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  • Not-for-profit Advisory Group minutes 16 March 2016

    Meeting details






    16 March 2016








    Tony Poulakis




    Rod Walker



    Contact and secretariat

    Gess Sottile


    (02) 6216 2264



    Murray Baird, Assistant Commissioner and General Counsel

    Arts Law Centre

    Robyn Ayres, Executive Director

    Australian Catholic Bishops Conference

    Father Brian Lucas, General Secretary

    Australian Centre for Philanthropy and Nonprofit Studies, QUT

    Proof Myles McGregor-Lowndes, Director

    Catholic Social Services Australia

    Joe Zabar, Director

    Herbert Smith Freehills

    John Emerson, Consultant

    Jobs Australia Ltd

    David Thompson AM, CEO and
    Chair, National Roundtable of Nonprofit Organisations

    Philanthropy Australia

    Krystian Seibert, Manager Policy & Research

    Salvation Army

    John McIntosh, Charities Tax Advisory Service

    Tax Institute

    Michelle Hartman, Partner, Deloitte Touche Tohmatsu (replacing Paul Ingram)




    Eliz Duffy, Indirect Taxes and Not-for-Profit Unit, Individuals and Indirect Tax Division




    Tim Dyce, Deputy Commissioner, NFP Client Experience Owner

    Tony Poulakis, Assistant Commissioner, PGH, Policy and Corporate Risks

    Rod Walker, Director PGH NFP Hub

    Mark Ferguson, PGH NFP Hub

    Albert Beric, Director PGH NFP Risk and Strategy

    Matthew Petersen, PGH NFP Risk Manager

    (by phone) Ilana Millar, Assistant Commissioner (Senior Tax Counsel), Tax Counsel Network

    (by phone) Brendon Fisher, Tax Counsel Network

    Robert Drummond, Assistant Commissioner, Business Reporting and Registrations, Operations

    Judy Attwood, Director Technical Excellence

    Melinda Gibbs, Technical Excellence

    Thomas Kaplan, ATO Corporate, NFP Communications Manager


    Murray Baird, Assistant Commissioner and General Counsel


    Elizabeth McKinnon, General Counsel, Australian Conservation Foundation

    Richard Gelski , Partner, Johnson Winter & Slattery, representing Executive Council of Australian Jewry

    Next meeting 13 July 2016.

    Record of meeting

    Key messages

    • The name of this forum will be changing to the Not-for-profit Stewardship Group and a membership refresh, including the appointment of the inaugural Community Co-chair, will be completed by the July 2016 meeting.
    • A preliminary draft ‘in Australia’ taxation ruling will be circulated to members for comment in the near future.
    • The ATO’s NFP Hub and the ATO’s Business Reporting and Registrations area continue to work together to resolve ABN issues. Almost all the identified issues have been addressed.
    • Treasury and the ATO continue to work together to advocate the need for law changes to address concerns associated with the special conditions governing rules in Division 50 of ITAA1997.
    • The Reinventing the ATO program of work for 2016-17 is close to finalised and the NFP Hub will be calling on members to help deliver changes for the
      not-for-profit sector throughout the year.


    Members were welcomed to the meeting with an opening statement from the ATO, including a welcome to new members and invited visitors.

    Confirm record of previous minutes

    The record of the 18 November 2015 meeting was confirmed and is now available on

    NFP perspective presentations

    The member from Herbert Smith Freehills and the member from the Australian Catholic Bishops Conference each gave presentations about how the entities they represent operate, the issues that concern them and their clients, and their experience in interacting with the ATO. General discussion followed, including the following observations and feedback:

    • There is a high failure rate for charities as with small business – those wanting to set up new charities are being encouraged to work with other existing organisations or assisted to find the best way to achieve their intentions.
    • It is important to understand the place of the small not-for-profit or charity, especially in the disability space.
    • Specialist practitioners make a significant contribution to the not-for-profit sector.
    • Practitioners are aware how difficult it is to get ATO forms changed and that sometimes the ATO can explain the cause of the problem but fixes can take a long time.
    • Is there some way the ATO can access data that will help update systems to overcome the ‘key contact’ issue? The ATO needs more flexibility about helping clients where it is clear that it is reasonable to deal with someone different who is not the nominated contact person.
    • There has been a significant improvement in the service provided by those on the ATO’s front line assisting not-for-profits. Those in the ATO working with not-for-profits are committed to the job and have a good culture.
    • In relation to where the ATO is going, there are clearly improvements coming for the client experience, practitioners have very few complaints about interaction with the ATO in the not-for-profit space and these complaints are mainly about a junior person ticking a box and not understanding.
    • This forum is good to attend; things happen, it’s not just talk.

    The ATO noted that there are changes coming as part of Reinventing the ATO that may address some of the issues raised, such as voice authentication and working towards a whole-of-government approach.

    The ATO thanked members for their positive feedback and confirmed that the ATO officers working with not-for-profits have a genuine desire to do their best by the sector and that the feedback is appreciated. The ATO remains committed to continue providing a quality service to not-for-profits and their representatives.

    ABR issues update

    The ATO’s Assistant Commissioner, Business Reporting and Registrations provided an update noting that of the five issues remaining at the time of the 18 November 2015 meeting, two now remain to be finalised.

    Action: The Business Reporting and Registrations team will confirm the numbers of clients taking up the Fast Track process.

    Ongoing Action: Any new ABN related systemic issues identified by members should be submitted to the NFP Advisory Group mailbox

    Treasury update

    The Chair introduced the Treasury representative who provided an update to the group. Key points:

    • The government is in the process of renewing the ACNC Advisory Board membership (The government confirmed the appointment of the new board on 5 May 2016).
    • The government is in the process of updating the Public Ancillary Fund Guidelines and Private Ancillary Fund Guidelines (The government confirmed the new guidelines will have effect from 5 May 2016External Link).
    • The post implementation review of the statutory definition of charities is almost complete.
    • The ‘in Australia’ changes as proposed by the government are still on the list of unenacted measures. Possible changes to the governing rules test in Division 50-50 of the ITAA1997 still being progressed.
    • The government is in the process of amending the ACNC regulations to extend transitional reporting provisions by two years allowing the ACNC to accept certain reports lodged with other government agencies.
      (This extension takes effect from 16 April 2016External Link).


    • The proposed changes to the draft amendments to Division 50-50 of the ITAA1997 put a regulatory burden on organisations that would not otherwise exist if the rules were clearer.
    • There are hidden compliance costs to clients that are largely unnecessary.
    • Good laws are needed that that people respect and that are easy to administer.


    ‘In Australia’

    Following consultation with the ‘in Australia’ working group (comprising mainly of members of this group) the ATO is preparing a draft taxation ruling on this issue. This ruling is listed on the ATO’s rulings program for delivery by 22 February 2017. A preliminary draft will be sent to members toward the end of April for comment from this group. The ATO will be asking members for relevant, practical and robust case studies. Update: Members were sent a copy of the preliminary draft ‘in Australia’ ruling on 11 May 2016 and met on 2 June 2016 to discuss.


    • The ruling needs to make clear that there are different tests for deductible gift recipients (DGRs) and income tax purposes respectively to avoid confusion.
    • Material on has a public benevolent institution (PBI) focus, especially the examples. It needs to be clear that the rules don’t just apply to PBIs.

    Broader public advice review

    The ATO is continuing to work through the range of not-for-profit related advice products.


    • When consulting on or announcing changes, the ATO needs to make clear whether there are changes to the ATO’s position. For those advice products that have remained unchanged for a long time, any changes may cause the public to ask ‘what has changed?’
    • Practitioners pay attention to differences to wording between ATO and
      ACNC – looking for difference in meaning. There is a fair bit of interest when changes happen.

    Action: A detailed update of the review of public advice products will be provided at the 13 July 2016 meeting.

    FBT meal entertainment and entertainment facility leasing expenses fact sheets

    The ATO noted the publication of two new products:


    • The timing of the publication of these products, two weeks before the end of the FBT year, was not ideal. They should have been published earlier.
    • The language is too technical in these products however, it is important to recognise that some issues are complex and there can be a danger is simplifying everything. For ease of understanding it is sometimes appropriate to refer to more detailed material or expert advice.
    • It’s not sufficient to publish the material, the existence of the new material needs to be widely marketed.

    Update: Non-Profit News Service - changes to FBT salary-packaged meal and other entertainment benefits was published on 18 March 2016.

    ATO risk and compliance update

    The ATO outlined the process of planning the 2016-17 risk program of work.

    Key points:

    • The ATO’s Compliance Group is now called the Client Engagement Group following consultation with staff and clients. It reflects a change in culture and a shift towards early engagement to ensure certainty. The change of name also emphasises that the ATO appreciates the importance of quality relationships with clients in shaping future compliance – from our support and assistance work, our advice, all the way through to audits and investigations.
    • The ATO will be holding a workshop in April 2016 to identify what issues and risks are emerging in the not-for-profit sector and to consider how best to respond to them to ensure fairness and integrity in the tax system. Interested members will be invited to attend this workshop. Update: Members were invited to a meeting on 6 April 2016 to discuss current and emerging tax compliance issues/risks in the NFP sector and how these can be identified and appropriately addressed.


    • A member asked for a progress update on the Tier 1 (Tier 1 being the largest not-for-profit organisations based on turnover) conversations. The ATO stated that all the not-for-profit clients that had been selected to participate have been contacted and the majority have had meetings with the ATO. The feedback from clients is that they appreciated the opportunity to speak to someone from the ATO one-on-one at their own premises and to then have a future contact point. The ATO noted these relationships are intended to be ongoing and that the ATO is considering extending the program to other not-for-profit entities.
    • A member noted that it would be good to have clarity about the roles of the ACNC and ATO respectively and how they intersect for example, when a particular issue arises, which agency is responsible? The ATO noted that a Client Engagement Protocol has been drafted between the ACNC and the ATO, and that it will form part of the formal MOU that exists between the two agencies. The protocol will address clarity about roles. The ATO is also planning to hold some joint ATO and ACNC client education events, such as webinars, to address this important point.
    • Another topic of interest is the ATO’s regulatory role in the context of the whole of the regulatory framework for charities.
    • It is important for the ATO to make more use of ACNC data on ancillary funds. Data matching could be done to identify those operating outside the system.
    • The ATO needs to take firm action where appropriate (e.g. where deliberate
      non-compliance has been detected), and it needs to let the community know that firm action will be taken in appropriate cases. The ATO also needs to focus on the ‘top of the pyramid’ of the ATO’s compliance model and those marketing product tax schemes
    • The ATO also needs to let the community know when it succeeds in taking effective action against those that deliberately seek to break the rules (e.g. prosecutions). The ATO noted that sometimes, despite best efforts to have these stories published, they are not picked up in the media as newsworthy. It was suggested that the ATO should target not-for-profit market publications, including not-for-profit peak body publications, because these publications consider ‘fallen saints’ stories as newsworthy.
    • It was suggested that the ATO publish case studies that have been de-personalised to alert those that are doing the same thing but that didn’t realise the ATO’s position.
    • The Cash Economy is still an issue with cash payments to people classified as volunteers when in fact they are not.

    ATO Reinvention – update from the ATO's NFP client experience owner and NFP client experience lead

    This discussion was based on the following document provided to attendees at the meeting:

    The ATO spoke to the document with the main points being that:

    • The seven columns represent priority groupings of initiatives mainly from the Client Experience workshop held on 30 September 2015.
    • This is a living document, some items may be added and others may be pushed to future years once they are fully scoped.
    • The concept of a single secure entry point to government at this point is aspirational and there are dependencies on other initiatives outside of the
      not-for-profit program of work.
    • Once the ATO’s Reinvention 2016–17 program of work is confirmed we will begin a consultation process to better understand what the not-for-profit initiatives really mean and how they will deliver what not-for-profit clients need.
    • The plan is also to improve the staff experience and to help the ATO better understand the sector with a better and sophisticated training program for ATO staff working with not-for-profits, including joint sessions with the ACNC and not-for-profit organisations.


    • The up-front message should be that not-for-profits are assisted to get the concessions they are entitled to.
    • One way for the ATO to learn more about not-for-profits is to visit organisations. One member suggested, for example, visiting a soup kitchen or the like to see how things operate and to gain some practical knowledge – sometimes what you think is going on is not.
    • Perhaps develop a government-wide skilling program, for example, in partnership with the Australian Public Service Commission (APSC).
    • Consider messaging and how messages are communicated. Perhaps selected not-for-profit representatives are given the opportunity to comment on communication products before they are published. The not-for-profit sector is diverse and often uses different language styles.
    • It is important to get stories out about the significant contribution that not-for-profits make to the community, as well as how the ATO is helping – the ATO should join in the story – ‘not-for-profit pride movement’, ‘get together with some of us and workshop an approach’.
    • How about not-for-profit practitioner workshops – case studies, new cases etc. there is a big demand for tax sessions.

    Update: Report once, use often framework through the integration of ATO and ACNC ancillary fund reporting

    The ATO provided an update on the progress of this initiative.

    Key points:

    • Form updates close to finalised, working group set up and consulted including members of this group and other not-for-profit representatives
    • Some work now needed to scope the need to integrate data and ultimately IT systems between ACNC and ATO.

    Action: A further ATO Reinvention update will be provided at the July 2016 meeting.

    Other business


    The ATO acknowledged the good news contained in the government’s 4 March 2016 media release about the ongoing role of the ACNC and expressed its commitment to continue working closely with the ACNC to deliver services to charities.

    Name change and membership refresh

    The Chair explained that the ATO intended to commence a membership refresh as flagged at the November 2015 meeting. This group was established in November 2013 and, in line with other external forums, the ATO is looking to refresh up to half the membership by the July 2016 meeting. As part of the refresh the ATO will also create a Community Co-chair role and will be seeking expressions of interest from existing members to take on this role.

    The Chair also noted that the name of this group will be changed to the Not-for-profit Stewardship Group following a corporate directive in the ATO to have all the ATO’s Stewardship Groups use the same naming convention.

    Norfolk Island

    The ATO reported that an ATO NFP Hub representative visited Norfolk Island in February 2016 in relation to Norfolk Island joining the Australian taxation system. There are estimated to be over 50 not-for-profits on the island, most of which are charities that will need to have an ABN to apply for tax concession status. During information sessions on the island, there were questions about how not-for-profit organisations on Norfolk Island should apply for an ABN. The ACNC noted that some of these entities have already registered with the ACNC as charities. The ATO’s Assistant Commissioner, Business Reporting and Registrations, noted that a fact sheet had been drafted to give Norfolk Island residents guidance about how to apply for an ABN.

    Action: The Business Reporting and Registrations team will provide a copy of the draft fact sheet about ABNs for Norfolk Island residents.

      Last modified: 02 Sep 2016QC 49867