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  • Small Business Stewardship Group minutes 22 November 2018

    Meeting details

    Venue: ATO office – Canberra

    Date: 22 November 2018

    Chair: Deborah Jenkins

    Contact: email Small Business Stewardship Group secretariat.

    1. Welcome and introduction

    Members were welcomed and apologies noted. Kate Carnell, the new co-chair of the SBSG was welcomed. Changes in SBSG representation from the Australian Retailers Association and the Australian Chamber of Commerce and Industry were noted.

    2. Agency update since last meeting

    Treasury

    A number of the new legislative measures announced in the 2018–19 Budget, have received royal assent since the last meeting. This includes legislation which: deters the production, use and distribution of sales suppression technology; extends the Taxable Payments Reporting System (TPRS) to couriers and cleaners and extends the $20,000 instant asset write-off to 30 June 2019 for businesses with a turnover less than $10 million.

    Bills for a number of other measures are currently before the Parliament.

    The Treasury is currently consulting interested parties on the government’s draft procurement connected policy, which aims to improve the integrity of the procurement process. Members were encouraged to provide their views on the consultation paperExternal Link.

    ASBFEO

    The ASBFEO office is working with the Australian Securities & Investments Commission (ASIC) to monitor the impact of the Australian Banking Association’s new Banking Code of Practice on small business. While the Code is a positive step, there are concerns in relation to a number of the clauses that appear to undermine the changes to loan documents made as a result of the unfair contract terms legislation. ASBFEO is also concerned that the code only applies to small businesses with a total loan exposure of $3 million. The Australian Financial Complaints Authority has a more appropriate limit of $5 million.

    The issue of unfair contracts continues to be an important focus for ASBFEO with most small businesses entering into nine standard form contacts each year. Small business contracts are not covered by the Australian Consumer Law, so the only real protection small business has from unfair conduct of large business is the unfair contract terms legislation.

    The $2 billion Australian Business Securitisation Fund announced by government aims to increase competition in the market for lending to small and medium enterprises. The Fund will provide a source of wholesale funds for smaller, second tier lenders at interest rates comparable to rates available to the major banks. The proposed Australian Growth Fund, modelled on the British Business Growth Fund, will help fast growth potential small business get the finance they need to reach their potential.

    Australian Taxation Office:

    The Independent Review for small business pilot that commenced on 1 July has now been in operation for more than four months. On 15 October, the ATO expanded the pilot to all eligible small businesses income tax audits nationally (previously offered only to eligible small businesses in Victoria and South Australia). As part of this initiative, the audits of eligible small businesses are reviewed by an independent area before assessments are issued. As at 19 November 2018, the service had been offered to 156 small businesses, and 21 offers had been accepted.

    By March 2020, myGovID and Relationship Authorisation Manager (RAM) will be offered as the alternate solution to AUSkey. This aims to address current limitations with AUSkey such as browser and device compatibility and will provide a contemporary and secure way to verify a person’s identity when interacting with online Government services. The ATO is currently running a controlled beta with small business participants to obtain feedback and improve the myGovID and RAM products.

    The revised ATO Taxpayers’ Charter is now available on the ATO website in 24 languages. The Charter, a guide for ATO staff and all taxpayers about client service, is now easier to read, includes more information about the ATO’s digital interactions with the community and simplified information about the review and audit processes.

    Since 1 July 2018, mobile strike teams have visited around 3,000 small businesses in ten locations as part of the ATO’s response to the Black Economy Taskforce recommendation to increase visibility of enforcement activities and crack down on the black economy. The ATO is focussing on locations with high risk of black economy activities and aim to complete around 10,000 visits this financial year.

    3. Strategic discussion of business

    The discussion focussed on ABN reform, the Australian Business Register (ABR) review, modernising business registers and e-Invoicing.

    Since August this year, the ATO has been supporting Treasury to consult with key stakeholders and the community about proposals from the Black Economy Taskforce to strengthen the integrity of the ABN system. Proposals are currently being developed for government consideration in 2019.

    An internal review of the ABR undertaken this year, focussed on the current state of the ABR and how to ensure we administer it in a way to creates trust and confidence in both the quality and integrity of the data and the experience for those registered. In mid-October, the ATO began piloting a new operating model to engage directly with the employer or at industry level, to address potential worker classification risks more holistically. The pilot will end in January 2019 with the aim to roll this approach out more broadly from then. More information about the ABR reviewExternal Link can be found on the ABR website.

    Members raised issues such as the definition of an employee in some legislation such as workers’ compensation and the impact this has on payroll tax. The ATO recognises these issues and notes that these are issues that affect many areas of legislation, not just tax and super.

    As announced in the 2018–19 Budget, ASIC’s business registers and the ABR will be modernised. All registries will be hosted by the ATO. A new Director Identification Number (DIN) will be established, providing traceability of a director’s relationships across companies and interfacing with other government agencies and databases. It will be a unique identifier for each person who is a company director or office holder.

    Members discussed the value proposition of e-Invoicing which is the direct exchange of invoices between a supplier’s and buyer’s business software. E-invoicing has benefits for business in terms of productivity and cost – it is around 70% cheaper to process than traditional paper or PDF invoice and can help support improved payment times. There are around 1.2 billion invoices exchanged annually in Australia.

    Critical to e-Invoicing is the Digital Capability Locator (DCL), a centralised electronic ‘directory’ of business digital addresses. The DCL allows for the discovery of the digital address of businesses, simply by using their business identifier (for example, the ABN).

    4. Member discussion

    External members provided insights into topical issues affecting small business including:

    • Favourable and unfavourable payment practices towards small businesses. There are a number of initiatives are underway to improve payment times to small businesses. This includes ASBFEO’s survey of small businesses and the National Transparency Register on the ASBFEO website, where businesses can promote their prompt payment time practices.
    • Examples of unfair contract terms and the impact on small businesses.
    • Access to justice issues and concerns about the effectiveness of some industry codes of practice.
    • Clarification of ATO guidance material on the Taxable Payments Reporting System for couriers. Members discussed examples for small businesses that provide delivery services that are not in the courier industry.

    5. Cash Flow Coaching Kit update

    The Cash Flow Coaching Kit is an easy to use coaching resource, co-designed with tax professionals and small businesses, which supports tax practitioners to have conversations about cash flow management with their small business clients.

    Based on evaluation findings and user feedback, a Phase 2 digital version is currently being piloted with tax practitioners and small business. This will complement the Phase 1 paper based Cash Flow Coaching Kit.

    The digital version will form part of the suite of products within the Cash Flow Coaching Kit. The design of the digital version will be consistent with the design of the paper kit so both versions can be used interchangeably or independently. The Cash Flow Coaching Kit suite of products is tailored, contemporary and interactive. The digital Kit will be compatible across multiple platforms (mobile, tablet and desktop) and interface with popular accounting software. Kits are available to small businesses through their registered tax practitioners and professional advisors to support a coaching conversation to improve their financial acumen and their ability to understand and identify effective action to better manage their cash flow.

    The digital Cash Flow Coaching Kit is due for full release in February 2019.

    6. Single Touch Payroll update

    More than 30,000 employers with 20 or more employees are now reporting through Single Touch Payroll (STP) each pay day and 3.3 million employees can now see their information in myGov. Around 15,000 smaller employers have also chosen to start reporting early.

    The extension of STP reporting to employers with 19 or fewer is still subject to the passage of legislation. However, small employers can choose to update their payroll solution (if they have one) when it is ready, and start reporting. There will be low-cost reporting software options available by 1 July 2019. The ATO has asked software developers to build low-cost STP solutions at or below $10 per month – including simple payroll software, mobile phone apps and portals.

    Micro employers (1-4 employees) will have a number of alternate options such as initially allowing their registered tax or BAS agent to report quarterly, rather than each time they run their payroll in-line with preparation of activity statements. Employers will also have access to deferrals and exemptions where they need additional time to start reporting.

    Subject to the passing of legislation which extends STP reporting to smaller employers, a transitional approach has been designed to accommodate those who have closely held payees (ie owners and relatives working within the business).

    From mid-December, employees commencing new employment will be able to access a pre-filled online TFN declaration form through MyGov. The form will include key pre-filled details such as tax file number, contact details, residency and existing education loans.

    7. Data sharing and release reforms

    Dr Phillip Gould from the Office of the National Data Commissioner (NDC) in the Department of the Prime Minister Cabinet gave a presentation on data sharing and release reforms.

    Data is a strategic national resource that holds considerable value for growing the economy, improving service delivery and transforming policy outcomes for Australians. Legislative reform and cultural change will ensure greater data sharing of government data.

    On 1 July 2018, the government established the Office of the NDC in the Department of the Prime Minister and Cabinet and appointed Deb Anton as the Interim NDC. Its role is to provide oversight and regulation of Australia’s new national data sharing and release framework, including monitoring and reporting on the operation of the framework and enforcing the accompanying legislation. The NDC will work with the Australian Information Commissioner, to ensure that Australia’s new data sharing and release framework is underpinned by a strong foundation of privacy and security.

    A new National Data Advisory Council comprising representatives from government, the business community, civil society and the research sector, will advise the NDC on ethical data use, technical best practice, and industry and international developments.

    Members discussed privacy concerns and the need for government to share data with other agencies so small businesses only have to provide their details once.

    The NDC is consulting widely with the community and key stakeholders about the data sharing and release framework including governing legislation. So far, stakeholders have shown considerable support for a principles-based approach to the legislation, designed to ensure it is not locked into the rules of the current environment.

    8. Superannuation update

    Superannuation issues covered in the paper tabled at the meeting and circulated electronically to members included updates on the status of new legislation before Parliament. This included superannuation guarantee integrity and superannuation guarantee amnesty: the superannuation guarantee gap, and the Small Business Superannuation Clearing House.

    9. Indirect tax update

    The ATO is transforming the administration of indirect taxes to make it easy for taxpayers to comply (and hard not to), to build trust and confidence in the community and to instil cultural traits and strengthening capabilities appropriate to the future landscape.

    Towards 2024 and beyond, the administration of the tax and superannuation systems will need to change. Business, industry and start-ups will drive the innovation and this means the ATO needs to position the GST and Excise systems well to respond.

    This is important for all business but particularly small business.

    The ATO is working with stakeholders to develop a roadmap towards 2024 and beyond – exploring and designing solutions to ensure tax administration keeps pace with community expectations. This work will position the ATO as an effective, efficient and sustainable administrator of indirect taxes into the future.

    Further updates will be provided in 2019.

    10. Other business

    Members were invited to put forward topics for inclusion as agenda items for future meetings and to consider their availability for the draft 2019 SBSG meeting dates.

    11. Meeting close

    Co-chair Deborah Jenkins thanked members for their contributions to meetings throughout the year and asked for feedback on 2018 meeting outcomes and 2019 proposed meeting dates to be provided to the Secretariat.

    Attendees

    Deputy Commissioner, Small Business, ATO

    Deborah Jenkins

    Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

    Kate Carnell

    Deputy Commissioner, Superannuation, ATO

    James O’Halloran

    Assistant Commissioner, Indirect Tax, Client Experience and Business Transformation

    Jennifer Moltisanti

    Deputy Commissioner, Service Delivery, ATO

    Robert Ravanello

    A/g Assistant Commissioner, Small Business Experience, ATO

    Justine Williams

    Senior Advisor to the Commissioner of Taxation, ATO

    Sue Goodear

    The Treasury

    Bede Fraser

    Council of Small Business Australia (COSBOA)

    Peter Strong

    Indigenous Business Australia (IBA)

    Andrew Clarke

    Business Enterprise Centres Australia (BECA)

    Graham Baxter

    Motor Traders Association of Australia (MTAA)

    Richard Dudley

    Chartered Accountants Australia and New Zealand (CA ANZ)

    Susan Franks

    Australian Lottery & Newsagents’ Association (ALNA)

    Michael Renshaw

    Direct Sellers Association of Australia (DSA)

    Gillian Stapleton

    Australian Chamber of Commerce and Industry (ACCI)

    Jenny Lambert

    Small Business operator

    Tony Sama

    Small Business operator

    Michelle Size

    Small Business operator

    Maree Petersen

    Small Business operator

    Deborah Cook

    Assistant Commissioner, ATO – Agenda Item 3

    Cathy Cox

    Assistant Commissioner, ATO – Agenda Item 6

    John Shepherd

    Assistant Secretary, Office of the National Data Commissioner, Department of Prime Minister and Cabinet – Agenda Item 7

    Dr Phillip Gould

    Apologies

    Deputy Commissioner, Indirect Tax

    Tim Dyce

    Dept. of Jobs and Small Business

    Rose Verspaandonk

    Australian Veterinary Association (AVA)

    Vacant

    Restaurant & Catering Australia (RCA)

    James Coward

    Real Estate Institute of Australia (REIA)

    Jock Kreitals

    Indigenous Business Australia (IBA)

    Wally Tallis

    Australian Retailers Association (ARA)

    Joshua Walker

    Employer Obligations Association

    Paul Mather

    Australian Chamber of Commerce & Industry (ACCI)

    Magdalena Kaczmarska

      Last modified: 14 Feb 2019QC 57900