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  • National Tax Liaison Group key messages 6 September 2016

    ‘Players’ in the tax system of the future

    The Tax Institute representatives Arthur Athanasiou and Tim Neilsen led a discussion on 'Players' in the tax system of the future.

    Key points included:

    • increased computing power, artificial intelligence and a significant reduction in the cost of data storage are enabling significant data mining and utilisation
    • advances in the digital economy are also contributing to eliminate fragmentation and duplication, contributing to efficiencies and a reduced demand for resources
    • ATO likely to be the lead in introducing new technologies which will enable predictive, rather than historical, auditing and more readily accessible collection of revenue. Revenue authorities are also likely to work more closely together
    • tax agent population likely to be reduced in line with digital facilities provided for self-lodgers. Tax profession to be more focussed on consultancy services
    • professional bodies to diversify their service offerings and open up to non-tax professionals, with pressures for merging to achieve sufficient scale
    • while tax law simplification and reform had the potential to reduce the demand for lodging by tax agents, there will always be a demand for their services reflecting lifestyle choices made by taxpayers.

    Treasury reports

    Part A: Budget and related measures

    Maryanne Mrakovcic, Deputy Secretary, Revenue Group and Robert Raether, A/g Division Head, Corporate International Tax Division,Treasury; and Michelle de Niese, Corporate Tax Association

    • Diverted Profits Tax - 20 submissions were received on the public consultation paper.
    • New Tax Framework Division created under the direction of the Revenue Group executive. Work priorities include the sustainability of the tax system, simplification, cross entity and intertemporal issues between the business and individual tax systems, the Commonwealth/States dimensions of tax reform and other areas where there is scope for collaboration.
    • Hybrids - A report to Government is close to being finalised.
    • Voluntary tax transparency code – There has been a slow start to the Board of Taxation’s voluntary code with members encouraged to promote its signing-off by boards.

    Part B: Australia as a ‘financial services centre’

    Maryanne Mrakovcic and Robert Raether, Treasury; and Tim Neilsen, The Tax Institute

    • The Markets Group, responsible for progressing issues associated with promoting Australia as a financial services centre, is currently looking at the treatment of regulatory capital, withholding tax and other announcements in the Budget.

    Corporate / International issues

    Paul Drum, CPA Australia; Maryanne Mrakovcic, Treasury; and Mark Konza, Deputy Commissioner, International, ATO

    • Members queried whether Australia was providing an internationally competitive framework as the recent integrity measures, the multilateral BEPS action items, corporate tax rate, work on infrastructure staples and negative control could be perceived as not conducive to attracting new business. The ATO noted that it is consulting transparently on these issues.
    • It was noted that all parties have a duty to promote the robustness of Australia’s corporate tax system to foster community confidence.

    Progress report on BEPS

    Key points included:

    • BEPS is a long term 25 year project
    • OECD is currently looking at feedback on the BEPS action items
    • 96 countries have signed on a shared understanding of the multilateral instrument
    • Kenya is the 100th country signing onto the common reporting standard
    • progress on defensive measures is contingent on OECD members agreeing to them.

    Australian developments:

    • Two taxpayer alerts issued recently.

    Reinventing the ATO

    Daniel Bamford, Assistant Commissioner, Reinventing the ATO

    • The Every Year Counts documents contain the 2016-17 initiatives that will be delivered and also those under ongoing design for future delivery.
    • The ATO is ramping up its engagement with software developers to address any issues via a deliberate partnership approach.
    • Progress on delivering commitments for tax practitioners includes:  
      • the release of a new portal with a communication preferencing pilot by April 2017, followed by full release prior to tax time next year. CAANZ has volunteered to participate in the pilots
      • addressing the AUSkey irritants, managing ABN connections to MyGov and cloud authentication and authorisation with no need for a soft key
      • exploring with the Digital Transformation Office an authentication option using biometrics as part of a whole of government solution.
    • An update was also provided on the ATO vision for the future of the Australian Business Register (ABR) and business focussed digital service, the intent being to improve and transform the experience of the ABR for its clients and partners. It was noted there was a need to look at potential crossovers with policy discussions initiated by the Board of Taxation in its working group in the sharing economy and whether consideration could be given to potential commercial use of geospatial and geocoding data associated with the ABR. Feedback was also sought from NTLG members on the ATO vision for the future of the ABR broadly.

    ACIL Allen report addressing complexity in Australia’s tax system

    Andrew England, Deputy Commissioner, Policy Analysis and Legislation; and Ben Kelly, Assistant Commissioner, ATO Policy Integration, ATO

    • The ACIL Allen report was prepared by independent consultants exploring contributing factors to complexity in tax law.
    • Proposes ten principles for a simpler tax system and ten more specific recommendations grouped into three categories of “building blocks” for achieving simplification with most of those recommendations needing further analysis prior to their implementation.
    • Includes the key issues identified by stakeholders as contributing to complexity. Members noted that in the case of some anti-avoidance legislation, a degree of complexity might be unavoidable.
    • Discussion included a suggestion that Treasury pilot simplification work in an area of the law that can then be put to the Government for consideration. Support from the profession and corporates to specific projects could be provided through the NTLG and the Consultation Steering Group.

    Tax Gap

    Kent Perdrisat, Assistant Commissioner, Performance Measures and Tax Gap, ATO

    • Consulting on new gap estimates in addition to the GST tax gap estimates.
    • An independent panel comprising Richard Fifield, Chris Richardson and Professor Neil Warren have assessed the robustness and reliability of the estimates.
    • Currently consulting, including on how to contextualise and provide a narrative explaining the estimates and methodology used.
    • The ATO intends to involve some NTLG and panel members as part of the communication strategy.

    ATO Advice and Guidance

    Michelle de Niese, Corporate Tax Association; and Jeremy Hirschhorn, Deputy Commissioner, Public Groups, ATO

    • The new approach for ATO Advice and Guidance is designed to provide better and quicker public advice. It provides certainty and reduces compliance costs wherever possible and, in some cases identifies the areas the ATO sees as high risk.
    • A number of administrative ‘safe harbours’ have already been issued as Practical Compliance Guidelines (PCGs) following co-design and intensive industry consultation.
    • PCGs also convey our approach to compliance risk, distinguishing low from high-risk areas and include incentives, in terms of penalties and interest, to come back within safe harbours.
    • The recently released Marketing Hubs discussion paperExternal Link is an example of the new approach.
    • Taxpayer Alerts are issued where it is too important to wait for risks to fully materialise and better to let people know early the landscape and compliance stance, enabling earlier corrections.
    • Consultation may include industry groups and external consultations. They are not issued lightly, only where there is the potential for a significant effect.

    ATO Tax Counsel Network (TCN) resources

    Clint Harding, Law Council of Australia; and Kirsten Fish, Chief Tax Counsel, ATO

    • TCN resources have been under pressure from:  
      • assisting with legislation, litigation and timely advice and guidance
      • the shift to earlier engagement
      • the opening up of mobility within the office.
    • TCN has engaged in a recruitment process for technical and non-technical staff to address these pressures and reorganised its resources to make them more effective and efficient.
    • Work is arranged in focus groups, some are industry based, others by transaction or taxpayer type.
    • The restructure facilitates a client focus. It allows staff to learn more of industry and market emerging trends, including what drives behaviours, in contrast to the former centres of expertise that were focussed on areas of the law.
    • TCN is piloting a business improvement process with the international focus group aimed at removing inefficiencies, standardising processes and feeding best practices into knowledge management to be disseminated more widely.
    • TCN takes a holistic approach to workforce planning activities balancing staff needs with skills requirements.
    • Transactions are looked at holistically with indirect tax and income tax considerations considered at the same time by the group allocated to deal with the issue.
    • Members suggested that sharing experiences with knowledge managers in firms could also assist TCN to develop its knowledge management skills.

    Design and Change Management business line

    Jane King, Deputy Commissioner, Design and Change Management, ATO

    • The business line was created in January 2016 to support the ATO to identify, design, implement and evaluate strategic and operational changes, partnering with key stakeholders to provide better outcomes for the community and the organisation.
    • Key functions include:  
      • developing insights and gathering feedback from stakeholders on changes made and on further design needs
      • providing support through a dedicated design service team
      • connecting across the ATO to support people through change
      • improving portfolio, program and project management through an integrated enterprise change framework, covering end to end processes
      • equipping the ATO with best practice framework, tools and processes to deliver successful change.
    • The impact of changes on people was discussed and the need for educational programs to assist change management. It was suggested that there are opportunities to compare experiences with other large organisations implementing change programs.

    Other business

    Review of the Independent Review Guidelines

    Debbie Hastings, Deputy Commissioner, Review and Dispute Resolution, ATO

    • The ATO tabled a marked-up copy of proposed changes to the Independent Review of the Statement of Audit Position.
    • The independent review guidelines commenced as part of Reinventing the ATO three years ago with only one case litigated from 28 requests.
    • Proposing to update the guidelines, including:  
      • when it might be appropriate to offer an independent review earlier, for example to address an issue in a transfer pricing case
      • when a review is likely not to be offered includes, for example:  
        • when already subject to an earlier neutral evaluation, say by a former judge or for important issues where it would be better to go straight to the Full Court
        • where the case is covered by a Taxpayer Alert, although this is subject to ATO discretion
        • when the audit has been subject to extensive scrutiny and review by ATO senior officers.
      Last modified: 09 Feb 2017QC 50327