• Division 815 Technical working group minutes - March 2014

    Meeting details

    Venue:

    ATO offices via videoconference

    747 Collins St Docklands

     52 Goulburn St Sydney 

    Date:

    14 March 2014

     

     

    Start:

    10.30am

    Finish:

    1.30pm

    Chair:

    Michael Jenkins

    Facilitator:

    Caroline Briers

    Contact and Secretariat:

    Caroline Briers

    Contact phone:

    (03) 9285 1502

    Attendees

    ATO Members

     

    Michael Jenkins

    Assistant Commissioner, Public Groups and International

    Caroline Briers

    Secretariat

    Helen Kelly

    Senior Tax Counsel

    Kevin O'Shaughnessy

    Senior Director, Technical Leadership Group

    Frank Cipriano

    Director, Technical Leadership Group

    Gus Falkenhagen

    Senior Director, Profit Shifting Practice (Project Manager)

    Megan Butcher

    Technical Adviser, Tax Counsel Network

    Catherine Armstrong

    Director, Technical Leadership, PG&H

    Matt Hayes

    ATO Consultant

    External representatives

    Liz Troman (for Reynah Tang)

    LCA

    Soulla McFall

    CPAA

    Vanda Davis

    FCAI

    Damian Preshaw

    TIA

    Anthony Seve (phone, part meeting)

    ICAA

    Lyndon James (for Anthony Seve)

    ICAA

    Paul Balkus

    CTA

    Richard Atkinson (for Sharon Jansen)

    MCA

    Wayne Sutherland

    ABA

    Denise Honey

    ATO appointee

    Stuart Edwards

    ATO appointee

    Chris Bowman

    ATO appointee

    Apologies

    Paul Korganow

    ATO, Assistant Commissioner, Profit Shifting Practice

    Reynah Tang

    LCA

    Sharon Jansen

    MCA

    Michael Kobetsky

    ATO appointee

    William Potts

    Treasury

    Agenda items

    Disclaimer

    Division 815 Technical working group agendas, minutes and related papers are not binding on the Australian Taxation Office (ATO) or any of the other bodies referred to in these papers. While every effort is made to accurately record views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.

    1. Introduction and Welcome

    The Chair welcomed the group and introduced members.

    2. Minutes of 17 December meeting

    A member noted that the minutes of the December 2013 working group did not capture the detail of the discussion regarding the 815-130 examples.

    The Chair responded that the minutes are intended to record general positions only.

    Change requested that the abbreviation FCAA should be FCAI.

    Action Item number

    14032014.01

    Action item name

    Amend minutes and arrange publication

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    One month

    2.1 Update on action items

    Action Item number

    17122013.01

    Action item name

    Circulate list of documents to be reviewed for members to consider next priorities

    Responsibility

    Secretariat

    Status

    Closed

    Expected delivery date

    Provided with Agenda for meeting

    Members suggested that the list be updated including any changes in priorities and the status of any work in progress. One member also suggested that the list include the booklets that are available on the web.

    One member noted that the TP review process practice statement had been withdrawn this week and queried whether this means TP review panels are no longer being used and, if so, what review processes are replacing it?

    The ATO assured the group that the withdrawal of this practice statement does not suggest a reorientation away from strong governance but, rather, reflects an expansion from transfer pricing to a broader profit shifting perspective.

    Action Item number

    14032014.02

    Action item name

    Circulate updated list of documents including ATO view of priority of each

    Responsibility

    Gus Falkenhagen

    Status

    Open

    Expected delivery date

    One month

    3. Update on project

    The ATO confirmed that there were no show stoppers that would prevent the package of TP products being released in draft for consultation in mid-April. The package of products will be issued and finalised together.

    4. Discussion - Options to simplify transfer pricing documentation

    Below is a summary of some of the observations made by the working group members:

    • Need to ensure that the scope of the application of options is clearly articulated such as defining who is eligible to apply the option
    • Should use objective eligibility criteria
    • Be careful using ranges in simplified methodology
    • It is desirable to strive for the achievement of statistical compliance rather than define so narrowly that there is little benefit from implementing the option
    • Need to almost incentivise compliance for SMEs that are intimidated by the TP process. Publishing benchmarks used by the ATO in their review processes may be one way of providing some comfort to SMEs without them having to do a full TP analysis.
    • Options should provide as much coverage as possible, perhaps delineating treatment for different variations instead of excluding certain arrangements
    • Be careful about the interaction between the different options
    • Need to provide detail of the documentation required under each option
    • Options should be consistent with commercial realism
    • Use the working group to test the veracity of the options in terms of supporting voluntary compliance
    • Coordinate with safe harbour work being done by the NTLG

    The ATO suggested that they develop a more detailed design for the options including the eligibility criteria, the actual method (or methods) that we are testing, any variations for different types of arrangements and any exclusions required because of an unacceptable risk. Specify the documentation requirements under each option.

    Action Item number

    14032014.03

    Action item name

    Develop detailed design of the options to enable a decision to be made about which ones can be progressed

    Responsibility

    Megan Butcher and Catherine Armstrong

    Status

    Open

    Expected delivery date

    Update on progress to be provided at next meeting

    5. Other business

    Members requested that invitations for future meetings be sent out well in advance to allow appropriate scheduling.

    Next meeting

    The next meeting is scheduled for May 2014. The Secretariat will advise of arrangements closer to the date.

      Last modified: 21 May 2014QC 40232