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  • Large Business Stewardship Group key messages 19 March 2020

    Welcome and introductions

    Michelle de Niese opened the meeting by recognising the current circumstances and thanked participants for dialling in under these circumstances. Michelle noted guests and apologies and gave an overview of the meeting.

    Treasury update

    Paul McCullough, Treasury, gave an update on recent developments in large business tax policy, which included: Organisation for Economic Co-operation and Development (OECD) Digital tax working group, Research and development and budget preparation.

    It was noted that the Government was looking at a package in response to COVID-19 and that Treasury had set-up a COVID-19 liaison unit headed by senior staffer Geoff Francis. Contact details for the unit will be circulated to members.

    Offshore Banking Unit issues may potentially become aligned to the OECD digital tax issues which will be informed by the outcomes from the next G20.

    Members requested that the FBT on car parking measures be reconsidered with COVID-19 in mind.

    COVID-19

    Rebecca Saint gave an update on the ATO response to COVID-19. The Corporate Tax Association (CTA) and ATO are working together very closely. The CTA is mirroring the ATO frequently asked questions (FAQs) on their website.

    Rebecca spoke about the ATO services going forward. The ATO is focussed on supporting business through the COVID-19 crises. Large corporates should send questions through to the Large Services team or their relationship manager.

    Some specific points, noting that the environment is very fluid:

    • Case officers are contacting all taxpayers currently subject to compliance to understand their specific circumstances and make any necessary changes to case management. Cases may be paused in full or part, or continue as planned depending on the preference of each individual corporate.
    • lodgement deferrals will be handled on a case by case basis
    • remission of interest and penalties – case by case but will be very pragmatic
    • instalment variations are expected to increase in April
    • compliance programs are continuing, but will be shaped to the needs of individual corporates
    • new cases will not be started
    • Public advice and guidance work has been deprioritised unless related to COVID- 19
    • a link to the ATO website was issued to members and the FAQs will continue to be updated.

    Members asked about:

    • streamlined assurance review for superannuation funds – whether the approach might be used for other areas
    • whether a 3-month blanket deferral was possible.

    Rebecca gave an update on ATO operations, noting it is an essential service. All ATO sites are currently open for business. Staff are only meeting in small groups and practising social distancing. The ATO is not currently allowing guests on premises. All travel is suspended and ATO staff are attending OECD meetings via phone conferencing. Foreign Investment Review Board actions are still being processed in conjunction with Treasury.

    Compliance risks and emerging issues

    Rebecca Saint and Michael Morton led a discussion on compliance risks and emerging issues, including discussion on Capitalised Labour, an update on Reportable Tax Position (RTP) data, an update on the information provided by Country-by-Country (CbC) and International Dealings Schedule (IDS) data and FBT and car parking.

    Discussion points included:

    • non-COVID-19 public advice and guidance has been deprioritised
    • public consultation on the draft Capitalised Labour ruling finished in February 2020. Some comments resulted in changes to the ruling. All feedback will be included in a compendium which shows how it was considered.
    • FBT and car parking based – the ATO is working through submissions received in consultation
    • RTP schedule has been updated and is scheduled for release March 2020. The aim was to make it far simpler and fine tune Categories B and C. The ATO will provide further insights later in the year
    • CbC reporting and IDS data is used for risk assessment at taxpayer and system level.

    The CTA will co-ordinate a list of priority public advice and guidance that members would like to proceed notwithstanding COVID-19.

    Digital Identity

    John Dardo provided an update on the Digital Identity program.

    John noted that:

    • AUSkey has a hard coded end date – noon 30 March 2020. All existing AUSkeys cease to work then. The ATO has no control over that date and it cannot be changed.
    • transition figures are well ahead of projections
    • there is a large amount of support links included in the agenda pack
    • an interim solution is being developed for individuals with non-resident associates
    • 80% of users who download the app do not need help
    • as credentialing is mapped to a person's mobile phone, this supported work from home if required.

    Members’ discussion

    • It was a positive that the website had a pop-up with a count down, but also would redirect automatically after 30 March 2020.
    • Transition numbers for large market are quite high.
    • Linking trust entities now works well but in the manual linking process got some interesting results in who a principle authority is.

    Large market independent review

    Deputy Commissioner Scott Treatt provided an update on the progress of the review of the large market independent review process.

    CTA, members of the National Tax Liaison Group, the Tax Institute and various ATO stakeholders have been involved.

    The ATO continues to work on the report but may consider the timing of that under the current circumstances.

    Board of Taxation

    Lynn Kelly led a discussion on recent developments at the Board of Taxation, including the Corporate Tax Residency review (CTRR).

    The CTRR was announced in December 2019. There has been a large amount of feedback from the tax and business community. An options paper was released late last year canvassing two options. Advice will be provided to Government in April.

    Members discussed how current travel restrictions impacted corporate residency and the fact that corporate officers, who live internationally, cannot travel. There is a potential for cross-jurisdictional issues.

    Government process to appoint a new chair is well underway. It needs cabinet endorsement and interim arrangements remain in place.

    It was noted that the current environment may have an impact on the timing of the Capital gains tax rollover review.

    Justified trust update

    Belinda Darling led a discussion on the Justified trust program covering:

    • where an issue is rated as low assurance because there is more work for the ATO to do (as opposed to the taxpayer)
    • how the pre-lodgment compliance review (PCR) process will contribute to mitigating increased workflows in year 3 (Justified trust refresh)
    • the relevance of gap analysis to governance ratings.

    It was noted that:

    • COVID-19 will have an impact on the trajectory of the program. We will actively manage this with the taxpayers and provide support.
    • The ATO are exploring doing the walkthrough processes for GST justified trust reviews over the phone as an alternative to physical walkthroughs
    • Gap analysis is most relevant in the context of a stage 2 rating for Governance. The ATO recommends taxpayers use the guide to self-assess their risk management framework
    • In relation to the PCR, the ATO will usually do a refresh where taxpayer reaches High Assurance every 3 years. During the interim period, taxpayers will have a 'maintenance and monitoring' approach applied. Information required in a refresh year will be less extensive as it is a 'top-up, not a re-do'. The ATO will seek input from members in designing the refresh process and will circulate a discussion note for consultation shortly.
    • The ATO will also be seeking input and comments from the LBSG in relation to the discussion draft: GST governance, data testing and transaction testing guide for the Top 100 and Top 1000 programs during April.

    CTA costs of compliance survey

    Michelle de Niese suggested, and the meeting agreed that this item should be held over to a future meeting.

    Research and development

    Michael Morton was to provide an update on Research and development but recommended that the subject be discussed again at a later meeting, after the impacts of COVID-19 on Government policy become clearer.

    Industry update

    Steve Southon from the banking industry gave an overview of the banking industry which included:

    • a snapshot of the 'big 4' banks financial performance
    • challenges in the current business environment
    • follow on from the Royal Commission
    • Fintech and Neo banks
    • Open Banking.

    Wrap up and close

    Michelle de Niese recognised the time taken out of the members' businesses to share their experiences and thanked the members for their input in difficult circumstances.

    Attendees

    Attendees list

    Organisation

    Attendees

    ATO

    Rebecca Saint (Co-chair), Public Groups and International

    Corporate Tax Association

    Michelle de Niese (Co-chair)

    ATO

    Belinda Darling, Public Groups and International

    ATO

    Jeremy Hirschhorn, Client Engagement

    ATO

    John Dardo, Enterprise Solutions and Technology

    ATO

    Mark Konza, Public Groups and International

    ATO

    Michael Morton, Public Groups and International

    ATO

    Scott Treatt, Private Wealth

    Adelaide Brighton Cement

    Mimi Ferguson

    Australian Banking Association

    Steve Southon (NAB)

    Australian Petroleum Production and Exploration Association

    Michael Fenner

    Australian Super

    Bevan Grace

    BHP Billiton

    Premila Roe

    Big 4 Representative

    Sarah Hickey

    Board of Taxation

    Lynn Kelly

    Business Council of Australia

    Pero Stojanovski

    Law Council of Australia

    Vivian Chang

    Property Council of Australia

    Dudley Heywood

    SEEK Limited

    Josie Guastalegname

    Telstra

    Ben Guthleben

    Transurban

    Cristina Wolters

    Treasury

    Paul McCullough

    Woodside Energy Limited

    Marc Lewis

    Apology

    Apology list

    Organisation

    Member

    Cochlear Limited

    Kimberley Simpson

      Last modified: 22 Oct 2020QC 64064