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  • Private Groups Stewardship Group key messages 29 November 2018

    Section 100A reimbursement agreements

    Martin Jacobs, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    Glenn Davies, Assistant Commissioner, Tax Counsel Network, ATO

    Andrew Orme, Deputy Chief Tax Counsel, Tax Counsel Network

    • The ATO is developing further guidance on Section 100A reimbursement agreements.
    • The draft Ruling under development will provide the Commissioner’s preliminary views on the exclusions from a ‘reimbursement agreement’ for:
      • agreements not entered into with a purpose of eliminating or reducing someone’s income tax, and
      • agreements entered into in the course of ordinary family or commercial dealings.
       
    • There was consensus amongst members the development of this guidance is an important product in the Privately Owned and Wealthy Group space and wished to be kept informed of the consultation process so they could contribute further to the development of this guidance.

    Division 7A Treasury Consultation Paper

    Greg Derlacz, Senior Advisor, The Australian Treasury

    • As part of the 2018-19 Budget, the Government announced it will further clarify the operation of the Division 7A integrity rule. This will enable the Government to ensure all Division 7A amendments will be progressed as part of a consolidated package.
    • In the 2016-17 Budget, the Government announced it will make targeted amendments to improve the operation and administration of Division 7A of the Income Tax Assessment Act 1936 (Division 7A). The amendments were to apply from 1 July 2018, but will now apply from 1 July 2019.
    • A Treasury consultation paper, Targeted Amendments to Division 7AExternal Link, was released on 22 October 2018, with submissions closing 21 November.

    Reportable Tax Position

    Michael Morton, Assistant Commissioner, Public Groups and International, ATO

    Kasey Macfarlane, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    • Members were provided with an update on Reportable Tax Position and proposed future approach currently being considered by the ATO.
    • It is intended there will be consultation on this matter in the near future.

    Communicating with Privately Owned and Wealthy Groups

    Sally Bektas, Assistant Commissioner, ATO Corporate

    Ash Khera, Assistant Commissioner, Private Groups and High Wealth Individuals

    • A brief overview was provided of the work undertaken by Marketing and Communications to improve the client experience. Highlights included launch of a pod cast channel for the ATO (Tax inVoice) and a renewed focus on tax time information provided to large businesses (including private groups)
    • Members were asked for their insights into the most effective ways of communicating with Privately Owned and Wealthy Groups. Several suggestions were made including attending association speaking engagements and building a profile of an organisation’s preferences for receiving communications from the ATO.

    Phoenix Taskforce update

    Aislinn Walwyn, Assistant Commissioner, Privately Owned and Wealthy Groups, ATO

    • The ATO led Phoenix Taskforce was prescribed in November 2014 to protect the public finances of Australia. There are 33 members representing Federal, Commonwealth, State and territory agencies.
    • Illegal Phoenix activity is not just a tax issue but an economy wide issue, impacting businesses, employees and government.
    • In July 2018 ASIC commissioned a report into the economic impact of potential illegal phoenix activity, estimating the annual direct impact of illegal phoenix activity to be between $2.85 billion and $5.13 billion. (The report is not a tax gap estimate, as it has a focus on economic activity not tax effect)
    • The Treasury, ATO, ASIC, Department of Industry, Innovation and Science and the Digital Transformation Agency are working together to modernise business registers. The modernised registers will be administered by the Australian Business Registrar within the Australian Taxation Office (ATO).
    • The government will continue to work with the community to further develop future options for modernising business registers including technology, governance and legislation with a focus on the user experience and data accessibility.
    • Community engagement will also include testing implementation options for a Director Identification Number (DIN). The DIN allows regulators to confirm the identity of company directors. This will improve the integrity of company formation and acquisitions.

    Law Policy and Advice update

    Income tax

    Will Day, Deputy Commissioner, Private Groups and High Wealth Individuals

    J 5 Global Tax Enforcement Alliance

    • The J5 Data Challenge was held in The Netherlands in the week of 5 November and was attended by representatives from the ATO. Significant international media coverage External Linkwas generated by the challenge.
    • J5 was launched at the OECD's Taskforce on Tax and Other Crimes meeting in Paris on 31 October to a generally positive response.
    • The J5 Enablers Group is holding an operational meeting in Utrecht, Netherlands, to develop an overarching concept of operations with respect to a high priority offshore enabler impacting our jurisdictions.
    • The IRS have formally requested a Simultaneous Criminal Investigation be conducted by the IRS and ATO with respect to a second J5 Enablers Target impacting on the US and Australia.  Further operational planning will occur with respect to this target whilst above mentioned overseas meetings are taking place.
    • Crypto/Cyber: UK and US members met in Singapore at an Interpol event and are discussing implementing a crypto currency training 'sandpit' for use by investigators in conjunction with Interpol.

    Tax and System Governance Tools Project

    • An automated Tax and System Governance Assurance Tools (TASGAT) is currently under development to make it easier for clients to have better systems and meet their tax obligations.
    • An Information System Risk Assessment (ISRA), to assess the integrity, controls and governance of the systems used by clients for reporting tax and superannuation obligations is undertaken by team from Indirect Tax. There has been increased interest from clients on how they can prepare for an ISRA and how they self-assess the health of their system to identify any issues early.
    • A System Governance Assurance Tool is currently under development to allow clients and their agents to self-assess the health of their systems from a GST and income tax perspective. We plan to co-design, build, test and deliver a PDF version of an Information Technology System Governance Assurance Tool by July 2019 and a dynamic interaction tool by December 2019.
    • We also plan to deliver a Tax Governance Tool for staff to assess the tax risk management and governance frameworks of large, private market clients. The intent of the Tool for staff is to deliver increased consistency and efficiency through a digital tax governance tool. It will assist staff to address technical interpretation questions regarding tax and superannuation obligations, and risk rate the entity being assessed. 
    • Several members of the Private Groups Stewardship Group will take part in a consultation process on this matter to be held early December 2018.

    Indirect Taxes

    Tim Dyce, Deputy Commissioner, Indirect Taxes, ATO

    • The Justified Trust approach for indirect Tax is tracking well with the ATO receiving a number of voluntary disclosures. Most issues identified relate to the integrity of business systems.
    • Low Value Imported Goods registrations are very good and payments are strong. There has been some media recently suggesting low compliance. ATO data indicates very strong levels of compliance.  
    • GST at Settlement applying to certain purchasers of new residential premises or potential residential land was implemented on 1 July 2018. Despite the short implementation timeframe, the system is running well.
    • A Taxpayer Alert highlighting ATO concerns recently issued on the GST implications of certain development lease arrangements.

    Superannuation

    Jenny Lin, Assistant Commissioner, Superannuation, ATO

      Last modified: 08 Jan 2019QC 57715