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  • Private Groups Stewardship Group key messages 28 November 2017

    Meeting opening

    Opening remarks

    Jacqui Clarke, Deloitte Private, external co-chair

    Jacqui extended a special welcome to two members for whom this was their first meeting, John Maroney, SMSF Association and Wendy Foster, Family Business Australia.

    General Anti Avoidance Rules Panel

    Fiona Knight, Assistant Commissioner, Tax Counsel Network, ATO and Martin Jacob, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    • Fiona shared insights and learnings from cases heard by the GAAR panel during the 2016–17 financial year.
    • 41 cases were considered by the GAAR Panel , 71 % of these were clients of the Private Groups and High Wealth Individual business line.
    • Of the 41 cases, 29 were full GAAR Panel hearings and 12 were preliminary hearings.
    • Of the 29 full hearings, in 15 cases the Panel recommended the application of a GAAR, requested further information in 11 cases and recommended that no GAAR be applied in 4 cases.
    • The majority of the Private Group issues over the past financial year dealt with by the panel were dividend stripping and franking benefits, with or without the use of a Self-Managed Superannuation Fund (SMSF).

    Aggressive tax planning

    Scott Walker, Assistant Commissioner, Private Groups and High Wealth Individuals

    Scott provided members with an overview of the compliance spectrum with regard to advisor behaviour, highlighting some Aggressive Tax Planning (ATP) focus areas.

    There has been an emergence of ‘non-traditional’ advisors or intermediaries drifting into the promotion of aggressive tax positions. There has been a move from mass marketed schemes to now one off transactional arrangements, with a noted increase in offshore advisors offering their services.

    Although ATP teams are part of the Private Groups & High Wealth Individual business line, the ATO response to ATP looks at the broader client experience and is not solely focussed on private groups. The ATP teams have commenced engaging with the big 4 accounting firms and are seeking to extend these interactions to peak bodies and other key intermediaries.

    Early engagement and tax governance

    Michael Dean, Partner, Private Clients PwC Australia and Greg Dick, Assistant Commissioner, Private Groups and High Wealth Individuals, ATO

    Michael provided an overview of the workshop that was held to explore improvements to Early Engagement and Tax Governance.

    Insights included the need for clarification of the value proposition of early engagement for clients, advisors and the ATO; clearer communication to clients which is meaningful to both clients and their advisors; consistency of approach across taxes and coordination of ATO interactions with the suggestion that advisors should be advocates of the early engagement process.

    There was consensus this work was progressing in the right direction.

    Common reporting standard

    Anthony Siouclis, Assistant Commissioner, Public Groups & Internationals, ATO

    Anthony led a general discussion on the Common Reporting Standard (CRS), with members raising a number of practical issues on how advisors should address discrepancies in the data.

    There was general concensus a subgroup should be formed to work with the ATO on addressing these discrepancies.

    Transparency of tax debt

    Robert Ravanello, Deputy Commissioner, Debt, ATO

    Robert provided members with an overview of the Transparency of Tax Debt measure. Treasury and the ATO have undertaken targeted consultation to design and include a number of safeguards in the design and administration of the measure.

    Public consultation on this measure will be posted on the Consultation Hub on ato.gov.au

    Tax and superannuation update and general discussion

    Update on income tax

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

    Will advised members the 2015-16 report of entity tax information is scheduled to be published in December 2017 and provided members with a brief overview of the Paradise Papers

    Update on indirect taxes

    Jeremy Geale, Deputy Chief Tax Counsel, Tax Counsel Network, ATO

    Jeremy provided an overview of GST on low value imported goods, advising that the ATO is undertaking an extensive campaign to help educate organisations that may be subject to this measure and will work with these organisations to understand any implementation issues they may have.

    Due to the success of the eAudit program the Indirect Taxes business line has continued to expand its use.

    A strong focus continues on the property, building and construction sectors. There are high turnover levels for participants, specialised GST laws and high value transactions all leading significant ATO work in relation to help, education and advice as well as meeting obligations and our review activities. These industries are also a key focus in the Private Group market.

    Update on superannuation

    James O’Halloran, Deputy Commissioner, Superannuation, ATO & Kasey Macfarlane, Assistant Commissioner, Superannuation, ATO

    • Kasey provided an update on SMSF events based reporting and the ATO’s position, referring to the recent media release.
    • Key messages are currently under development to ensure the community understands the impacts and consequences arising from the Budget 2016 new measures.
    • The messages will warn and pre-empt taxpayers that are potentially impacted by consequences of inaction before a critical date or event.
    • In the coming months we will also be continuing to communicate key messages to remind people the changes so that they can review their arrangements and try to minimise any contribution cap breaches for the income year.
    • We are also working on material to support the SMSF sector apply the transitional CGT relief which they will be calculating and claiming in their income tax return (noting that preparation and lodgment of these return are being done now).
    • Kasey went on to discuss several areas of complexity in the market place and the ATO’s progress including:
      • Transitional CGT relief continues to be source of complexity for many. Guidance materials are available on the ato website.
      • The application of the super changes in relation to reversionary Transition to retirement income streams (TRIS).
      • The calculation of Exempt Current Pension Income (ECPI) and the question of when an SMSF is required to obtain an actuarial certificate is an issue that has raised some matters of practical consideration.
      • The use of reserves by SMSFs is an area that has received some attention in the context of the super changes – given the different consequences that can arise. Early in 2018 we will be issuing some guidance on when we consider reserves are appropriate and when they are not appropriate in the context of an SMSF.
      • There are some technical deficiencies we are aware of relating to the application of the transfer balance cap provisions in the context of market-linked pensions and these issues have been raised with Government.
       
      Last modified: 25 Jan 2018QC 54425