• Division 815 Technical working group minutes - 27 May 2015

    Meeting details

    Venue:

    747 Collins St Melbourne

    52 Goulburn St Sydney

    Teleconference

    Date:

    27 May

     

     

    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

    Helen Kelly

    Senior Tax Counsel

    Kevin O'Shaughnessy

    Senior Director, Technical Leadership Group

    Daryl Cornish

    Director, Profit Shifting Practice (Project Manager)

    Shahzeb Panhwar

    Director, Profit Shifting Practice

    Catherine Armstrong

    Director, Technical Leadership, Private Groups and High Wealth Individuals

    Cameron Smith (phone)

    APA Program management unit

    Gloria Cassimatis (phone)

    APA Program management unit

    External representatives

    Reynah Tang

    LCA

    Soulla McFall

    CPAA

    Paul Suppree (phone)

    CTA

    Vanda Davis

    FCAI

    Damian Preshaw

    TIA

    Anthony Seve

    ICAA

    Wayne Sutherland (phone)

    ABA

    Sharon Jansen

    MCA

    Stuart Edwards

    ATO appointee

    Jake Meyer (for Denise Honey)

    ATO appointee

    Chris Bowman

    ATO appointee

    Apologies

    David Honybun

    ATO

    Paul Korganow

    ATO

    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 to the meeting.

    2 Minutes of 26 February meeting and action items

    Member requested change to minutes as Jake Meyer attended for Denise Honey.

    Action Item number

    27052015.01

    Action item name

    Update February minutes

    Responsibility

    Secretariat

    Status

    Open

    Expected delivery date

    Prior to publication

    There were four action items from the February meeting.

    2.1 Consider 815-130 (2) power to impute issue

    The ATO advised:

    • The issue regarding power to impute that was raised has been considered
    • There is no need to take any further action as the ruling is sufficiently clear
    • If form is disregarded then it becomes a pricing issue and you then price the substance of the actual transaction
    • If any member wished to provide an example that can highlight the problem then the ATO will consider further, otherwise the issue will be considered closed

    Action Item number

    27052015.01

    Action item name

    Provide an example to highlight issue with 815-130(2) power to impute

    Responsibility

    Members

    Status

    Open

    Expected delivery date

    30 June 2015

    2.2 APA program session for Law Council

    Meeting held 13 April, item can be closed.

    2.3 Advise ATO of other priorities for work

    One submission received. The ATO advised:

    • There is a suite of five products being developed regarding financing
    • There has been some delay in these documents as they are interrelated, therefore they need to be delivered as a package
    • First three products have progressed to the draft stage but there are still processes around 815-140 to be resolved before they are ready for consultation
    • Update to TR2000/16 has been raised as a priority issue
    • OECD work on low value services will not be considered until passed as law in Australia
    • No action will be taken on Arms' Length Debt Test work by Board of Tax until it is released by government

    2.4 Benchmark data

    The ATO advised:

    • Some work has been done on analysis of Australian buy/sell businesses however not yet fully developed
    • There is still an intention to pursue this further, item to remain open

    3 Updates

    3.1 Report on developments on transfer pricing issues

    Standing agenda item. The ATO advised:

    • Simplification work progressing through project established by Safe Harbour Steering Group
    • Representatives from the CTA, TTI and CAANZ are included
    • Catherine Armstrong is working with the group to ensure the forensics are right
    • PSLA 3687 on 815-A penalties is close
    • this group is scheduled to sunset at the end of 2015. The group needs to consider what ongoing work will be required after that.
    • E&R group focusing on marketing hub work
    • taxpayers coming forward about their documentation and testing the waters with us
    • Country by Country reporting measures announced in the Budget
    • Drafting instructions issued and we are working on it however it is early days
    • drafting instructions are aligned with the OECD draft legislation
    • aware of the interaction and overlap with the IDS
    • Tier 2 project logistically related to FATCA/CRS

    Chris Bowman detailed his involvement in study of accounting software and the difficulty for current systems being able to achieve the CBC requirements. Industry opinion is that it will take two years to be able to develop a solution.

    Action Item number

    27052015.02

    Action item name

    Provide information regarding accounting software issues

    Responsibility

    Chris Bowman

    Status

    Open

    Expected delivery date

    August meeting

    4 Discussion

    4.1 APA PSLA

    APA PSLA draft document was provided to members in advance of the meeting. The ATO advised:

    • Draft to replace 2011/1
    • Different guidelines to design of PSLA so very different, very focused on staff guidance
    • Fact sheets will be developed for taxpayer guidance
    • More differentiated approach to APAs, structured to suit each taxpayer
    • We are still seeking feedback on the document
    • Triage process is to get expertise upfront

    4.2 FAQs

    FAQs document was provided to members in advance of the meeting. The ATO advised it was developed as a result of external and internal feedback and call centre queries. Has anything been missed or are there any concerns?

    • Weighted average - suggest profit before tax over three years divided by turnover over three years rather than average of three ratios
    • Clear that simplification doesn't exclude the need to keep records
    • Can we give an example under question one, possibly around loan simplification?

    4.3 PSLA on Penalties under 815-A

    This item was held over due to lack of time.

    5 Other business

    Nil

    6 Next meeting

    The remaining meetings for 2015 are scheduled for Tuesday 25 August and Tuesday 24 November.

      Last modified: 01 Sep 2015QC 46849