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  • Private Groups Stewardship Group key messages 20 September 2018

    ATO working towards 2024

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

    Sally Druhan, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    Ash Khera, Senior Director, Private Groups and High Wealth Individuals, ATO

    • Stewardship group members discussed and provided feedback on the ATO Corporate Plan, its connection to the Privately Owned and Wealthy Groups programs of work and how it may contribute to improving the client’s tax and superannuation experience.
    • In addition, members discussed the public perception of private groups, how they are experiencing engagement with the Tax Office and the role of advisors. Members provided feedback that the engagement approach seems to be working well for the large private groups, however further work needs to be done to enhance the next level of engagement.

    High Wealth Individuals (HWI) and medium business tax gaps

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

    • The Stewardship Group was advised of the planned released of a High Wealth Individuals’ (HWI) income tax gap and a Medium Business Tax Gap as part of the ATO’s broader Tax Gap program of work.
    • It was highlighted that the HWI income tax gap would be measured across those privately owned groups controlled by individuals who control more than $50 million net wealth.  It was also noted that this $50 million net wealth threshold is greater than the existing $30 million net wealth threshold that applies in determining our HWI population, but is considered to be more reflective of contemporary perceptions of wealth in comparison to the current $30 million threshold.
    • Similarly Stewardship Group members were advised that the medium business tax gap population will include companies with a turnover greater than $10 million but less than $250 million (excluding those already included in the HWI tax gap population), plus individuals who together with associated entities control net wealth of more than $10 million.
    • There was some discussion about the methodology that will be applied in calculating the respective tax gaps; noting that the HWI tax gap will be measured using a top down statistical method (Extreme Value Theory), and that measurement of the medium business tax gap will involve the undertaking of a random enquiry program.
    • Stewardship Group members emphasised the need to ensure appropriately pitched and targeted communications to support the release of the respective tax gaps, and to also use the opportunity to balance community perception by highlighting the positive and important role that private groups play in the broader economy and community.
    • It was agreed the ATO will keep the Stewardship Group informed in relation to planned release dates for the HWI and medium business tax gaps as they become more certain. The ATO will also consult with members and seek members’ input into supporting communication and messaging prior to their finalisation and prior to release of the respective tax gaps.

    Reportable Tax Position

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

    • The Stewardship Group was briefed about the extension of the RTP Schedule to include companies in public or international economic groups with a turnover greater than $250 million for years ending on or after 30 June 2018.  Members feedback was sought about a proposal to further extend the RTP schedule for private companies in economic groups with a turnover greater than $250 million from the 2019–20 financial year onwards; requiring those companies to disclose their most contestable and material tax positions through the RTP Schedule.
    • It was noted the extension of the RTP schedule obligations to private companies from the 2019–2020 financial year would potentially apply to approximately 450 private companies. 
    • Feedback from members highlighted the importance of tailoring ‘category C’ questions and ensuring that information that may be required to be disclosed by private companies under the RTP schedule is appropriately targeted and relevant to private companies. Feedback from members also emphasised the need for a clear and consistent understanding between the ATO, advisers and taxpayers about how the disclosed information will be used and what the consequences will be when a private company makes a disclosure through the RTP Schedule.   
    • Further discussion focussed on the need for clear communication and instructions for private companies about the self-assessment questions relating to the RTP schedule that  will be included in the company tax return from 2018–19.  In particular it was highlighted that because private companies will not be required to complete the RTP Schedule in 2018–19, there is a need to make it clear that private companies are not required to address these particular questions when completing the 2018–19 company tax return.
    • It was agreed the ATO will work with a small working group comprising members of the Stewardship Group to co-design:
      • key messages and a communication strategy for private companies about the RTP schedule related self-assessment questions in the company tax return (that are not applicable for private companies in 2018–19);
      • an implementation plan for the planned extension of the RTP Schedule obligations for private companies in economic groups with a turnover greater than $250 million from 2019–20. 
       

    Block chain and crypto currency

    Ben Brown, Senior Director, Private Groups and High Wealth Individuals, ATO

    • The members considered the significance for private groups of block chain and cryptocurrency. In the context of the current tax treatment of cryptocurrencies and This link will download a fileOECD discussion (PDF, 1.5MB)This link will download a file they discussed the questions:
      • Is this a disruptive technology?
      • What are the impacts on business both positive and negatives and how is this significant for the tax and super systems?
       
    • It was felt that there has been a shift from a focus on cryptocurrency as an investment opportunity to block chain as an enabler to re-engineer existing and create new business processes. The emergence of initial coin offerings as an alternative to the traditional approach to raising capital was also noted. A key point of difference in comparison to previous examples of disruptive technology is accessibility – there are no real barriers to entry.
    • More specific examples discussed included the potential for the use of smart contracts underpinned by block chain technology, to support early engagement services like Commercial Deals and to enhance digital sharing of information between private groups and the ATO.
      Last modified: 04 Jan 2019QC 57714