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  • Small Business Stewardship Group minutes 6 March 2019

    Meeting details

    Venue: ATO office - Canberra

    Date: 6 March 2019

    Co-Chairs: Sue Goodear ATO (Acting), Kate Carnell, ASBFEO

    Contact: Small Business Stewardship Group Secretariat

    1. Welcome and introduction

    Members were welcomed and apologies noted. Changes in member representation from the Australian Retailers Association and the Restaurant and Catering Industry Association were noted.

    2. Agency update since last meeting

    Treasury

    Instant asset write-off:

    Among the new measures in the House of Representatives is the proposed increase of the instant asset write-off for small businesses to $25,000. Members queried the uncertainty created by the non-passage of the legislation for the instant asset write-off. Some small businesses may have purchased assets costing between $20,000 and $25,000 with the expectation that they would be entitled to deduct the full cost in their 2019 return.

    Update: Legislation giving effect to the higher $25,000 threshold from 29 January 2019 together with the measures announced in the 2019-20 Budget to increase and expand access to the instant asset write-off passed Parliament on 4 April 2019 and received Royal Assent on 6 April 2019. Information about these changes is available on the ATO website.

    New initiatives to support small business

    • On 1 March 2019, the Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO’s) Small Business Concierge service commenced. ASBFEO will assist small businesses in dispute with the ATO with the Administrative Appeals Tribunal process.
    • Tax clinics at 10 universities are being trialed to provide free tax advice and support to unrepresented small businesses and individuals. Clinics are expected to be established by the end of March / April 2019.

    Progress of recommendations from the Black Economy Taskforce

    • Sharing economy reporting regime – The Treasury discussion paper about implementing a sharing economy reporting regime has received a number of submissions from stakeholders.
    • Improved integrity in government procurement – Businesses seeking to tender for Australian Government contracts over $4 million (inclusive of GST) will soon be required to provide a statement of tax record from the ATO indicating they are generally compliant with their tax obligations. The policy is expected to be in place by 30 June 2019 (legislation is not required).

      Update: The Minister for Finance and the Public Service and the Assistant Treasurer announced the release of the policy on 26 March 2019.

    Department of Jobs and Small Business

    As part of the Small Business Digital Champions Initiative, 100 small businesses from diverse sectors across Australia have been chosen to receive a digital transformation of up to $20,000. Twenty of these will also receive mentoring and will be showcased to inspire other small businesses to reach their digital potential.

    The Department is leading the development of a new Payment Times Reporting Framework which will require large businesses with over $100 million in annual turnover to publish payment information. This will help small business owners, the community and the economy. Currently, the Government pays 97 per cent of invoices in 30 days and is working towards a timeframe of 20 days.

    The report on the operation and effectiveness of the Franchising Code of Conduct is expected to be released soon. (Update: the report was tabled on 14 March 2019.)

    Small Business Fairs were held at 23 locations around Australia in February and March 2019. The fairs bring together business leaders, experienced business owners, and government agencies to provide advice and tips for small business. The fairs have been well attended and attracted a very positive response.

    In December 2018 and February 2019, Senator the Hon Michaelia Cash, Minister for Small and Family Business, Skills and Vocational Education convened two Small Business Mental Health Roundtables aimed at encouraging small businesses to address their own mental health. Key stakeholders across the small business and mental health sectors attended the roundtables to help inform this policy area.

    Australian Taxation Office

    On 1 March 2019, the Commissioner of Taxation announced extended tax assistance for small businesses in identified postcodes in North Queensland affected by floods. The ATO is automatically deferring certain lodgment and payment obligations until 31 May 2019 and fast-tracking refunds for small businesses and individuals in these areas. Individuals or businesses affected by this disaster and needing further assistance, but outside the highly impacted postcodes, should phone us on 1800 806 218, or contact their tax or BAS agent. Businesses making purchases to replace stock and other losses in the coming months should continue to pay and lodge as normal. It is important to keep on top of lodgment and reporting.

    Between August and December 2018, as an initiative to combat the black economy, the ATO undertook around 4,000 mobile strike team visits in 14 locations. Between January and June this year, we plan to visit another 6,000 small businesses in 18 locations.

    The ATO has recently updated its industry benchmarks (2016-2017 financial year data) which allow small businesses to compare themselves to other businesses in their industry. The industry benchmarks can also be found on the ATO app.

    The ATO is currently reviewing its ato.gov.au business menu and has prepared a draft design concept which is ready for consultation. Members will be invited out of session to provide feedback on this concept to help us improve the website’s navigation, structure and content.

    3. ASBFEO Agency Update

    ASBFEO has received many complaints regarding Viewable Media and the Shoppers Network around advertising contracts. They have written to the finance providers. They continue to work with the ACCC, ASIC and the AFCA to achieve resolution.

    ASBFEO is concerned about the lack of regulation for finance companies providing services to small businesses.

    ASBFEO has received complaints from small businesses about online companies not paying GST on low value imported goods. The ATO invited ASBFEO to continue to share information and complaints on the issue with it and Department of Home Affairs.

    4. Member discussion

    Members raised examples of industry practices they have observed involving small businesses. These included:

    • businesses advertising jobs insisting that workers have an ABN when they would ordinarily be classed as ‘employees’
    • suppliers’ invoices with GST calculated at a few cents higher than is allowed.

    The members discussed the issue of contractors versus employees.

    Members also raised concerns about the need for adequate agency consultation periods and for time to apply for government programs. Some industry association members particularly noted their processes have lead times to enable consultation with members that do not readily support short consultation periods.

    5. Single Touch Payroll update

    New legislation passed the Parliament in February 2019, extending Single Touch Payroll (STP) reporting to all employers from 1 July 2019. Deferrals or exemptions will be available for smaller employers with 19 or fewer employees and their registered agents, using an online form which will be available from April 2019. Smaller employers unable to start reporting before 30 September 2019 will be able to use the online tool to apply, and in most cases receive an immediate response.

    Implementation of STP is progressing well with more than 42,600 substantial employers and 20,000 small employers (19 or less employees) currently reporting. More than 4.5 million individual employees can now see their STP information in myGov. Around 3,000 employers are on-boarding each week.

    The ATO has worked with software providers to provide no cost and low cost software solutions for employers with up to four employees. Some are already available for under $10 per month with more to come. Most are expected to be on the market by 1 July 2019.

    Members advised that awareness among the small business community of STP is quite low. The ATO noted it has started writing to all employers to inform them about STP and the transition options. There are also a number of fact sheets and communication materials available to help explain STP and the ATO’s support for small business.

    Members asked about what happens when a business makes a mistake in its reporting. The ATO will not apply penalties if a business attempts to get it right and errors can be corrected in most cases in the following pay report. No penalties will be applied to any small employer that makes a genuine attempt to switch to STP reporting.

    6. The small business landscape

    Chris Jordan, Commissioner of Taxation and Jeremy Hirschhorn, Second Commissioner, Client Engagement Group presented this agenda item. The Commissioner reiterated the importance of this group to the ATO as an important channel for members to raise their concerns about any aspects of tax and superannuation administration. This group is in a good position to understand the issues, influence change and take appropriate action.

    Jeremy Hirschhorn discussed how the ATO has taken action over the past few years to deal with matters related to corporate tax avoidance and the large market tax gap. He recognises that taking action with large and multinationals is important for perceptions of fairness of the system, our administration and for those in small business.

    Jeremy also explained the realignment of the ATO’s Client Engagement Group, which includes changes to the Small Business line – with the merging of GST into the Small Business line and the creation of an employer experience in the new Superannuation and Employer Obligations line. The realignment is designed to help us take a more holistic view of our small business clients and their interactions across our tax and superannuation system, enabling us to achieve a better client experience for small businesses.

    Members raised issues that need further discussion or follow up – contractors versus employees, employment scams and involvement in consultation.

    7. Superannuation update

    Legislation to implement the Superannuation Guarantee Amnesty announced in May 2018 has not been enacted. If passed into law, the proposed amnesty will be a one-off opportunity for employers to self-correct past super guarantee non-compliance without penalty and will be available retrospectively from 24 May 2018 to 23 May 2019.

    On 1 March 2019, the Superannuation Guarantee integrity legislation received Royal Assent. The legislation provides discretion for the Commissioner of Taxation to direct employers to undertake an approved education course where they fail to comply with their super guarantee obligations. It also includes the ability to seek a court imposed penalty where an employer fails to comply with the direction. The ATO is considering the best way to apply these directions. The legislation commenced on 1 April 2019.

    Commencing in April 2019, employees will have visibility of super guarantee payments made by their employers into an Australian Prudential Regulation Authority (APRA) fund accounts through myGov. This will help to address the problem of transparency with the super guarantee through access and visibility, enabling us to deal with facts rather assertions about employers meeting their obligations.

    8. The e-invoicing experience

    An update on progress of work on e-invoicing since the discussion at the November 2018 meeting was provided.

    E-invoicing is the digital exchange of an invoice from software to software, allowing a consistent standard at two ends of the supply chain. This will make paper, PDF and email invoices a thing of the past. Businesses will be able to save time and money, as they'll be paid faster and the risk of fraudulent invoices will be minimised.

    Following on from the 2018 Trans-Tasman e-invoicing agreement to enable a common approach to seamless trans-Tasman business environment, the Australian and New Zealand prime ministers continue to strengthen the commitment to progressing e-invoicing this year. This initiative will create opportunities for businesses to integrate with the global trading environment with billions of dollars in savings. Many countries have mandated e-invoicing for large business and government for regulatory compliance reasons.

    The ATO is consulting with industry and pilot testing the environment to enable successful implementation.

    Members discussed the positive impact of e-invoicing on reducing payment times and raised the real world challenge for small business - cash flow capacity.

    9. Other business

    Members were invited to put forward topics for inclusion as agenda items for future meetings.

    10. Meeting close

    Acting co-chair Sue Goodear thanked members for their contribution to the meeting. The next meeting is scheduled for Friday 21 June 2019.

    Attendees

    Organisation

    Members

    Sue Goodear

    Assistant Commissioner, Small Business, ATO (Acting co-chair)

    Kate Carnell

    Australian Small Business and Family Enterprise Ombudsman (co-chair)

    Chris Jordan

    Commissioner of Taxation, ATO

    Jeremy Hirschhorn

    A/g Second Commissioner of Taxation, ATO

    Melinda Smith

    Chief Service Delivery Officer, ATO

    James O’Halloran

    Deputy Commissioner, Superannuation

    Tim Dyce

    Deputy Commissioner, Indirect Tax

    Robert Ravanello

    Deputy Commissioner, Service Delivery

    Justine Williams

    A/g Assistant Commissioner, Small Business Experience, ATO

    John Shepherd

    Assistant Commissioner, ATO

    Mark Stockwell

    A/g Assistant Commissioner, ATO

    Bede Fraser

    The Treasury

    Rose Verspaandonk

    Department of Jobs and Small Business

    Graham Baxter

    Business Enterprise Centres Australia

    Richard Dudley

    Motor Traders Association of Australia

    Greg Ellis

    Indigenous Business Australia

    Susan Franks

    Chartered Accountants Australia and New Zealand

    Jock Kreitals

    Real Estate Institute of Australia

    Jenny Lambert

    Australian Chamber of Commerce and Industry

    Adele Sutton

    Direct Sellers Association of Australia

    Deborah Cook

    Small Business operator

    Tony Sama

    Small Business operator

    Michelle Size

    Small Business operator

    Apologies

    Organisation

    Members

    Deputy Commissioner, Small Business, ATO

    Deborah Jenkins

    Department of Jobs and Small Business

    Peter Cully

    Restaurant & Catering Industry Association

    Julian Harniman

    Employer Obligations Association

    Paul Mather

    Indigenous Business Australia (IBA) (Delegate)

    Wally Tallis

    Council of Small Business Australia

    Peter Strong

    Direct Sellers Association of Australia (Delegate)

    Gillian Stapleton

    Australian Lottery & Newsagents’ Association

    Michael Renshaw

    Australian Veterinary Association

    Jeffrey Wilkinson

    Australian Retailers Association

    Member TBC

    Small business operator

    Maree Petersen

      Last modified: 04 Jun 2019QC 59180