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GST Stewardship Group key messages 15 June 2022

Information about the key topics discussed at the GST Stewardship Group meeting 15 June 2022.

Last updated 21 August 2022

Welcome and introductions

As this was the first face-to-face formal meeting in more than 2 years, GST Stewardship Group co-chair Deborah Jenkins introduced ATO members and guests to the group. She also covered the key messages from the last formal meeting in November 2021, including the action items, all of which had been completed.

GST system – context and environment

This focused on understanding the current environment and context and how that might impact on administration and performance of the tax system.

The ATO took members through a presentation that included a political, economic, social, technological, legal and environmental snapshot over the past 6 months. The presentation focused on 5 key themes for GST:

  • Opportunities arising from digitalisation
  • Use of cryptocurrency and non-fungible assets in supply chains
  • Property and construction market changes
  • Change in preferences for energy sources and implications
  • Generational and cultural attitudes to risk, business and tax.

Members' comments

How do you change mindsets and positively influence attitudes to tax obligations in the current environment? Young people in their 20s and 30s may be compliant but think the system is broken. The ATO needs bolder messaging regarding its work dealing with tax fraud. The ATO should reconsider providing broad tax respite during natural disasters.

The size and scale of small business debt presents a collection challenge. Also, there is still a digital divide. How do you bring people into the electronic system without alienating them?

The GST gap and non-compliance are big worries among tax practitioners who do the right thing. They are frustrated when they see people committing fraud.

Increasing cultural diversity among new businesses means they may have different ideas about good record-keeping and perspectives on authority.

Does Australia still have a fit-for-purpose regulatory framework with secrecy laws that limits the ATO’s ability to share information and legislation restricting the role of digital service providers?

Is the ATO resourcing public guidance sufficiently so that it can provide timely guidance on emerging issues?

A number of commercial players are now moving into the build to rent sector but do not understand residential issues. The legislation is complex – are there opportunities to simplify the law?

Current GST performance and key programs at the ATO

ATO small business future vision

The ATO outlined its small business future vision 2030 including the adoption of a digital first approach. The presentation included some of the challenges the ATO is facing with the shadow economy, refund fraud, tax complexity and errors and growing levels of small business debt.

There are 3 main focus areas as the ATO heads down a digital first path:

  • What assurances should be built into the tax digital ecosystem?
  • Incentives to join a permission-based tax digital ecosystem – How would people opt in and participate?
  • Integrity controls for bad and opportunistic actors – The ATO’s new approach should not expose the system to any more risks.

The GST gap and managing risk behaviours for small business clients

The ATO presented the GST tax gap in the small business market, what is being done to address it, and other GST endemic risks such as food and property. The ATO shared statistics about the small business market.

Based on the Small Business Income Tax Gap Random Enquiry Program, there were 3 indicators of a good business:

  • They have good record-keeping.
  • They are using digital software products.
  • They engage an adviser when they need to.

The ATO is using a range of nudge messaging and acting on third party data to help businesses get things right, including payment plans and ABN cancellation upon exit.

Members were surprised at the number of small businesses with no employees and noted the challenge of how to effectively engage with these businesses.

Integrated compliance – serious fraud and evasion

The ATO provided members with an overview of the work undertaken in Integrated Compliance in relation to GST evasion and fraud. This covered the work within the compliance program to treat high risk evasion behaviour; the Criminal Law Program investigating and prosecuting external fraud; and the System Integrity Program detecting vulnerabilities that pose potential fraud or serious evasion threats and ensuring appropriate risk tolerances, treatments and controls are in place.

A range of media and communication activities are used by the ATO to highlight activities used to identify and prosecute entities that commit GST fraud.

Members asked whether the ATO could prosecute social media influencers promoting GST fraud. The ATO said that it is possible but, like all offences, would require evidence of an offence being committed.

The ATO also works with the telecommunication sector and the Australian Competition and Consumer Commission to detect and prosecute scammers, many of whom are based overseas.

GST performance and key programs for public and multinational businesses

The ATO took members through programs that focus on public and multinational businesses including the Top 100 and Top 1,000 programs. Combined Assurance Reviews for the Top 1,000 program include both income tax and GST assurance. The main barriers to businesses achieving a high rating are governance, correct reporting and systems.

Vision for GST in 2030

The ATO and members spoke about developing new strategies for the prevention of known problems – help and education, advice and guidance, working with partners such as the tax profession and digital service providers, and looking at how to ensure the right controls around registrations and refunds.

The group explored ideas for improving the administration of the GST system built around the following 3 themes:

  • Protect GST – addressing behaviours across specific markets, industries and compliance pillars  
    • a number of compliance-related measures were discussed
     
  • Future-proof GST – address vulnerabilities and complexities in the system, focusing on  
    • cultural changes/changes of mindset
    • systems changes
    • law changes
    • changes to the external environment, such as the rise of cryptocurrency
    • productivity improvement, innovation promotion, digital and data optimisation.
     

Agency updates

Treasury and the ATO provided written updates which were included in the meeting papers provided to members.

Treasury

The key issues covered in the written update were:

  • legislative updates including the  
    • Treasury Laws Amendment (Cost of Living Support and Other Measures) Bill 2022
    • Excise Tariff Amendment (Cost of Living Support) Bill 2022
    • Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021
     
  • recent consultation on  
    • Deductible Gift Recipient category for pastoral care services
    • Consumer Data Right (CDR) rules and standards design paper in the telecommunications sector
    • CDR Sectoral Assessment for the Open Finance Sector – Non-Bank Lending
    • Digital Games Tax Offset
    • distribution guidelines for ancillary funds
    • review of the News Media and Digital Platforms Mandatory Bargaining Code.
     

ATO

Written updates were provided on:

  • Tax time
  • New measures
  • Australian Business Registry Services including Director ID
  • GST discussions at other ATO Stewardship groups
  • GST Public Advice and Guidance priorities
  • GST litigation and GST service standards.

Attendees

Attendees list

Organisation

Member

ATO

Deborah Jenkins (Co-chair), Small Business

ATO

Alex Affleck, Office of the Chief Tax Counsel

ATO

Andrea Wood, Small Business

ATO

Kath Anderson, Individuals and Intermediaries

ATO

Sue Goodear, Small Business

Australian Banking Association

Chris Plakias

Chartered Accountants Australia and New Zealand

Kevin O’Rourke

Coles Finance

George Nikolaou

Corporate Tax Association

Paul Suppree

CPA Australia

Ken Fehily

Digital Service Providers Australia New Zealand

Matthew Prouse

Independent member

Jennee Chan

Property Council of Australia

Andrew Howe (Co-chair)

Small business representative

Amanda Gascoigne

The Tax Institute

Bastian Gasser

Treasury

Geoff Francis

University of New South Wales

Michael Walpole

Guest attendees

Guest attendees list

Organisation

Attendee

ATO

Adrian Preston-Loh, Public Groups and International

ATO

Andrew Watson, Small Business

ATO

Bianca Armytage, ATO Corporate

ATO

David Mendoza, Integrated Compliance

ATO

Dora Jain, Small Business

ATO

Jenny Lin, Private Wealth

ATO

Justine Williams, Small Business

ATO

Kasey Macfarlane, Private Wealth

ATO

Kim Dimmick, Small Business

ATO

Megan Croaker, Public Groups and International

ATO

Rebecca Richards, Public Groups and International

ATO

Sarah Taylor, Integrated Compliance

ATO

Sheridan Harvey, Policy, Analysis and Legislation

ATO

Tony Goding, Small Business

NSW Treasury

Nathan Pringle

SA Treasury

Zov Mazibuko

Treasury

Victoria Henry

Apologies

Apologies list

Organisation

Member

ATO

Emma Tobias, Small Business

Law Council of Australia

Andrew Sommer

QC70180