• Division 815 Technical working group Minutes - 26 November 2014

    Meeting details

    Venue:

    747 Collins St Melbourne

    52 Goulburn St Sydney

    Teleconference

    Date:

    26 November

     

     

    Start:

    10.00am

    Finish:

    1.00pm

    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

    David Honybun

    Assistant Commissioner, Economist Practice

    Helen Kelly

    Senior Tax Counsel

    Kevin O'Shaughnessy

    Senior Director, Technical Leadership Group

    Daryl Cornish

    Director, Profit Shifting Practice (Project Manager)

    Shahzeb Panhwar (for Paul Korganow)

    Director, Profit Shifting Practice

    Catherine Armstrong

    Director, Technical Leadership, Private Groups and High Wealth Individuals

    Cameron Smith

    APA Program management unit

    External representatives

    Reynah Tang

    LCA

    Soulla McFall

    CPAA

    Vanda Davis

    FCAI

    Damian Preshaw

    TIA

    Anthony Seve

    ICAA

    Wayne Sutherland

    ABA

    Sharon Jansen

    MCA and CTA

    Stuart Edwards

    ATO appointee

    Chris Birchall (for Denise Honey)

    ATO appointee

    Michael Kobetsky

    ATO appointee

    Chris Bowman

    ATO appointee

    Apologies

    Michael McCormack

    ATO

    Paul Korganow

    ATO

    Michelle DeNiese

    CTA

    Denise Honey

    ATO appointee

    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

    Michael Jenkins welcomed members and introduced Cameron Smith, the new APA program manager.

    2. Minutes of 14 October meeting

    Minutes were accepted, the August minutes have been published on the website.

    There are four outstanding action items from the October meeting

    Action Item number

    14102014.01

    Action item name

    Consider priority of PSLA for outbound interest free loans

    Responsibility

    ATO

    Status

    On hold as documentation package not released yet

    Expected delivery date

    February meeting

     

    Action Item number

    14102014.02

    Action item name

    Reconsider list of priority work

    Responsibility

    All members

    Status

    On hold as documentation package not released yet

    Expected delivery date

    February meeting

     

    Action Item number

    14102014.03

    Action item name

    Progress of APA reports for 2012 & 2013

    Responsibility

    ATO

    Status

    Closed - to be discussed at Agenda item 3.1

     

    Action Item number

    14102014.04

    Action item name

    Feedback on any specific issues with the APA program

    Responsibility

    Members to provide to Secretariat

    Status

    Closed - only one submission received

    3. Updates

    3.1 APA program

    Cameron Smith, the new APA program manager, attended via phone and addressed this item. The ATO advised:

    • The changes were flagged in the recent Large Business alert
    • The APA program management unit will manage the APA process
    • APAs will go through a gatekeeper and triage process
    • The unit will be responsible for monitoring and reporting on the APA program
    • The triage process is an education and assistance role, determining whether an APA is the best product to assist
    • Holistic approach to APAs, focussing on all International issues not just transfer pricing
    • Focus is on openness and transparency, broader understanding of global business
    • Similar to triage process for private rulings which has been effective in improving response times
    • PSLA 2011/1 will need to be updated to reflect changes to the law and to APA processes

    Member advised that they believed from press reports that the ATO had withdrawn from a number of APAs and asked for details of the issues.

    Action Item number

    26112014.01

    Action item name

    Details of APAs that have been revoked

    Responsibility

    ATO

    Status

    Open

    Expected delivery date

    February meeting

    Members raised issues regarding the Competent Authority roles and the APA process. The ATO advised:

    • Competent Authority will provide signoff for all APAs
    • There will no longer be differentiation between bilateral and unilateral APAs
    • Increase in number of Competent Authorities as advised in recent alert
    • Members asked for details of the recent alert.

    Action Item number

    26112014.02

    Action item name

    Send link to details of new Competent Authorities

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    End December

    Discussed the action item from the October meeting regarding APA program statistics. The ATO agreed to follow up on the release of statistics that were provided to the Large Business Liaison Group as at 30 June 2014.

    Action Item number

    26112014.03

    Action item name

    Send link to APA program statistics provided to LBLG

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    End December

    3.2 Progress on publication of documentation package

    The chair advised that we will hold over until agenda item 4 and deal with together.

    3.3 ATO/Treasury/Customs work

    The ATO advised:

    • Meeting held Friday 21 November 2014
    • ITX have appointed a new person to the group
    • Some members are going to a conference in South Korea that will be dealing with some of the issues
    • Group also looked at a case study from Canada that outlines some of the issues between customs duty and transfer pricing
    • Next meeting scheduled for 5 February 2015

    4. Discussion

    4.1 Proposed PSLA on exceptions to the basic rule in 815-130

    The ATO advised:

    • 2014/6 was released in November 2014
    • PSLA will provide an approval process to assure that exceptions to the basic rule are applied appropriately and consistently
    • Auditors must seek approval at the Assistant Commissioner level to adopt a view that the exceptions apply
    • Matters should also be escalated at an early stage to technical areas to assist auditors to prepare the case
    • This will provide a check and balance for administration of 815-130 exceptions

    Feedback from members was positive and members asked to see a draft once available.

    Action Item number

    26112014.04

    Action item name

    Send draft PSLA to members

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    End December

    4.2 Simplification options

    The ATO advised:

    • PSLA and simplification options have been sent out previously to members for review
    • Minute is going to the Commissioner with the simplification options
    • Chief Tax Counsel has looked at the documents and made some suggestions for additional options for future work
    • Documentation package has been updated following the Rulings panel and the TP and PSLA have been combined, which has delayed the publication
    • Publication scheduled for early December

    4.3 Update on ATO review into rulings and advice products

    The ATO advised:

    • Feedback on the first phase is now finalised and the results of the review will be going to the ATO Executive and the NTLG before Christmas
    • Key issues identified included the lack of readily identifiable entry points for advice, lack of transparency on prioritisation, consultation too late in the process, poor searchability and processes take too long.
    • Phase two will focus on developing an end-to-end process, right product, right platform, right timeframe
    • Comprehensive layered approach
    • Contemporary and relevant advice

    4.4 Communication options

    The ATO asked for input from group on communication options. Members requested:

    • Email to members to advise that products released
    • Members will distribute via their internal channels
    • Advise members if there is going to be delay in publication

    Action Item number

    26112014.05

    Action item name

    Send link to documents to members

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    Upon release

    5. Other business

    5.1 Changes to IDS for simplification measures

    Member asked whether this could be included in next meeting and whether Ron Stevenson was available to attend.

    Action Item number

    26112014.06

    Action item name

    Update on IDS for next meeting

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    February meeting

    5.2 Interpretative matters arising out of TR 2014/6

    Member raised that the issue that the basis for imputing conditions in applying 815-130(2) is not stated in TR 2014/6 and suggested ways that this should be addressed.

    The ATO advised:

    • We consider recharacterisation or imputation of conditions can arise under 815-130(2) so as to reflect substance rather than form
    • In 815-130, we are establishing the basis upon which arms-length conditions are identified, if that means we need to impute, then we will do so
    • Kevin O'Shaughnessy will raise the issue with his colleagues involved in the ruling.

    Next meeting

    The next meeting is scheduled for 26 February 2015.

      Last modified: 16 Apr 2015QC 44886