyce

    Tim Dyce opened the meeting. He welcomed Denis McCarthy who was representing Chartered Accountants Australia and New Zealand on behalf of Kevin O’Rourke.

    There were no outstanding items from the 21 February 2018 meeting.

    Overview of 2018–19 Budget measures relating to GST administration – Susan Bultitude

    Susan Bultitude led a discussion on the 'Levelling the playing field for online bookings' measure announced in the 2018–19 Federal Budget.

    This proposal removes a turnover concession in that it currently exempts non-resident online travel companies (OTCs) from charging and remitting GST on hotel room bookings in Australia (Division 188 15(3)(c)(i)). This exemption allows entities to disregard supplies that concern a right or option to use commercial accommodation in the indirect tax zone. It applies whether the sale of the hotel room was made to Australian consumers or overseas consumers.

    • Business customers receiving a tax invoice from registered OTCs will be able to claim their ITCs.
    • This levels the playing field between offshore and local businesses supplying hotel accommodation.

    Consultation on the related Exposure Draft Legislation will occur in due course.

    Discussion on Budget measures and GST administration impacts; potential for GST issues, if any, arising from other Budget measures – Susan Bultitude

    1. Black Economy Package – New and enhanced ATO enforcement against the black economy.

    This measure funds ATO strategies to combat the black economy. It includes funding for:

    • ensuring taxpayers participating in the black economy meet their lodgment and employer obligations
    • being highly visible in the community with mobile strike teams to engage clients across the country supported by a strong audit program
    • leveraging the efforts of tax practitioners by supporting their dealings with clients, intervening early with agents at risk of requiring further compliance treatments, working with agents that have high numbers of high risk clients and dealing with the most concerning agents
    • investment in better data and analytics, including the development of a new Black Economy Hotline to collect community information on the black economy, and
    • helping and educating youth, migrants and small businesses to make the right decisions and take the right actions.
    1. Black Economy Taskforce – consulting on a new regulatory framework for Australian Business Numbers.

    This measure gives authority for the ATO and Treasury to consult on and design a new regulatory framework for ABNs to support the integrity of the tax system, and ensure the accuracy of ABN data available to businesses, government and the community.

    Stakeholder views will be sought on a range of ABN-related recommendations from the Black Economy Taskforce in order to gain a more comprehensive understanding of the issues and consequences of changing the ABN framework.

    Update on progress of GST at Settlement new measure – Rosie Cicchitti

    Rosie Cicchitti provided an update on the progress of GST at Settlement measure.

    Thirty two information and awareness seminars have been organised around Australia between March and September 2018. The seminars have involved the Australian Institute of Conveyancers, Law Societies, the Property Council of Australia and the Urban Development Institute of Australia. A list of these seminars was provided to members. The ATO has received some very positive feedback about some of the seminars held to date. Tim Dyce encouraged members to advise the ATO if more seminars and/or other consultation sessions are required.

    Reference was also made to a related ATO podcast available at ato.gov.au that covers what needs to be done to implement the change and how GST is collected on property transactions. A transcript of a GST at Settlement webinar held on 17 May is also available at tv.ato.gov.auExternal Link.

    Update on cross border issues and OECD Global Forum on VAT – Rosie Cicchitti

    Rosie Cicchitti provided an update on the GST on low value imported goods (LVIG) measure.

    Key activities to date

    The ATO has conducted a significant international program of engagement with its LVIG clients:

    • undertaken substantial research and modelling to identify overseas businesses that potentially sell low value goods to consumers in Australia
    • issued three rounds of letters to advise potential registrants about the requirements of the new law and to explain how they can register
    • directly engaged through its client relationship managers with its largest clients
    • met with more than 300 potential registrants, influential advisors and transporters through our international engagements, which included face to face meetings and information sessions
    • communicating with key stakeholders  
    • finalised three law companion rulings, fact sheets and general web guidance taking into account feedback from businesses and advisers
    • simplified registration for providers of LVIG became available 1 January 2018.

    The ATO has been receiving several registrations per week, including many large platform entities. In the coming months the ATO will continue to engage with business and intermediaries to help promote the need to register and assist them in understanding their ongoing obligations.

    Tim Dyce mentioned that the next OECD Global Forum on VAT is currently being organised and the location of the forum is expected to be announced in the near future.

    Update on 2024 Vision of the GST Product – Tim Pulsford

    Tim Pulsford reminded members that the concept of the 2024 Vision of the GST Product was covered at the February 2018 GST Stewardship Group meeting where four key themes were discussed: emerging technology; law and policy; capability, people and systems; and GST/VAT global shifts. He provided further details about the related transformational roadmap, including its purpose and how the ATO will work with stakeholders to develop and deliver an improved client experience.

    The ATO is developing a business transformation roadmap for indirect taxes to make it easier for clients to meet obligations and to build trust and confidence in a client-centric system. The roadmap will describe an agreed destination and the paths to getting there. It will be an incrementally timed pathway that sequences the concepts and activities moving the ATO toward 2024 and beyond.

    The ATO will work with key stakeholders (including the States and Territories and other partners in the tax system) over the coming months to design the initiatives that will lead the organisation from the current state to 2024.

    The members welcomed the opportunity to participate in the design of the future initiatives and noted that any future system should incorporate the following features:

    • law – simplify where possible
    • education – for ATO staff, clients and practitioners
    • red tape reduction – it was noted that compliance costs have increased over recent years
    • systems – need to work for clients and the ATO, and be properly integrated.

    FSI Record Keeping and Governance Guide – For consultation – Amy James-Velagic

    Amy James-Velagic reminded members that an opportunity to provide feedback to the ATO on the draft web content for the FSI Record Keeping and Governance Guide was recently available via Let’s Talk. She also stated that GST Stewardship Group members were still welcome to provide such feedback via the secretariat within two weeks of this meeting. The ATO is particularly interested in seeking feedback about whether or not the content will be effective in developing a shared understanding in regards to a clear benchmark on its expectations, and, will it be prescriptive enough while not being too prescriptive given the diversity in size, systems and complexity of clients.

    Action item

    ID

    A - 25/05/2018

    Due date

    8 June 2018

    Responsibility

    Members

    Action

    Members to provide feedback to the secretariat on the draft web content for the FSI Record Keeping and Governance Guide.

    Credit Card Apportionment Industry Guidance – For consultation – Amy James-Velagic

    Amy James-Velagic led a discussion and sought feedback about the various options of credit card apportionment public advice and guidance which have been raised by both internal and external stakeholders to achieve.

    It was noted that while the ATO has established public guidance in relation to the ATO view on apportionment, the ATO’s Indirect Tax business line has recently:

    • been undertaking reviews to test the practical application of the ATO view in relation to credit card apportionment, other compliance activities and industry engagement
    • identified that there appears to be inconsistency of treatment on various issues between clients, and
    • identified that clients are also lodging refund claims in relation to prior years which suggests that there is also uncertainty from clients in relation to their own application of the ATO view. Certainty and transparency of the ATO’s approach is a priority in the Financial Services Industry (FSI) GST strategy. The ATO is therefore exploring options in relation to how it could provide greater certainty to the FSI industry. Accordingly, feedback from members was sought in relation to what range of guidance would be most effective and suitable. Updated or new rulings, practical compliance guideline (PCG), web content, legislative determinations, private rulings and compliance agreement or other forms of agreement were proposed for consideration by members.
    Action item

    ID

    B - 25/05/2018

    Due date

    TBA

    Responsibility

    Members

    Action

    Members to provide feedback to the secretariat on what range of guidance materials and what type of content would be most effective in achieving greater certainty and transparency in relation to the ATO’s view on credit card apportionment.

    FSI Strategy – Insurance industry consultations – Amy James-Velagic

    Amy James-Velagic provided an update on the findings and outcomes from the insurance industry GST consultation sessions held on 23 April 2018.

    During the past year, as part of the GST FSI strategy, the ATO has been undertaking a scoping process in relation to understanding the potential GST issues relevant to general, health and life insurance, and the extent of any assurance the ATO has with respect to whether the insurance industry is correctly reporting its GST obligations.

    The scoping exercise included conducting insurance industry consultation sessions on 23 April with key advisory firms and insurance associations. The purpose of these sessions was to provide an update on the progress of the scoping exercise and to discuss the issues that the ATO is considering as potential priority issues for greater focus when developing assurance strategies.

    At a high level, draft insurance priority issues discussed at the session included:

    • operational and legislative compliance with the general insurance provisions and the compulsory third party (CTP) scheme provisions of the GST Act
    • compliance general provisions of the GST Act relating to documentation requirements and GST credit entitlements, and
    • characterisation of supplies issues.

    At the session, the ATO consulted with industry to better understand and listen to feedback on:

    • whether these are the most significant issues
    • whether these issues proposed to be priority are indeed priority issues for industry, and
    • whether there are other issues and risks arising in practice within the insurance industry, particularly from a commercial perspective.

    The feedback obtained from the session has been taken into account in relation to the finalisation of the ATO’s insurance scoping process and included in its GST FSI strategy for the 2019 financial year.

    Other business, summary and close

    The meeting concluded at 1.15pm.

    The next meeting will be held on 22 August 2018 in Melbourne.

      Last modified: 10 Aug 2018QC 56455