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  • Private Groups Stewardship Group key messages 12 June 2019

    Private Wealth Programs of Work

    Kasey Macfarlane - Assistant Commissioner, Private Wealth ATO

    Ash Khera - Senior Director, Private Wealth ATO

    Members were provided with information on the three new Private Wealth programs of work:

    • Top 500 (expansion of current Top 320 program)
    • High Wealth Private Groups (expansion of High Wealth individuals)
    • Medium and Emerging Private Groups.

    A discussion occurred on the expanded engagement and assurance programs.

    Members provided insights and suggestions for:

    • introducing education briefings and program expectations to support the additional large taxpayers prepare for ATO’s engagement
    • identifying program expectations use straightforward language and consistent terminology with clients in large market
    • provide advance notice of ATO engagement, and where possible share the list of the additional large clients for engagement.

    Cluster based approach to managing risk

    Kasey Macfarlane - Assistant Commissioner, Private Wealth ATO

    Michael Drogaris - Senior Director, Private Wealth ATO

    Members were informed on the ATO’s ‘risk clustering’ based approach that will be adopted to manage priority tax risks in the Private Wealth market from 2019-20.

    There was a discussion on some key risk areas being scoped for management under a ‘risk cluster’ based approach.

    Key features of the approach for managing priority risks across Private Groups include:

    • identifying and detecting risks that exhibit common factors, characteristics and behaviours across the Private Groups population
    • examining and understanding the key drivers and causes associated with common risk behaviours
    • a range of tools appropriate to the relevant drivers and behavioural causes to address the identified risks at a Private Groups population and system level, as opposed to focusing only at an individual taxpayer compliance level. This will include more timely and targeted public and advice and guidance. For example, Taxation Rulings, Tax Determinations and taxpayer alerts to make it easier for our clients to comply.

    Reportable Tax Position

    Kasey Macfarlane - Assistant Commissioner, Private Wealth ATO

    Anthony Marvello - Assistant Commissioner, Public Groups ATO

    Members were updated on the proposed expansion of the Reportable Tax Position (RTP) Schedule to large private companies and large professional services firms. The proposed expansion to large private companies will take effect from 1 July 2019 (or the 2020 financial year).

    Since the last meeting, the ATO has consulted with a sub-working group of this group and undertaken targeted consultation with some large professional services firms about the proposed draft consultation paper. ATO will issue a paper for broader consultation in July 2019.

    Members provided feedback on what governance might look like.

    It was suggested for the ATO to leverage off professional association contacts and engage with specific roles within entities, for example, Chief Financial Officers (CFOs). This could be supported by holding round table discussions.

    Clear messaging could address the value to the community, as the expansion will add to the cost of compliance. The Adviser’s Standards Model being developed by the ATO and an Advisers consultation group could also be of benefit.

    Open items for members

    There was an open opportunity for members to share insights, observations or raise issues they feel the ATO needs to pay attention to.

    The following topics were raised and discussed for consideration:

    • A member received personal correspondence concerning Excess Contributions. Enquiries by their Accountant and Financial Adviser resulted in being advised by the ATO telephone contact that “it was one of many letters that had been sent out in error and to just forget about”. This issue had caused uncertainty and concern and the wasted time (several hours over several days) of two professional advisors to resolve. The member believes that this could be a public relations (PR) opportunity for the ATO by demonstrating that it practices what it preaches. An admission of the error and an apology to those affected (including the advisors) would be good for ATO’s reputation.
    • Advisers get a lot of questions about s293 notices and suggest the document is very formal. More plain English would assist taxpayer time and reduce reliance on advisers. There were also concerns that continued deferment of small s293 amounts could accumulate to a larger problem for taxpayers.
    • The SAP module for Single Touch Payroll (STP) is not quite right yet. Given the STP timelines and the broad use of SAP for many taxpayers, this should be considered in implementation.
    • The Fuel Tax Engagement team responded very well to recent approaches by a private group. The team engaged well, explained issues, were very helpful and facilitated an extension.
    • Can the Internationals Schedule be simplified or tailored for entities? Cross border issues will be discussed in a future meeting.
    • There may be merit in identifying false, but widely believed behaviours in the cross border space, and issuing advice to correct misperceptions.

    Income tax update

    Scott Treatt - Assistant Commissioner, Private Wealth

    Extension of concessions for Divison 7A:

    • The group discussed the extension of the concessions afforded under PCG 2017/13 with regard to unpaid present entitlements and the application of Division 7A. It was noted that it was likely the PCG would be updated to incorporate the 2020 income year and this should be published shortly. The publication can now be found at PCG 2017/13 Division 7A - unpaid present entitlements under sub-trust arrangements maturing in the 2017, 2018, 2019 or 2020 income years.

    Section 100A:

    • Development of guidance is progressing.
    • Internal drafts are progressing and will be brought back to this group for further consultation.

    Research and Development (R&D):

    • Substantiation (business records) is a key issue.
    • The scope of the project needs to be considered ie R&D verses ordinary business cost.
    • A Practical compliance guideline is being developed.

    Statement of Record:

    • From 1 July 2019, tenderers applying for Commonwealth Government contracts (procurement) over $4 million (including GST) must obtain a statement of tax record (STR) showing including registration, lodgment and payment satisfactory engagement with the tax system.
    • There is a four day turnaround on provision of the STR which is valid for 12 months.
    • There was a discussion on consideration of expansion for sub-contractors to also be complaint.

    Tax Governance Project

    Ash Khera - Senior Director, Private Wealth ATO

    An update was provided on the Tax Governance project.

    The two tools being introduced on 1 July 2019 are as follows:

    • Information Risk Assessment (ISRA) tool being released externally to support private wealth clients and their advisors to self-assess the integrity of their systems and provide the report to our case officers as part of a Top 500 engagement. This is intended to improve the client experience and reduce the cost of compliance by reducing the time we need to spend in a client’s business.
    • The Tax Governance tool will be released internally and has been developed to support our Private wealth staff to consistently assess tax governance and contribute to establishing justified trust in large private group engagement cases.
    • User guides and commentary will also be available to support clients.

    Other business

    Kasey Macfarlane - Assistant Commissioner, Private Wealth ATO

    There was a discussion on a new measure relating to the improving the Black Economy. From 1 July 2019, new rules will disallow deductions for payments to employees and contractors, where the employer has not met their payment and reporting obligations.

    It was noted that to maintain deductibility, an employer must notify the ATO that they have not met their payment and reporting obligations before the ATO notifies of audit or review.

    There was a discussion to what extent the ATO would allow rectification in the instance where payment and reporting obligations were not meet.

    Tim Dyce undertook to liaise with ATO’s small business area to further work through this.


    Attendees details are listed below.




    Tim Dyce (Co-chair), Private Wealth


    Ellen Denton (Secretariat), Private Wealth


    Ann Magro, Private Wealth


    Ash Khera, Private Wealth


    Kasey Macfarlane, Private Wealth


    Michael Drogaris, Private Wealth


    Scott Treatt, Private Wealth

    Balmoral Family Group

    Peter Gillett

    Chartered Accountants Australia & New Zealand

    Michael Croker

    CPA Australia

    Greg Nielsen

    Deloitte Private

    Michael Gastevich

    Family Business Australia

    Wendy Foster

    Fox Private Group

    Michael Griffith

    Greenwoods & Herbert Smith Freehills

    Andrew White

    Grocon Pty Limited

    Annemarie Numa (Co-chair)

    Independent member

    Paul Brassil

    Law Council of Australia

    Angela Lee

    Lowy Family Group

    John Fanning

    PFD Foods

    Peter Cartsidimas

    PwC Private

    Michael Dean


    Apologies are listed below.




    James O’Halloran, Superannuation and Employer Obligations

    Arnold Bloch Leibler

    Paul Sokolowski

    Law Council of Australia

    Terry Murphy


    Mal Cameron

    The Tax Institute

    Mark Molesworth

      Last modified: 07 Aug 2019QC 59848