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  • Not-for-profit Stewardship Group minutes 13 July 2016

    Meeting details

    Venue

    Melbourne

     

     

    Date

    13 July 2016

     

     

    Start

    10.00am

    Finish

    3.00pm

    ATO co-chair

    Rod Walker, NFP Strategy Team and Client Experience

     

     

    Community co-chair

    Joe Zabar, Catholic Social Services Australia

     

     

    Contact and secretariat

    Gess Sottile

    Phone

    02 6216 2264

     

     

     

     

    Attendees

    ACNC

    Murray Baird, Assistant Commissioner and General Counsel

    Arts Law Centre

    Prof. Myles McGregor-Lowndes, Director

    (Community Chair) Catholic Social Services Australia

    Joe Zabar, Director Strategic Policy and Engagement, Economic Policy

    Herbert Smith Freehills

    John Emerson, Consultant

    Jobs Australia Ltd

    David Thompson AM, CEO and member of the 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

    Treasury

    Murray Crowe, Principal Advisor, Individuals and Indirect Taxes Division

    New members

     

    Australian Institute of Company Directors (AICD)

    Phil Butler CPA, NFP Sector Leader

    Giuntabell

    Nunzio Giunta CPA, Managing Director

    Justice Connect

    Juanita Pope, Director for Not-for-profit Law

    Prolegis Lawyers

    Anne Robinson AM, Founder and Principal

    Special guest - outgoing member

    Catholic Mission

    Father Brian Lucas

     

    ATO

    Tim Dyce, Deputy Commissioner, NFP Client Experience Owner

    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

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

    Andrew Healey attended for Robert Drummond, Assistant Commissioner, Business Reporting and Registrations, Operations

    Amanda Littame, Technical Excellence Services (by phone)

    Thomas Kaplan, ATO Corporate, NFP Communications Manager (by phone)

    Secretariat

    Gess Sottile, ATO NFP Strategy Team, NFP Reinvention

    Apologies

    Law Council of Australia

    Jennifer Batrouney QC, Chair of the Law Council’s NFP Legal Practice and Charities Committee

    Next meeting 9 November 2016.

    Record of meeting

    Welcome

    Members were welcomed to the meeting with an opening statement from the ATO Chair, including a welcome to new members and guests. The ATO Chair then introduced the inaugural Community Chair.

    Inaugural Community Chair

    This meeting was the first for Joe Zabar from Catholic Social Services Australia as the inaugural Community Chair of the NFP Stewardship Group. Joe is a Foundation member of the Group and his appointment as Community Chair of the Group was welcomed by all. Joe addressed the group and expressed his intention to continue working closely with the ATO and to help make the valuable work of this group better known in the broader community and to forge closer links between this group and the NFP community.

    Confirm record of previous minutes

    The record of the 16 March 2016 meeting was confirmed and are now available.

    NFP Advisory Group March 2016 Minutes

    Round the table introductions

    Welcome to new members

    This meeting was the first attended by new members appointed in July 2016 following a membership refresh, these new members are:

    • Australian Institute of Company Directors (AICD), represented by NFP Sector Leader, Phil Butler CPA,
    • Giuntabell represented by Managing Director Nunzio Giunta CPA
    • Justice Connect, represented by Director for Not-for-profit Law, Juanita Pope
    • Law Council of Australia, represented by Chair of the Law Council’s NFP Legal Practice and Charities Committee, Jennifer Batrouney QC
    • Prolegis Lawyers represented by Founder and Principal Anne Robinson AM

    All in attendance were asked to introduce themselves and attendees were provided with an updated membership list.

    Thank you to leaving members

    A certificate of recognition and appreciation was presented to ceasing Foundation member, Fr Brian Lucas (Catholic Mission) by Tim Dyce, Deputy Commissioner and NFP Client Experience Owner. Fr Brian Lucas was recognised for his significant contribution to improving the administration of not-for-profits and charities, and the tax laws that govern them. Fr Lucas was an active member of the Charities Consultative Committee from 1999 and the Not-for-profit Advisory Group since 2013.

    Other ceasing members who were unable to attend the meeting were:

    • Elizabeth McKinnon, who represented the Australian Conservation Foundation
    • Richard Gelski, who represented the Executive Council of Jewry.

    What the ATO heard

    Members value:

    • the change of focus of this group in recent times from a compliance focus to a wider whole-of-client focus and welcome the change of name to confirm the role of this group as a ‘stewardship’ group
    • being able to have ‘robust’ conversations with the ATO and still walk away confident that the relationship with the ATO is positive and strong
    • the opportunity to be part of reform including major tax reform
    • direct access to ATO experts when they have issues or questions
    • being told the real reason why things are not working

    Members consider that:

    • the work of this group is a shared responsibility between the ATO and members, not just to discuss issues but to find solutions together
    • the working groups, formed out-of-session to work on specific issues, have been very effective.

    Action item:
    NFPSG14-16

    Due: ASAP

    Responsibility: Secretariat

    The ATO will provide members with contact details and areas of expertise/responsibility of the ATO’s NFP representatives, that can be contacted anytime if members have issues to discuss or questions to ask out-of-session.

    How the ATO's Not-for-profit Hub works

    For the benefit for new members and as an update for continuing members, the ATO’s Director of NFP Risk and Strategy outlined for the group how the ATO is organised to administer NFPs.

    There are 45 staff members across various teams in the ATO who work predominantly on NFP issues including:

    • Strategy development
    • Improving the NFP experience, including the ATO’s Reinvention Program
    • Policy and advocacy
    • Tax counsel
    • Issues management and government relations
    • Risk management and case selection
    • Client engagement and assurance (including audits)
    • Provision of advice
    • Call centre and processing of tax concession applications
    • Marketing and communication.

    Working with our partners

    The ACNC and the ATO continue to work together closely to provide charities with a more ‘whole-of-government’ experience. The ACNC and ATO meet regularly on various aspects of the work of administering charities and there is a Memorandum of Understanding between the agencies that outlines how they work together in a number of ways including the exchange of data.

    The ATO also works closely with Treasury on policy issues and the implementation of new law.

    Reinventing the ATO program

    The ATO Chair provided an update on the planning and progress of the Reinventing the ATO Program as it relates to NFPs and talked through the updated program of work, a copy of which was provided to members.

    In summary:

    • The ATO is open to considering change in all its interactions with charities and NFPs.
    • Work is progressing to implement a new integrated Registered Charity Ancillary Fund Reporting process which will mean that most Registered Charity Ancillary Funds will have the ability to report once only, to the ACNC. The ACNC will share the data with the ATO to fulfil the ATO reporting requirements.
    • Planning will commence in September 2016 to look at how the ATO’s tax concession application forms can be transitioned to a digital platform.
    • Work is underway to provide NFPs with more options to access information about entitlements and obligations including more webinars.
    • Planning is underway to put in place a process where the ATO will consult with NFPs to ensure that ato.gov.au content is written in a style that is easily understood by NFPs.
    • The ATO plans to publish details of its ATO-wide 2016-17 Reinvention commitments, including those that will help NFPs, in the near future.

    What the ATO heard

    • Members value continuity in staff responsible for not-for-profits; at the very least the ATO should try and retain corporate memory when there are staff changes.
    • Members value the opportunity to partner with the ATO to provide services to NFPs.
    • It is important for the ATO to resource changes adequately to avoid bad experiences resulting from commitments not being met.

    About the Not-for-profit Stewardship Group

    For the benefit for new members and as an update for continuing members, the ATO Chair talked through a summary of the purpose of the group, how it works (including out-of-session working groups) and expectations of members.

    Marketing the work of the NFP Stewardship Group

    The Community Chair talked about his desire to have the community made more aware of this group and the work that it does. General discussion followed about ways that this group and its work can be marketed to the community including the following key points:

    • There are some key NFP representatives that do not know about the NFP Stewardship Group.
    • In addition to the formal minutes of the NFP Stewardship Group, the ATO should consider preparing key messages that can be used by NFPs on their websites and/publications, tailored to the intended audience.
    • Marketing and communication of the work of this group should go out using a variety of channels including NFP peak bodies and other forums such as (but not limited to) Associations ForumExternal Link, Australian Institute of Company DirectorsExternal Link, Charity Law AssociationExternal Link.
    • The ATO should consider organising an annual meeting (in addition to the meetings of this group) that throws the net beyond the membership of this group. The purpose of the meeting would be to invite NFP representatives to have a conversation with the ATO.

    Action item:
    NFPSG 16-16

    Due date:
    9 November 2016

    Responsibility:
    ATO Marketing & Communications

    The ATO will work with this group and other NFPs to market the purpose and work of this group in a more active way and to a wider audience, packaged in a way that can be picked up by NFP community publications. The ATO will also use the Non-profit News Service to alert the NFP Community to messages about this group, including outcomes of meetings.

     

    Action item:
    NFPSG 17-16

    Due date:
    9 November 2016

    Responsibility:
    ATO Chair

    The ATO will consider organising an annual meeting (in addition to the meetings of this group) that throws the net beyond the membership of this group. The purpose of the meeting would be to invite NFP representatives to have a conversation with the ATO.

     

    Action item:
    NFPSG 18-16

    Due date:
    9 November 2016

    Responsibility:
    ATO Marketing & Communications

    The ATO will look at ways to give this group a more prominent place on ato.gov.au that is easy for the NFP community to find.

    Involving the community in shaping the agenda for the NFP Stewardship Group

    The Community Chair also talked about his desire to involve the community in the shaping of the meeting agendas for this group.

    Action item:
    NFPSG 19-16

    Due date:
    October 2016

    Responsibility: Secretariat

    A snapshot of the planned topics for discussion at the forthcoming November 2016 meeting of the NFP Stewardship Group will be published prior to the meeting and the community will be given the opportunity to submit topics/questions for discussion at the meeting.

    ABR issues update

    The ATO’s Business Reporting and Registrations representative provided the following update.

    Online ABN application

    • We have made it possible for applicants to select ‘Australian public company limited by guarantee’ as an entity type during their application.
    • We have removed some outdated ABR system rules that were impeding ABN applications from being processed online.
    • We have further similar enhancements planned for September 2016; the delay is due to a shortage of ATO IT resources and the competing demands of the Tax Time period.

    Client support

    • We are allowing call centre staff to resolve more client issues over the phone. Previously, clients were advised that if their ABN application was within the 28 service standard that they would need to wait. However, our call centre staff have been given the required accesses and information to resolve most issues over the phone, allowing ABNs to be issued on the spot. No complaints have been made by not-for-profit entities since this ‘fast track’ service has been introduced.
    • The majority of ABN applications which can’t be resolved by call centre staff are being processed by an automated macro. Where an application is assessed as fitting within an acceptable level of risk, an ABN can be issued and all updates actioned to the record within three to four business days.

    Charity information

    We have experienced issues with certain ABN information not always displaying accurately in ABN Lookup. We are still working to resolve discrepancies in tax charity concession status, deductible gift recipient status and GST information displayed on ABN Lookup.

    We did conduct a reconciliation between ABN Lookup and the ACNC register and can report that there are now no errors with the display of the ACNC registration status.

    We are working with the ACNC on a process where we could update the ABR with information they gather through online annual information statements submitted by registered charities. We don’t expect this information exchange to begin before July 2017. However, once implemented, it will improve the accuracy of information held in the ABR and may reduce the need for registered charities, in some circumstances, to update their information with both the ACNC and the ABR.

    Entity swaps and moves

    From time to time, clients will call the ATO and request that we change their entity type but allow them to retain their original ABN. In fulfilling this request, both ABR and ATO records need to be migrated to the new entity type. In some circumstances, this can be a complex process, taking up to 12 months to complete. Because of this, ABN holders are generally advised to cancel their ABN and apply for a new one.

    An entity swap will be refused if the client does not meet certain criteria (entity matrix). For example, there are statutory requirements that require the creation of certain trusts to be evidenced in writing for the trust to be valid.

    We have been working with the ATO on a new, quicker process. It is expected that clients, who meet certain criteria, can call the ATO to have their ABN and tax records migrated to a new entity type within 30 days.

    Action item:
    NFPSG 20-16

    Due date:
    9 November 2016

    Responsibility:
    Business Registrations

    Business registrations will consider sharing or publishing the entity permissions matrix.

    Additional business locations

    Business locations are the permanent physical premises operated by a business or organisation. We currently ask clients to provide the main business location and additional business locations during their ABN application.

    We began collecting additional business locations within the ABN application in late 2013. About 500 government agencies rely on this information as part of their business operations e.g. disaster relief, grant allocations and other activities that benefit business.

    Existing ABN holders are encouraged to voluntarily update their record to include information on all their business locations including:

    • site address (number, street, suburb, state)
    • site specific email address
    • site specific phone number
    • activity undertaken at the location (to allow us to assign a correct industry coding).

    Providing this information is not mandatory and no penalties will be applied to existing ABN holders that choose not to. However, if an ABN holder elects to provide this information, it will enable government at all levels to better plan for and support your local operations at these sites.

    Additional business location details can be withheld if there is a risk to the safety of individuals as a result of disclosure, e.g. women’s refuge centres. However, if government agencies (and they are the only one who will have access to this non-public information) don’t know about and can’t verify your operations through the ABR, you may not get all the location specific support and assistance we’d like to provide you. This may be particularly critical in an emergency or disaster response situation.

    Discussion

    Issues/questions raised by members included:

    • Where one out of four directors is a non-resident then there are delays while all are checked
    • Business registrations is exploring ways of making this easier e.g. using third party data however, no immediate fix is available.

    Treasury update

    The Treasury representative, Murray Crowe, gave an update to the group and gave the assurance that all members of this group can call him to discuss issues relating to charities and NFPs at any time.

    Action item:
    NFPSG 21-16

    Due date:
    ASAP

    Responsibility:
    Treasury

    Treasury will check with the relevant minister(s) to ensure that this group is considered for inclusion in consultation on measures that will affect charities and NFPs.

     

    Action item:
    NFPSG 22-16

    Due date:
    ASAP

    Responsibility: Secretariat

    The ATO will set up a working group to coordinate the formulation of a strong case for law change (joint ATO and NFP single view) in relation to ongoing issues with Division 50-50 of the ITAA1997.

    ATO law update

    ‘in Australia’

    The ATO is progressing the drafting of a new taxation ruling on the issue of ‘in Australia’, following consultation with this group and other NFP experts. A final draft for public consultation is expected to issue in September 2016.

    Action item:
    NFPSG 23-16

    Due date:
    Completed

    Responsibility:
    Tax Counsel Network

    An updated preliminary draft will be sent to members of the ‘in Australia’ working group for identification of any significant changes before progressing to public consultation.

    Review of NFP related public advice products

    The ATO is progressing the review of NFP related public advice products, in consultation with relevant NFP and government representatives (including the ACNC).

    Communication and marketing update

    Right information and services at the right time in a language NFPs understand

    The ATO chair explained that there are four main ways the ATO plans to make the right information and services available at the right time to the NFP community in a language they can understand.

    1. Consult with NFP representatives when drafting ato.gov.au content intended to help NFPs.
    2. Promote and market existing and new information and services available for NFPs.
    3. Diversify the ways that information is made available including webinars and videos.
    4. Consult with NFP representatives in designing support for the NFP community to transition to digital by default.

    Events

    A joint ACNC/ATO webinar, tailored for charities wanting to know more about applying to be a deductible gift recipient (DGR), was held on 28 July 2016. This webinar is the first in a series of presentations aimed at helping the NFP community understand how the ACNC and ATO work together.

    Applying for DGR endorsementExternal Link

    Better Boards Conference 2016 - Knowledge, Networks & Insights for Non-Profit Leaders Better Boards Conference 2016. On 29-31 July 2016 the ATO and ACNC attended together to answer questions and provide information about the services each agency provides for charities and the NFP community.

    Better Boards conferenceExternal Link

    The ATO is planning to be available at most Ask ACNC sessions to help answer tax related questions charities.

    Ask ACNCExternal Link

    Action item:
    NFPSG 25-16

    Due date:
    ASAP

    Responsibility:
    ATO Marketing & Communications

    ATO will consider publishing a schedule of future communication and education events.

    New products

    An FBT video for NFPs is coming soon.

    Action item:
    NFPSG 26-16

    Due date:
    Completed

    Responsibility:
    ATO Marketing & Communications

    The ATO will share the latest version of the FBT video for NFPs with members before marketing to the wider community.

    Research

    The ATO is in the process of engaging an organisation external to the ATO to undertake research to help the ATO understand the NFP community better including the different types of NFPs, how they operate and how better to communicate with the NFP community.

    Writing for NFPs

    As part of the Reinventing the ATO program the ATO is looking at ways to ensure that content on ato.gov.au intended to provide information to the NFP community is easy to understand.

    Action item:
    NFSG 27-16

    Due date:
    ASAP

    Responsibility:
    ATO Marketing & Communications

    The ATO will set up a working group to agree on a process for the ATO to engage the NFP community to ensure that information on ato.gov.au is written in a way that is understood easily by the NFP community.

    ATO/NFP Engagement Strategy

    The ATO is drafting a strategy to outline actions it will take to engage more actively with the NFP community.

    Action item:
    NFPSG 28-16

    Due date:
    ASAP

    Responsibility:
    Director NFP Risk and Strategy

    The ATO will consult with this group before finalising its NFP engagement strategy.

    What the ATO heard

    • It is very important that messages from the ATO about activities or changes that affect the NFP community are published at the right time, especially anticipated events.
    • The ATO should consider sharing the ATO’s NFP engagement strategy with this group before finalising. The ATO will also consider making this information public.
    • The ATO should explain more clearly to the community how the ATO is organised to service the NFP community, it is very important to make it clear that if they have an NFP question that it will be directed to a group of people who know the answers (NFP experts).
    • The ATO should consider using peak body newsletters as a channel for sharing information with the NFP community.
    • The ATO should consider reaching out to licenced clubs.

    Action item:
    NFPSG 29-16

    Due date:
    9 November 2016

    Responsibility:
    ATO Marketing & Communications

    The ATO will publish information that makes it clear that the Non-profit business hours telephone number (1300 130 248) will connect callers with NFP experts.

    Compliance update

    The ATO’s Director of NFP Risk and Strategy provided an update, key points included that the ATO is:

    • preparing a profile of high-risk cases
    • looking at training organisations that have self-assessed as income tax exempt to consider whether some should be registered as charities with the ACNC
    • considering how it can publish case studies to demonstrate what is ‘the wrong thing’ and the possible consequences, including links to information about how the community can let the ATO know about organisations or individuals who are doing the wrong thing
    • always looking for intelligence from the community.

    What the ATO heard

    • The ATO should consider looking at:
      • the behaviour of very closely held NFPs
      • for-profit entities setting up NFPs
      • the activity of ‘social washing’ where social enterprises are benefitting individuals.
       
    • The ATO can do more to let the community know what it is doing about those that are doing the wrong thing deliberately
    • The ATO should consider undertaking some follow-up research to the ANAO Report into the Administration of Deductible Gift Recipients (Non-profit Sector)External Link in relation to main intermediaries who submit DGR applications and consider contacting those intermediaries to understand the type of issues they deal with and the advice they provide.

    Other business

    Contacting the ATO

    Members were reminded that they can raise issues or submit questions to the ATO anytime via the NFP Stewardship Group inbox NFPStewardshipGroup@ato.gov.au

      Last modified: 16 Nov 2016QC 50526