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  • Small Business Stewardship Group minutes 27 July 2017

    Meeting details

    Venue: ATO Offices, Canberra

    Date: 27 July 2017

    Chair: Deborah Jenkins

    Contact: email Small Business Stewardship Group secretariat or phone 02 93745658


    Deborah Jenkins, Deputy Commissioner, Small Business, ATO

    James O'Halloran, Deputy Commissioner Super, ATO

    Robert Ravanello, Deputy Commissioner Debt, ATO

    Tim Dyce, Deputy Commissioner Indirect Tax, ATO

    Michael Ingersoll, Assistant Commissioner, ATO

    Michael Gleeson, A/g Assistant Commissioner, ATO

    Bede Fraser, Treasury

    Kate Carnell, Small Business and Family Enterprise Ombudsman

    Peter Strong, Council of Small Business Australia

    Scott Kompo-Harms, National Farmers' Federation

    Paul Mather, Employer Obligations Australia

    Jock Kreitals, Real Estate Institute of Australia

    Graham Baxter, Business Enterprise Centres Australia

    Michael Croker, Chartered Accountants Australia & New Zealand

    Richard Dudley, Motor Traders Association of Australia

    Michael Renshaw, Australian Lottery and Newsagents' Association

    Heath Michael, Australian Retailers Association

    Debbie Neutze, Australian Veterinary Association

    James Coward, Restaurant & Catering Australia

    Stella De Cos, Indigenous Business Australia

    Timara Kay, Direct Selling Australia

    Matthew Elliston, small business owner

    Deb Cook, small business owner

    Maree Petersen, small business owner


    John Hart, Restaurant & Catering Australia

    James Pearson, Australian Chamber of Commerce and Industry

    Wally Tallis, Indigenous Business Australia

    Gillian Stapleton, Direct Selling Australia

    Agenda items

    1. Welcome and introductions

    The Chair, Deborah Jenkins opened the meeting, welcoming members and noting apologies.

    2. ATO update since last meeting

    The Chair addressed the following topics:

    • The ATO's IT outages and the work we are doing to minimise the risk of the ATO and the community being exposed to systems incidents in the future.
    • Operation Elbrus, including:
      • The review being undertaken by the Inspector General of Taxation examining how the ATO addresses the risk of fraud and associated issues; and
      • The ATO's support for both employers who used the Plutus Payroll (the company at the centre of the investigations) and their employees.
    • Key points from the Commissioner's National Press Club speech (5 July).
    • Recent ATO award nominations for our Cash Flow Management Program, Simpler BAS and the ATO website.

    3. Strategic discussion of business

    Topics discussed included:

    • The ATO provided an overview of a proposal that enables ATO officers to experience 'a day in the life' of a small business. Members provided preliminary feedback on how this would help staff better understand the complexity of operating a small business and identify ways to improve the small business tax and superannuation experience.
    • Existing Fringe Benefits Tax (FBT) concessions for small businesses.
    • The role of the SBSG and harnessing members' expertise and experience to explore significant issues impacting on small business.
    • The need to look at current small business safe harbours and understand how small business can access them.
    • The complexity and impact of having numerous definitions of small business across Government and the need for this to be addressed as whole of Australian government issue. This includes the need to justify any new definitions through the regulatory impact statement process.
    • The need for a whole of Australian Government approach to tackling administrative and regulatory complexities, to cut red tape for small business.

    4. Single Touch Payroll

    John Shepherd, Assistant Commissioner, Single Touch Payroll (STP) provided the members with an update on the progress of STP.

    STP is a reporting change for employers with 20 or more employees, which will be compulsory from 1 July 2018. Employers will need to report payments such as salaries and wages, pay as you go (PAYG) withholding and super information to the ATO directly from their payroll solution at the same time they pay their employees. John noted the following:

    • Reporting will be optional for those with 19 employees or less.
    • From 1 July 2017, a limited release of STP began for a small number of employers and their Digital Solution Providers. These employers will be able to report payroll information through an STP enabled solution.
    • From October 2017, additional functionality will be available and payroll software or service providers will be able to start releasing STP products over time. As these features become available, employers can choose to start reporting through STP early if they wish.
    • Since the last SBSG meeting, the small business STP pilot program, designed to demonstrate its deregulation benefits, has been completed. The pilot was conducted with a broad range of small businesses (19 or less employees) in partnership with digital service providers and tax practitioners. The final report was delivered to the Minister for Revenue and Financial Services in June 2017.

    5. Small business legislation update


    Michael Ingersoll, Assistant Commissioner, Individuals and Small Business Taxpayers, provided an overview of recent small business legislative changesExternal Link for small business that apply to the 2016-17 income year onwards, including:

    • reducing the company tax rate from 30% to 25% and the impact on franking credits. Some companies and their advisors have been unhappy with Franking Credits being limited to the applicable tax rate i.e. 27.5% for small business in 2016-17. The ATO has discussed this issue with Treasury and has also published a Practical Compliance Guideline to help small business if they have franked at the wrong rate;
    • increasing the small business entity turnover threshold from $2 million to $10 million from 1 July 2016;
    • extending the $20,000 instant asset write-off provision for small businesses which will now end on 30 June 2018; and
    • increasing the unincorporated tax offset.

    To be considered a small business and access a number of concessions, you need to be carrying on a business. The ATO has committed to consulting on this issue and providing further guidance on what this actually means. This advice is expected to be published by the end of August 2017.


    James O'Halloran, Deputy Commissioner, Superannuation, provided an overview of the superannuation reform packageExternal Link which commenced on 1 July 2017. The main superannuation changes for small businesses that will assist their workers manage their super contributions include:

    • contribution caps: Small business employers need to be aware of the impact these changes may have on their employees' salary sacrifice arrangements; and
    • personal super contributions deductions (PSCD): Small business employers may have employees who claim the PSCD. Employees need to be aware that the contributions claimed as a deduction will count towards the employee concessional contributions cap. Employees making personal super contributions from income after tax and claiming a deduction for this contribution will also need to check they remain within the new reduced concessional cap.

    James noted that while it is early days, the ATO's current focus is making sure the information and support is available to individuals. He provided SBSG members with links to Law Companion Guidelines, Guidance Notes and Practical Compliance Guidelines to assist with understanding how the superannuation changes may operate in practice and how the ATO will apply its compliance resources.

    James also discussed Superannuation Guarantee compliance and the Small Business Superannuation Clearing House.

    1. Superannuation guarantee compliance

    There has been a recent focus on non-compliance of superannuation guarantee through the release of the Senate Economics References Committee's report into the non-payment of superannuation guaranteeExternal Link and the Cross Agency Working Group reports on ‘Superannuation Guarantee Non-compliance’External Link. The Government is considering the recommendations to improve compliance. Later this year, legislationExternal Link to prevent employers from using salary sacrificed amounts to meet superannuation guarantee obligations, is expected to be introduced.

    • James noted that unpaid superannuation guarantee, however big or small, is taken seriously by the ATO because even if small in relative terms, it can have a real impact on employees.
    • Employers therefore have an important role to play in improving superannuation guarantee compliance.
    1. Small Business Superannuation Clearing House (SBSCH)

    6. Cash economy activities update

    • Tom Wheeler, Assistant Commissioner, discussed the cash and hidden economy in Australia, and the work his team are doing to address it.
    • He noted that while the majority of small businesses are compliant, a minority aren't. The focus is on those that are operating outside the system, who either don’t register, don’t lodge and/or don’t report cash and electronic transactions.  
    • The ATO uses a range of approaches to identify and respond to the cash and hidden economy through the insight – prevention – correction framework. This includes analytics, referrals from the community and other agencies, audits, other indicators, high risk industries strategies and small business benchmarks.
    • The ATO provides education and assistance to support small businesses and uses marketing and communication to maintain visibility of our actions.
    • The ATO is also addressing risks by bolstering community perceptions of fairness and working to influence social norms.
    • An ANAO review of the ATO’s strategies to address cash economy, found the ATO’s approach is consistent with international best practice, sound and increasingly cost effective.
    • Tom discussed the ATO's work to enhance our approach such as working more closely with stakeholders, understanding the drivers for non-compliant behaviours, and further data sharing and analytics. Members discussed the drivers and behaviours by both employers and employees that contribute to the cash economy.
    • In the 2017-2018 Budget, the Government announced the intention to ban sales suppression technology. This technology is designed to alter information in point of sales records to reduce sales.
    • Members acknowledged that the Final Black Economy Taskforce report was yet to be released.
      Last modified: 30 Aug 2017QC 53194