• 2016 Completed matters

    The following 2016 consultation matters have either been completed or actioned through other processes.

    Matters that were outside the scope of our consultation processes as determined by our consultation principles were actioned through other processes including discussions with relevant staff and highlighting our existing information and guidance processes.

    We also directly provided information, and referred to the public or private ruling programs.

    If you have any queries, contact the ATO Consultation Hub at consult@ato.gov.au

    [201659] Non-arm’s length limited recourse borrowing arrangements (LRBAs) [NEW]

    [201654] Tax treatment of retail premiums received by resident and non-resident shareholders in a renounceable rights offer [NEW]

    [201651] Government specific FBT web content [NEW]

    [201649] A fairer approach to penalties [NEW]

    [201648] Correcting GST errors amendment determination

    [201647] Remaking Excise legislative instruments

    [201646] GST and Hep-C medicines

    [201643] The application of section 99B of the ITAA 1936 to trust capital gains [NEW]

    [201638] CGT and controlled foreign company rules

    [201637] Assistance for drought affected farmers

    [201635] Client communication list

    [201634] Effective life review of assets used in the cut and sewn textile product manufacturing industry

    [201633] Effective life review of assets used in the dairy product manufacturing (cheese, milk powder and yoghurt) industry

    [201632] Effective life review of assets used in data centres

    [201631] Effective life review of assets used in the fruit and vegetable processing industry

    [201630] Effective life review of assets used in the grain (flour, linseed oil, rice) industry

    [201629] Effective life review of assets used in the mining support services industry

    [201628] Effective life review of assets used in the photo processing industry

    [201627] Effective life review of assets used in the poultry processing industry

    [201626] Effective life review of assets used in the pulses industry

    [201625] Effective life review of assets used in the spirit manufacturing industry

    [201624] Remaking of a GST Legislative Determination

    [201623] Understanding and improving the Division 293 tax client experience

    [201622] Partnership Framework

    [201618] Making it easier to plan for retirement

    [201617] Making it easier to finalise a deceased estate

    [201616] Small business CGT relief - whether a transfer of property can be treated as a payment

    [201614] Regulation and the sharing economy – getting the balance right

    [201613] Business Activity Statement – Making it easier

    [201612] Starting a small business for young adults – preparing for success

    [201610] Manage ABN connections

    [201609] Legal database

    [201608] Country by Country Reporting (CbC) Reporting)

    [201607] Newly acquired rental property clients - repairs and maintenance

    [201605] Outstanding claims liability (OCL) declaration

    [201603] Meaning of the phrase ‘alteration, extension or improvement’ as it appears in Division 43 of the Income Tax Assessment Act 1997

    [201602] The operation of Division 2 – car fringe benefits of the Fringe Benefits Tax Assessment Act 1986

    [201601] Green certificates

    [201659] Non-arm’s length limited recourse borrowing arrangements (LRBAs)

    Purpose

    The consultation is aiming to support SMSF trustees and professionals in considering the application of the non-arm’s length income (NALI) provisions to limited recourse borrowing arrangements (LRBA).

    SMSF trustees have until 31 January 2017 to ensure that any LRBA’s are on terms consistent with an arms-length dealing, or alternatively brought to an end.

    Description

    On 6 April 2016, we issued Practical Compliance Guide PCG 2016/5 which sets out the 'Safe Harbour' terms on which SMSF trustees may structure their LRBAs consistent with an arm's length dealing.

    On 28 September 2016, we issued Tax Determination TD 2016/16 which provides guidance on the application of the NALI provisions where the SMSF has an LRBA that is not on arm’s length terms.

    This consultation aims to identify any further guidance required by the industry on this issue, including Q & As.

    Who we consulted

    Chartered Accountants Australia and New Zealand (CAANZ), CPA Australia, National Tax and Accountants Association (NTAA), SMSF association, SMSF advisers and tax practitioners

    Outcome

    A meeting of the SIRN was held on 25 October 2016 to discuss the release of the ATO’s Tax Determination TD 2016/16 and updated Practical Compliance Guideline PCG 2016/5 which provide SMSF trustees and advisors guidance on the application of the non-arm’s length provisions to LRBAs.

    Members have been invited to provide examples for us to consider and we will shortly publish some FAQs.

    Contact

    Nadia Alfonsi

    Professionals Portfolio, Superannuation

    nadia.alfonsi@ato.gov.au telephone: 02 9374 8298

    [201654] Tax treatment of retail premiums received by resident and non-resident shareholders in a renounceable rights offer

    Purpose

    To receive feedback on our current understanding of the features of a typical renounceable rights offer by an ASX listed company and the possible tax consequences for non-resident shareholders on receipt and disposal of an entitlement to acquire shares in the company.

    Description

    The ATO currently does not have a view in respect of the tax treatment of non-resident shareholders in a renounceable rights issue. The position in respect of resident shareholders was discussed at The Tax Institute National Conference Round Table session in March 2016 and, as part of that process, we committed to providing advice on this issue. Consultation in respect of non-resident shareholders will ensure that we produce practical, relevant and accurate advice to complete the ATO’s view on this issue.

    Who we consulted

    Nominees from the Australian Bankers Association, Law Council of Australia, CPA Australia, Chartered Accountants Australia and New Zealand (CAANZ), The Tax Institute, Corporate Taxpayers Association, Minerals Council of Australia and additional tax professionals.

    Outcomes

    The issue has been referred to the Public Advice and Guidance Centre (PAG) to determine whether a Practical Compliance Guideline is a more appropriate product for this topic. Any decision to consult further will be based on this advice.

    Contact

    Elena Stamatovska

    Tax Counsel, Tax Counsel Network

    elena.stamatovska@ato.gov.au telephone: 03 8601 9955

    [201651] Government specific FBT web content

    Purpose

    As part of our review of Fringe Benefits Tax (FBT) web content, we are seeking government stakeholder views on the relevance and applicability of the content designed for their specific market.

    We want to confirm how government users currently use FBT online documents designed for their use and how these online documents can be improved.

    Description

    We will consult with FBT STIP members our proposal to:

    We will seek feedback on whether:

    • members use this publication?
    • the content is tailored and useful for Government organisations, or do members refer to FBT – A Guide for employers?
    • members object to removing this publication and inserting a link to FBT – A Guide for employers?
    • if the publication is used, what part specifically is used frequently that members wish to retain?

    We also welcome any feedback on any FBT content that could be added to support them in best managing the FBT liability of their organisation.

    Who we consulted

    FBT States and Territories Industry Partnership.

    Outcome

    As a result of the consultation process some content will be removed from the website and other content will now be consolidated.

    Contact

    Amber Ibbott

    Law Interpretation Officer

    amber.ibbott@ato.gov.au telephone: 03 5227 1553

    [201649] A fairer approach to penalties

    Purpose

    To seek feedback from the community on how we can reshape our application of penalties to ensure we take the best approach.

    Description

    In 2015, a review of our penalty administration was initiated. After research and early discussions with the community on our current approach, a number of recommendations have been developed and included in our consultation paper.

    We have focused on the ‘failure to take reasonable care’ penalty for false and misleading statements and ‘failure to lodge on time’ penalty for income tax returns and activity statements. These penalties represent the largest proportion of penalties applied and the majority are received by small businesses and individuals.

    We want to reshape our application of penalties to encourage willing participation in the tax system. The new proposal seeks to make it easier for those who want to do the right thing, while remaining firm on those who choose to do the wrong thing.

    Who we consulted

    Taxpayers, tax, legal and accounting profession associations and industry bodies, small business industry professional associations and ATO stewardship groups.

    Outcomes

    Feedback received from sessions are being collated and reviewed for presentation internally for a decision on future direction.

    A final report is expected to be published in mid-December 2016.

    Contact

    Cathie Gee

    Executive Director, Indirect Tax

    FeedbackATOpenalties@ato.gov.au telephone: 07 3213 8154

    [201648] Correcting GST errors amendment determination

    Purpose

    To provide an opportunity to comment and give feedback on the proposed amendments to the Goods and Services Tax: Correcting GST Errors Determination 2013.

    Description

    We are amending the Goods and Services Tax: Correcting GST Errors Determination 2013:

    • to clarify that you cannot correct an error from an earlier tax period by requesting an amendment of an activity statement of a later tax period
    • to ensure that credit errors from an earlier tax period can only be corrected in a later tax period if the activity statement for the later tax period is lodged within the period of review for the earlier activity statement in which the error was made.

    The proposed amendments ensure errors are corrected under the Determination in line with Parliament’s intention for such a determination. That is, to minimise compliance costs and to allow a credit error only to be corrected within the period of review for the relevant activity statement.

    The draft Correcting GST Errors Amendment Determination 2016 (No.1) was published on the ATO Legal database to give an opportunity for tax and law/accounting professionals, industry bodies and affected taxpayers to provide comments and feedback by 20 October 2016.

    Who we consulted

    Representatives of tax and law/accounting profession associations, major industry participants, industry bodies and taxpayers.

    Outcome

    The draft Correcting GST Errors Amendment Determination 2016 (No.1) was published on 28 September 2016 on the ATO Legal database for comment.

    We have received comments from Industry bodies supportive of the amendments and some questions on the application of the determination. We have responded to all comments and questions.

    It is anticipated that the Correcting GST Errors Amendment Determination 2016 (No.1) will be made substantially the same as the draft legislative determination published on the ATO legal database.

    Contact

    Bronlynn Graham

    Director, Indirect Taxes

    bronlynn.graham@ato.gov.au telephone: 07 3213 8347

    [201647] Remaking Excise legislative instruments

    Purpose

    The ATO is seeking comments as part of the process of remaking the following legislative instruments:

    Excise (Denatured spirits) Determination 2006 (No. 2)External Link

    Excise concessional spirit approvals guidelines 2006 (No. 1)External Link

    Description

    The revised instruments will be a restatement of the previous determinations which are scheduled to be repealed on 1 October 2016 under the sun-setting provisions as prescribed in Part 4 of Chapter 3 of the Legislation Act 2003. Minor amendments have been suggested to assist with clarity.

    As part of the remaking process, we are taking the opportunity to seek comment on the new versions from an industry perspective.

    If you have any queries or wish to discuss this matter further you should email or telephone the contact.

    Who we consulted

    Members of the Alcohol Stakeholder Group and the Department of Immigration and Border Protection.

    Outcome

    No feedback was received from clients during the consultation process. This was in line with expectations as changes were only minor.

    Contact

    Bennett Sandhu

    Senior Technical Advisor

    Excise Product Leadership, Indirect Tax

    bennett.sandhu@ato.gov.au telephone: 08 7422 2549

    [201646] GST and Hep-C medicines

    Purpose

    New Hepatitis C medicines were made available in community pharmacies on 1 March 2016. The medicines are GST-free to patients, but subject to GST earlier in the supply chain. The medicines are very expensive for pharmacies to purchase, and due to restricted trade payment terms and the timing of PBS and GST refunds via the Pharmacy Guild, pharmacists have expressed concerns about cash flows.

    Description

    A workshop was held on 5 April 2016 with representatives from the Pharmacy Guild, pharmacists, medicine manufacturers and wholesalers, the Department of Health and the Health Minister’s office. The ATO explained the operation of the GST law and the characterisation of the supplies, the choice to account on a cash or non-cash basis, and the options to submit a BAS monthly or quarterly.

    The ATO explained how the negative cash flow impacts could be reduced by considering and applying these choices (as some pharmacists noted that they account on a cash basis and lodge their BAS quarterly).

    The Pharmacy Guild also raised concerns that GST refund verification may delay refunds. At the workshop the ATO explained the function of the Risk Engine and the difficulties with modernising the Risk Engine, but offered to investigate a process to mitigate the chances that verification will delay refunds.

    Additional questions about the interaction of the proposed new small business threshold and the sale of more expensive medicines was raised with the ATO.

    Who we consulted

    The Pharmacy Guild of Australia

    Outcome

    An information sheet has been published and also provided to the Pharmacy Guild to distribute to its members.

    Contact

    Adam Johnson

    GST Technical Product Leadership,

    adam.johnson@ato.gov.au. telephone: 07 3213 5693

    [201643] The application of section 99B of the ITAA 1936 to trust capital gains

    Purpose

    To inform the development of public advice about the application of section 99B of the ITAA 1936 to amounts distributed by the trustee of a non-resident trust that are attributable to capital gains from non-taxable Australian property assets.

    Description

    The issues include:

    • potential for a resident beneficiary of a non-resident trust to be assessable under section 99B on amounts attributable to trust capital gains arising from non-taxable Australian property assets
    • the hypothetical taxpayer test in paragraph 99B(2)(a) and (b)
    • the absence of any linkage with the CGT provisions, including Subdivision 115-C, affecting access to the CGT discount and concessions, and capital loss offsetting.

    Who we consulted

    Representatives of tax and accounting profession associations and industry bodies.

    Outcome

    Draft taxation determinations were published on 30 November 2016

    Contact

    Lyn Freshwater

    Tax Counsel Network

    lyn.freshwater@ato.gov.au telephone: 07 3213 5554

    [201638] CGT and controlled foreign company rules

    Outcome

    Submitter was asked to make a submission to the Board of Taxation Sounding Board as the matter required a law change.

    [201637] Assistance for drought affected farmers

    Purpose

    Examine issues impacting drought-affected Australians’ awareness of and access to Government assistance. Explore and make recommendations on both short and long term fix options.

    Description

    The Agricultural Competiveness White Paper recommended a series of initiatives to assist rural communities to manage the effects of drought and improve the competitiveness of the agricultural sector. As part of these initiatives, the ATO made a commitment to engage taxpayers in their local communities in a series of ‘town hall’ style events in regional areas, and meetings with local governments and business associations. It was identified that given the level of resources required to plan and execute these events, there is an opportunity to implement a whole of government approach. These events would then be able to offer assistance from many of the agencies involved in the White Paper.

    Who we consulted

    Primary producers from a mix of industries, industry representatives, Federal and state governments, tax agents and other small business intermediaries

    Outcome

    Feedback that has been received during this consultation will be reviewed internally during October 2016.

    Contact

    David Colahan

    Project Director

    david.colahan@ato.gov.au telephone: 07 3213 3222

    [201635] Client communication list (CCL)

    Purpose

    To develop meaningful description titles of the communication items appearing in the CCL function of the tax and BAS agent portals.

    Description

    Following enhancements made to the CCL function in the portal in April 2016, including its availability to BAS agents, we are looking to provide more meaningful descriptions of the communication items in the CCL.

    Who we consulted

    Tax and BAS agents and members of ATO Tax Practitioner Advisory Group (ATPAG) and BAS Agent Association Group (BASAAG).

    Outcome

    As a result of consultations conducted with both ATPAG and BASAAG members, along with consultations with other Tax and BAS agents, we have developed new descriptions to appear in the CCL function on the Tax and BAS agent portals.

    The valuable feedback from tax practitioners has assisted to improve the descriptions appearing on the CCL and will make them more meaningful to agents,

    These changes will allow agents at a glance to easily identify the context of the communications appearing on the CCL and will assist agents to identify and prioritise any action that may be required.

    The new CCL descriptions have been finalised and will be introduced to the CCL function on the Tax and BAS agent portals in August 2016.

    Contact

    David Baker

    Director

    david.baker@ato.gov.au telephone:08 7422 2735

    [201634] Effective life review of assets used in the cut and sewn textile product manufacturing industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201633] Effective life review of assets used in the dairy product manufacturing (cheese, milk powder and yoghurt) industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201632] Effective life review of assets used in data centres

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201631] Effective life review of assets used in the fruit and vegetable processing industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201630] Effective life review of assets used in the grain (flour, linseed oil, rice) industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201629] Effective life review of assets used in the mining support services industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201628] Effective life review of assets used in the photo processing industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201627] Effective life review of assets used in the poultry processing industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201626] Effective life review of assets used in the pulses industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201625] Effective life review of assets used in the spirit manufacturing industry

    Outcome

    This matter has been consolidated into a new matter 201639 Effective life review of assets.

    [201624] Remaking of a GST Legislative Determination

    Purpose

    To decide if the legislative determinations will be remade and, if remade, whether to incorporate changes put forward as a result of the consultation.

    Description

    The draft GST legislative determinations published on the Legal database have been updated to make them easier to read and to correct small errors, but remain substantially the same as the original determinations. These draft legislative determinations will replace the original legislative determinations that have expired or will expire on 1 October 2016.

    This provide opportunities for tax professionals, stakeholders and affected taxpayers to provide comment on the new drafts including:

    • whether the determinations are still required
    • what updates or amendments are necessary
    • what improvements can be made?

     

    Who we consulted

    Representatives of tax and accounting profession associations, major industry participants and industry bodies.

    Outcome

    Significant feedback was received for Goods and Services Tax: Recipient Created Tax Invoice Determination (No.37) 2016 for Recyclers of Precious Metals. In particular, we have received feedback on the precious metal refining practice as well as the definition of precious metal for GST purposes. We will examine these comments more closely to determine their incorporation in the final legislative determination. It is anticipated that the final legislative determination will be substantially different from the draft legislative determination.

    Minor or no comments were received for the remaining legislative determinations. It is anticipated that these legislative determinations will be remade substantially the same as the draft legislative determinations.

    Contact

    Bronlynn Graham

    Director, Indirect Taxes

    bronlynn.graham@ato.gov.au telephone: 07 3213 8347

    [201623] Understanding and improving the Division 293 tax client experience

    Purpose

    To understand the current client experience with Division 293 tax, identify current irritants, seek feedback on the impact of improvements put in place, proposed design changes and any suggestions to improve the overall experience.

    Description

    Since 1 July 2012 very high income clients have been assessed for Division 293 tax on superannuation contributions. Assessments have been issuing to clients since February 2014.

    Feedback, from both clients and intermediaries, has identified a number of irritants and that the overall client experience is potentially overwhelming, confusing and complex.

    The ATO are keen to better understand the experience that clients and intermediaries have when they receive a Division 293 notice of assessment. As well as defining the current experience the ATO are also validating initial feedback and research, including:

    • the current irritants we have identified from client and practitioner feedback
    • some ‘quick wins’ we have identified and implemented over the last few months to address key irritants and system defects
    • proposed strategies to further improve the client experience and simplify the interplay between various ‘taxes’ and ‘payments’ on super contributions
    • ‘re-design’ concepts currently being explored and validated with clients and practitioners by the external consultant.

     

    Who we consulted

    Tax Practitioner Stewardship Group and Superannuation Industry Stewardship Group members

    Outcome

    Consultation has been concluded with group members with one action item still to be finalised that arose from the ATPAG consultation.

    Feedback from both groups has been positive and in broad agreement with the external consultant (Neoteny Service Design) principles as well as a clear desire from both groups to work with us in co-designing future correspondence.

    Contact

    Louie Markovski

    Director Individual Client Engagement

    louie.markovski@ato.gov.au telephone: 03 9275 5333

    [201622] Partnership Framework

    Purpose

    Develop a partnership framework which will guide how the key players in the tax and super systems will work together with the ATO into the future. It will provide a consistent approach for how the ATO approaches relationships with partners, so tax and super services are delivered by the right people in the right way at the right time.

    Description

    The Framework for working together is expected to be made available to the broader community in 2017. It will serve as a flexible document to guide what we do together to build the types of relationships we need to improve experiences in the tax and super systems. It includes:

    • a vision and universal principles for working together
    • defined list of products and services needed to establish and support the framework
    • cultural behaviours to make it happen and support effective partnerships.

    Working with our partners in the tax and super system (Partners Program) is one of six strategic programs established to deliver the Reinvention agenda.

    The Partnership Framework is one of the projects under this program of work. It is about is about creating a trusted environment where the ATO listens, responds and builds strong relationships with the key players in the tax and super systems.

    Who we consulted

    Tax agents, BAS agents, Tax Practitioners Board, software developers, Australian Business Software Industry Association, Chartered Accountants Australia and New Zealand, CPA Australia, Australian Institute of Superannuation Trustees, Institute of Certified Bookkeepers, National Tax and Accountants’ Association. Taxpayers Australia, The Tax Institute, Institute of Public Accountants, Australia Payroll and other partners in government are also invited to engage in design interviews and co-creation.

    Outcome

    • Representatives of the tax profession, software industry and ATO have worked together to co-create a Framework for working together prototype for tax agents, BAS agents and software developers.
    • Between May and August 2016 tax agents, BAS agents and software developers participated in design interviews and workshops to co-create the framework. We worked together to develop a shared understanding of the types of relationships formed in the tax and super systems, now and into the future.
    • In August 2016, participants who had participated in co-creation workshops were invited to a webinar to comment on the draft Framework for working together prototype. All feedback received during these activities were used refine and validate the prototype.

     

    Contact

    Tim Roach

    Assistant Commissioner

    Partner Relationship

    timothy.roach@ato.gov.au telephone: 08 9268 0970

    Lesley Slevin

    Assistant Commissioner, Design and Change Management

    lesley.slevin@ato.gov.au telephone 02 4923 1378

    [201618] Making it easier to plan for retirement

    Purpose

    To explore issues around Superannuation to identify irritants and issues encountered by people planning their retirement.

    Our primary focus will be people who are:

    • 50 plus years
    • 2 to 3 years from retirement

    Our objective is to develop recommendations and resolve any identified issues, to improve the client experience and make it easier for clients to interact with the ATO.

    Description

    The ATO will undertake research, engage and consult with community representatives, and internal and external stakeholders to identify irritants encountered by people planning for retirement, Consultation will be through interviewing internal and external stakeholders, feedback from ATO staff via Let’s Talk, and conducting a workshop to discuss issues encountered by people who have undertaken the process of planning for retirement.

    Who we consulted

    Community representatives, Association of Superannuation Funds of Australia, superannuation funds, legal and tax practitioners, Australian Shareholders Association, Individuals Tax Liaison Group, National Seniors, Financial Counselling Australia, Department of Human Services, Department of Veteran’s Affairs, Australian Securities and Investments Commission, Adult Multicultural Educational Services, Association of Independent Retirees, Federation of Ethnic Communities Council of Australia, The Treasury and ATO staff

    Outcome

    Research has been completed and the draft recommendations to address the issues and irritants raised in the workshop held on 24 May 2016 are awaiting endorsement. Once endorsed, the recommendations will be forwarded to stakeholders for costing and implementation.

    Contact

    Tania Laycock

    Director, Individuals

    tania.laycock2@ato.gov.au telephone: 07 3149 5155 or 0447 609 012

    Libby Kaufman

    Assistant Director, Individuals

    llibby.kaufman@ato.gov.au telephone: 07 314 95408 or 0403 913 062

    [201617] Making it easier to finalise a deceased estate

    Purpose

    Identify issues and irritants encountered by people finalising a deceased estate, with a view to resolve the identified issues to improve the client and staff experience to make it easier for clients to navigate the processes in managing the affairs of someone who has died.

    Description

    Research, consultation and engagement occurred with stakeholders to understand identified issues. The Individuals Fix-it squad recommended short to medium and long term strategies which aim to reduce red tape, reduce reverse workflows, improve and simplify processes, to make it easier for clients to interact with the ATO.

    Consultation was completed by interviewing internal and external stakeholders, requesting feedback from ATO staff via Let’s Talk, and conducting a workshop to discuss issues encountered by people who have experienced the process of finalising a deceased estate.

    Who we consulted

    Community representatives, Public Trustees, Department of Human Services, Births, Deaths and Marriages, Queensland, tax professionals, not-for-profit organisations and ATO staff.

    Outcome

    Our research, interviews and feedback demonstrated that managing the tax affairs of someone who has died is a complicated process and not well understood by many individuals.

    Following the workshop, the Individuals Fix-It Squad proposed nine recommendations to improve the process for clients and staff, some of which have been implemented as follows:

    • contact centre interactive voice response (IVR) - phone option for clients to speak with appropriately trained staff
    • contact centre scripting updated to improve clarity and link to greater information
    • educational postcards drafted and referred to Individuals Engagement and Support for future marketing strategies to support clients
    • deceased estates eLibrarywiki page published and available for staff to bridge the gap between formal training and procedures. Content will also be added to ‘The Capability Toolbox' used by contact centre staff
    • website content has been reviewed, proposed updates are awaiting finalisation.
    • single point of contact for Public Trustees established for complex issues resolution.

     

    Contact

    Tania Laycock

    Director, Individuals

    tania.laycock@ato.gov.au telephone: 07 3149 5155 or 0447 609 012

    [201616] Small business CGT relief - whether a transfer of property can be treated as a payment

    Outcome

    This matter was actioned through other processes.

    The ATO contacted the submitter and provided information and guidance.

    [201614] Regulation and the sharing economy – getting the balance right

    Purpose

    This Small business Fix-it squad will explore the range of government regulations that apply to a particular industry in both the sharing and traditional economies. The squad will look at ways to shape the regulatory approach to the selected activities with a focus across the whole of the market to get the balance right.

    Description

    Potential key areas for exploration in the squad include:

    • Regulators keeping up with the pace of change – how have regulators responded to the emergence of the sharing economy? What approach delivers the best experience for incumbents and emerging sectors of the economy?
    • Consumer protection – sharing economy platforms tend to adopt a user rating based approach to address many of the concerns around consumer outcomes. Do ratings systems constitute self-regulation?
    • Maintaining a level playing field – the best approach to managing an environment where some incumbents argue that sharing economy platforms have become successful by exploiting loopholes in regulation, while some sharing economy platforms argue that regulation is unclear or stifles growth.
    • The changing nature of employment – how does the growth in ‘task” based work impact upon our traditional regulatory approach to employment.

     

    Who we consulted

    Federal, state and local governments, Council of Small Business of Australia, tax agents and other small business intermediaries, academia, platform from the sharing economy, small businesses within the sharing economy

    Outcome

    Feedback that has been received has been endorsed and will soon be published on our website.

    Contact

    David Colahan

    Project Director

    david.colahan@ato.gov.au telephone:07 3213 3222 / 0431 265 522

    [201613] Business Activity Statement – Making it easier

    Purpose

    The purpose of the Small business fix-it squad was to identify the underlying issues for small business to meet BAS requirements by:

    • examining the end to end record keeping and reporting process from a small business perspective
    • identifying and prioritising significant common irritants.

    The squad made five fix recommendations after validating the fix concept design using a range of techniques to test and prioritise the fix ideas.

    Description

    The Small business fix-it squad was made up of small business owners, tax practitioner representatives and representatives of software providers. The squad prioritised the key problems under the following themes:

    • complexity – understanding the law, GST codes and due dates
    • cost to business – keeping records and managing cash flow
    • accessing support – getting the right advice from the right person at the right time and awareness of the availability of support tools.

    Three of the five fix-it squad ideas were tested with a further 11 small business owners from a variety of industries and another nine tax professionals. The five final recommendations from this squad are outlined below.

    Who we consulted

    Small business owners, BAS and tax agents and software providers

    Outcome

    Fix-it squad recommendations were:

    • simplify GST record keeping and reporting, including piloting BAS form changes to simplify and reduce time and complexity of record keeping
    • offer contemporary help and reminders, including:              
      • SMS lodgment / payment reminders to help small businesses plan and meet their BAS due dates
      • call confirmation and call back options
    • promote the development of a client dashboard in native systems so that small business owners can see all their reporting and payment obligations at a glance
    • promote tools and options to support small business owners to pay their BAS on time and help manage cash flow, including:              
      • early payment options
      • PAYGI calculator
      • explore policy change to incentivise early payment
    • develop a tailored engagement pack (with incentives) to help establish good habits at the time of setting up a small business.

    The status of the recommendations can be found on our website Small business fix-it squads.

    Contact

    Julie-Ann Fleming

    Project Director

    julie-ann.fleming@ato.gov.au telephone: 07 3149 5597

    [201612] Starting a small business for young adults – preparing for success

    Purpose

    This fix-it squad examined the issues faced by young adults when starting a small business for the first time.

    Description

    The fix-it squad grouped the issues for young adults starting a small business into three key areas:

    • incomplete or no research and planning
    • lack of business management knowledge and experience
    • no central resource connecting people with customised information and advice.

    The squad made three fix recommendations and have been working with various government agencies and intermediaries to implement the recommendations.

    Who we consulted

    Young adults who own a small business, federal and state governments, tax agents and other small business intermediaries

    Outcome

    Fix-it squad recommendations included:

    • develop a central resource for people starting a small business, including:              
      • Redesigning the Starting a small business page (and related content) on business.gov.au to make it more customised and accessible for small business owners.
      • Presenting this information in mobile app format.
      • Investigating the viability of delivering information in a game format.
    • create an engagement pack (push service) for new small business owners, triggered at the time of ABN registration, with relevant information delivered regularly over the course of their first year in business.
    • create a whole-of-government catalogue of grants and programs available to small business owners (searchable by location and industry).

    The status of the recommendations can be found on our website Small business fix-it squads.

    Contact

    David Colahan

    Project Director

    david.colahan@ato.gov.au telephone: 07 3213 3222

    [201610] Manage ABN connections

    Purpose

    To gain feedback about a username and password option to access government online business services.

    Description

    The target audience of tax and BAS agents were given an overview of Manage ABN Connections which included a discussion about other projects currently underway to deliver authentication choices, such as:

    • AUSkey remediation
    • cloud software authorisation and authentication
    • authenticator application
    • relationship and authorisation manager

    Across the group of participants:

    • there were varying levels of interest in Manage ABN Connections (e.g. using myGov as a credential to access the Tax Agent and BAS Agent Portals).
    • all attendees were supportive of credential choice.

     

    Who we consulted

    Tax practitioners, specifically tax and BAS agents

    Outcome

    Feedback from the sessions included:

    • ability to work outside the office, for example accessing the Portal when at a client’s premises is beneficial
    • benefits for small businesses as well as small Tax and BAS Agents
    • concern regarding management of staff access
    • essential to retain choice of AUSkey for access to the Tax Agent and BAS Agent Portals
    • no issues regarding cloud (online) authentication
    • timing of credential choice (this or any alternatives under the AUSkey remediation work) should be considered in conjunction with portal changes.

    Access to the Tax and BAS Agent Portals using Manage ABN Connections will be introduced in late 2016, when additional controls are available. That is, the ability for tax and BAS agents to control whether their staff can use this service. The timing of deployment will take into consideration other changes / system enhancements and will be communicated to tax practitioners in advance.

    AUSkey will remain as an authentication option for Tax and BAS Agent Portals.

    Contacts

    Jodie Stevenson

    Director, Digital Strategy & Design (CS&S)

    telephone: 02 6216 3413

    Celia Fisher

    Project Officer, Digital Strategy & Design (CS&S)

    telephone: 03 9937 9326

    [201609] Legal database

    Purpose

    To improve the design of the Legal database.

    Description

    The Legal Database has been a valuable source of tax related information for tax practitioners, taxpayers, superannuation industry participants and trustees as well as students of tax and superannuation law.

    Who we consulted

    A range of frequent Legal Database users.

    Outcome

    Following consultation and user testing the ATO is implementing recommended design improvements to the Legal database to improve its useability and accessibility.

    We continue to welcome feedback on the Legal database – contact the Legal database team.

    Contact

    Joanna Wilson

    Tax Counsel Network Support Services

    joanna.wilson@ato.gov.au telephone: 02 6216 1657

    [201608] Country by Country Reporting (CbC) Reporting)

    Purpose

    The purpose of this consultation is to work collaboratively through issues surrounding the implementation of CbC Reporting in an Australian context, and to enable the ATO to share and gain feedback on the implementation and administration of the measure.

    Description

    CbC Reporting implements Action 13 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Action Plan. It is part of a broader suite of international measures aimed at combating tax avoidance through more comprehensive exchanges of information between countries.

    Taking effect from the first income year commencing on or after 1 January 2016, ‘significant global entities’ are required to give the Commissioner three statements corresponding to the ‘CbC Report’, ‘Master File’ and ‘Local File’.

    The CbC report provides specific information on the global activities of an entity, including the location of its income and taxes paid. The master file provides an overview of an entity's global business, its organisational structure and its transfer pricing policies. The local file provides detailed information about a local entity's intercompany transactions.

    For further information please see the CbC Reporting page.

    Who we consulted

    We are consulting with a wide range of stakeholders that may be affected by this measure. These stakeholders include representatives from tax agents, corporates, regulatory and industry bodies.

    We will shortly be commencing consultation with the software industry via the Software Industry Partnership Office (SIPOExternal Link).

    Outcome

    Through valuable feedback received via a number of consultation sessions held in Sydney and Melbourne and comments received via our mailbox, we have been able to develop a ‘Local File – High Level Design’ that meets Australia’s commitments under OECD Action 13, while minimising overlap with existing reporting requirements.

    The final version of the Local File – High Level Design is available via the CbC Website.

    Contact

    Caroline Bath

    CbC Reporting

    Project Manager, Public Groups and International

    caroline.bath@ato.gov.au or CbCReporting@ato.gov.au

    telephone: 02 6216 1659

    [201607] Newly acquired rental property clients - repairs and maintenance

    Purpose

    To seek feedback on:

    • the content of a proposed letter to issue to selected clients through their tax agents regarding rental property repairs and maintenance claims
    • a proposed auto amend approach where amendments are identified by clients and tax agents on further review of their claims.

     

    Description

    The ATO is proposing to contact selected clients via their tax agents regarding their rental property repairs and maintenance claims for newly acquired rental properties. Initially this process will be piloted with approximately 100 tax agent clients.

    This consultation is to confirm or refine the content of the letter and to discuss a proposed auto amend process as part of the overall approach.

    Who we consulted

    Telephone interviews were conducted with members of the ATO Tax Practitioner Advisory Group (ATPAG)

    Outcome

    As a result of consultation conducted with ATPAG members, we have amended the tone of the letter as the feedback indicated it may have been perceived to be too aggressive. The auto amend process will remain unchanged

    Contact

    Justin Micale

    Senior Director, Individuals Business Line

    justin.micale@ato.gov.au telephone: 08 9628 5907

    [201605] Outstanding claims liability (OCL) declaration

    Purpose

    To address the risk found in a 2013 ATO review that there was an insufficient level of documentation held across the general insurance industry to support the basis for determinations of OCL risk margins used for tax purposes.

    Description

    The OCL declaration is an administrative process to manage income tax risk. The purpose of the OCL declaration is to:

    • obtain assurance that the management decision regarding the tax OCL risk margin is not influenced by factors extraneous to the uncertainty in the central estimate
    • ensure that the decision of management is well documented.

    The value of a general insurer’s OCL under Division 321 of the Income Tax Assessment Act 1997 (ITAA 1997) has a significant impact on the insurer’s income tax liability. Section 321-20 of the ITAA 1997 sets out how the company works out the value of OCL for tax purposes. The OCL value can be increased by a risk margin that is determined by the management or decision makers of the general insurance company.

    Who we consulted

    Members of the general insurance industry, which represented over 55% of the market (based on gross earned premium) and advisors to taxpayers in this industry.

    Outcome

    Finalisation of the OCL declaration administrative process developed by the ATO. The ATO requested the OCL declaration from larger members of the general insurance industry and will be extending the use of the OCL declaration to the wider industry during the 2016 calendar year.

    Contact

    Frank Saliba

    Team leader, Public Groups and International

    frank.saliba@ato.gov.au telephone: 02 9354 3497

    [201603] Meaning of the phrase ‘alteration, extension or improvement’ as it appears in Division 43 of the Income Tax Assessment Act 1997

    Purpose

    To develop an income tax ruling, or alternative advice product, to clarify the meaning of the phrase “alteration, extension or improvement” in Division 43 of the ITAA 1997.

    Description

    To assist taxpayers in understanding the meaning of the phrase ‘alteration, extension or improvement’ in the context of Division 43 of the Income Tax Assessment Act 1997 (ITAA 1997), to enable taxpayers to determine whether there is an extension, alteration or improvement for the purposes of the capital works deductions. This in turn may have implications for the deductibility of those expenses under another provision of the ITAA 1997.

    The ruling is intended to provide a seamless explanation to complement the ATO view on the meaning of repairs as set out in TR 97/23 Income tax: deductions for repairs. The following list of issues are in the process of being considered:

    • The meaning of the phrase ‘alteration, extension or improvement’ for the purposes of Division 43 of the ITAA 1997.
    • The interaction between this aspect of Division 43 of the ITAA 1997 and:
    • subsection 40-45(2) of the ITAA 1997, which excludes from Division 40 of the ITAA 1997 those capital works for which an amount can or could be deducted under Division 43 of the ITAA 1997, or
    • section 40-760 of the ITAA 1997, which provides that a deduction for environmental protection expenditure is not available under section 40-755 for capital expenditure for constructing an extension, alteration or improvement to a building, structure or structural improvement or expenditure to the extent it can be deducted under a provision other than subdivision 40-H of the ITAA 1997.
    • the difference between a ‘repair’ for the purposes of sections 8-1 and 25-10, and an ‘alteration, extension or improvement’ for the purposes of Division 43 of the ITAA 1997.
    • apportionment.

     

    Who we consulted

    Representatives of tax and accounting professional associations and industry bodies.

    Outcome

    A draft ruling is expected to be released in April 2017.

    Contact

    Tim Sporne

    Director, Tax Counsel Network

    tim.sporne@ato.gov.au telephone: 08 8218 9310

    [201602] Operation of Division 2 – car fringe benefits of the Fringe Benefits Tax Assessment Act 1986

    Purpose

    To determine if further guidance to supplement the current car fringe benefit public advice contained in chapter seven of the Fringe Benefits Tax guide is required and if so, what that advice might be and what form it might take.

    Description

    A discussion paper will be released to canvas whether there is a need for additional advice than what is already contained in Fringe Benefits Tax – a guide for employers.

    Where guidance is required, it will provide a more detailed explanation of the issues identified by outlining the principals involved and illustrating the application of those principles. It will also include other issues that are identified as part of this consultation process and potentially include issues raised in ATO Interpretative Decisions (ATO IDs).

    The issues being considered include the:

    • meaning of the 'earliest holding time' for the purposes of paragraph 9(2)(b)
    • meaning of the term ‘applied to own use’ in the context of ‘cost price’ in subsection 9(2)
    • meaning of the term ‘private use of the car’ for the purposes of subsection 8(2)(b)
    • application of the car fringe benefit carve outs in subsection 7(2A) and section 8.

     

    Who we consulted

    Profession bodies, including representatives of tax and accounting profession associations and industry bodies.

    Outcome

    No further action on the proposed public ruling. However, the existing FBT guide will be reviewed to provide additional guidance.

    Contact

    Tim Sporne

    Director, Tax Counsel Network

    tim.sporne@ato.gov.au telephone: 08 8218 9310

    [201601] Green certificates

    Purpose

    To understand commercial practices and position(s) taken, and the basis for tax position(s) taken by a broad sample of the liable entity population. To also obtain feedback on our preliminary view of the tax treatment of green certificate expenses to help determine and communicate our compliance approach.

    Description

    The ATO has conducted an initial review into the operation of “green certificate” schemes and, in particular, when entities that are liable to surrender certificates are claiming a deduction for the loss or outgoing they incur in relation to those certificates.

    The ATO identified from this review that different tax positions are being taken within industry. This has prompted the ATO to commence a consultation process with industry regulators and a number of industry participants.

    The ATO are considering taking an approach of accepting current industry practice of claiming deductions for green certificates on either surrender or an accruals basis and are continuing work on limiting the exposure if entities were to chop and change their treatment.

    The ATO are exploring the option of entering into agreements and locking in a consistent treatment with industry participants who represent the vast majority of green certificate liabilities and are currently formulating ‘draft’ agreements to present for feedback

    Who we consulted

    Energy Supply Association of Australia (ESAA), representative sample of members of the ESAA, representative sample of electricity and gas retail distributors, other ‘green certificate’ affected parties.

    Outcome

    Outcome will be communicated to participants in the consultation process and the relevant Industry Association by the end of September 2016.

    It will involve seeking to enter into agreements with participants who represent the vast majority of green certificate liabilities. The agreements will seek to confirm current Industry practice, but limit the exposure that may arise if participants chop and change their treatment.

    Contact

    Gus Parmeter

    Public Groups and International

    augustine.parmeter@ato.gov.au telephone: 02 4923 1612

    Last modified: 02 Dec 2016QC 48597