GST Stewardship Group key messages 16 November 2022

Welcome and introductions

GST Stewardship Group co-chair Will Day welcomed everyone and talked about recent leadership changes across the ATO. He went through the action items from the last meeting, all of which have been completed. External co-chair Andrew Howe also welcomed people to the meeting.

ATO and GST digital strategies

The ATO provided members with an overview of the ATO digital strategy which was endorsed in August 2022 and the accompanying GST digital strategy.

The strategies are focused on digitalisation, not just digitisation. Digitisation is the process of transforming information from physical to digital, whereas digitalisation refers to improving holistically and transforming to be fully digital end-to-end, maximising the use of digital identity, data, and natural systems.

The ATO digital strategy highlights what digital makes possible for the next 3 years and beyond, with a vision for the ATO to be a leading digital business that shapes trusted and effective digital services and ecosystems.

The GST digital strategy describes the direction the ATO will undertake to deliver contemporary and future-focused digital services through natural systems for GST participants.

The ATO is working to understand the common building blocks to put in place to develop a seamless digital economy with closer to real-time reporting and payments using natural systems.

Members were keen to be involved in further consultation and input into the development of the GST digital strategy. Feedback and insights included:

• They see real benefits to digitalisation, not just for improving tax performance, but also for the client and tax adviser experience and efficiency for GST administration and integrity of the system.
• Services need to be designed for all users in the system, including financial advisers and lawyers, who may have clients using the ATO’s digital services, but are not able to utilise digital services themselves.
• The ATO digital strategy needs to ensure a consistent user experience. It must cater for infrequent and sporadic users so when they do interact it is familiar and easy for them to use.
• The ATO is working to understand the common building blocks to put into place to develop a seamless digital economy with real-time payments.
• Co-chair Will Day summarised the discussion
  • There is support for these strategies and the ATO needs to design for the variety of users in the system.
  • The ATO will continue to work with members in the coming year to seek their input as this work progresses.
   

Improve small business tax performance

One of our key focus areas in the ATO Corporate Plan 2022–23 is Improve small business tax performance and the ATO’s progression to tax administration 3.0 where taxable events, reporting and payment are better integrated. The ATO asked members to consider the 3 main focus areas as the ATO heads down a digital first path:

• What are the natural systems to support a real-time GST reporting solution?
• What could be the definition of real-time, suitable to Australian conditions?
• What are the shifts required, such as clients needing to be digital and subscribed to eInvoicing?

Feedback and insights from members included:

• The ATO needs to consider making it easier for businesses to correct any mistakes they may have made when uploading data without imposing penalties.
• Systems will need to be designed for simplicity, have scope to cover abnormal transactions and also contain safeguards to stop people doing the wrong thing.

Community and industry insights

Members provided feedback and insights on a range of topics including:

• concern about Australian Business Number (ABN) and GST registrations being cancelled if they have not been used for some time – members will provide information to enable the ATO to work through these issues
• effective engagement on GST matters through other ATO external forums and Stewardship groups – members talked about the challenges of ensuring the right feedback is going to the right forum at the right time including
  • members of other committees may not have the knowledge to understand issues from a GST perspective
  • there are specific GST-related factors that GST Stewardship Group members may want to focus on
  • justified trust operates differently for GST than it does for income tax
  • there are different approaches to justified trust in the public groups and private wealth client experiences.
   
• businesses that are resource and GST knowledge-constrained are making GST-related mistakes – these mistakes are due to a combination of system complexity and a lack of trained resources.

Treasury and ATO

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

Treasury

Key issues covered included:

• legislation introduced since the 15 September 2022 GST Stewardship Group update
• recent consultation on
  • franked distributions and capital raising
  • addressing the tax challenges arising from the digitalisation of the economy
  • strengthening the ABN system
   
• specific Budget 2022–23 measures.

ATO

Updates included:

• digitalisation and tax administration 3.0
• eInvoicing update
• Australian Business Registry Services including director ID
• ATO tax gap estimates
• GST at other ATO Stewardship groups
• GST public advice and guidance priorities
• GST litigation and service commitments
• GST communications.

Operation Protego

The ATO provided members with an update on recent developments in Operation Protego, formed by the ATO to disrupt and address individuals that were not genuine businesses and seeking to exploit the GST refund system.

Most people identified were conducting this fraud in their own names, rather than on behalf of someone else.

Members noted that ATO campaigns on social media platforms such as TikTok may be useful to reach the people involved in this fraud and that tax agents are already putting messages onto TikTok to warn about this type of fraud.

Members discussed a range of options that could be considered by the ATO to limit the impact of this type of fraud.

Lodge and Pay

In 2022–23, the ATO is centred on minimising new growth in collectable debt and reducing our backlog through normalising our core strategies and focusing on targeted strategies.

The resumption of firmer and stronger actions and implementation of targeted strategies is working and resulting in higher year-to-date GST collections than forecasted.

While the ATO has implemented an adaptive collection strategy to deal with significant GST fraud debt related to Operation Protego, recoverability prospects remain low and will continue to have an impact on GST collectable debt in 2022–23.

The ATO is driving innovation and efficiency in our lodgment and payment pipeline.

We have issued formal intent notices to approximately 10% of 30,000 businesses who meet the criteria for the disclosure of business tax debts. Around one in 3 of these businesses no longer satisfy the conditions for disclosure of their business tax debt because they have established payment plans.

GST Stewardship Group wrap-up

Members provided their feedback on the group’s key achievements in 2022 and suggested ideas for the 2023 forward work program.

Feedback from members on key achievements in 2022 included:

• Pre-meeting information is presented professionally.
• Information is clear and actionable.
• Having 3 formal meetings a year is better than 2.
• Face-to-face discussions are better than videoconferencing. It is good to be able to talk openly, and express honest opinions. The group is very cohesive.
• Voices and concerns of members are being heard and acted on with a view to genuinely improving the GST system.
• The willingness of senior ATO officers to come to meetings is appreciated.
• Smaller offline discussions work well and deep dives on particular topics are also very good.
• Workshopping the 2030 GST vision was useful and practical.

Ideas from members for the 2023 forward work program included:

• Deep dives into topics such as the ATO’s GST digitalisation program and fraud prevention would be useful.
• It makes sense for the GST Stewardship Group to play a key part in helping to develop the ATO’s GST digital strategy.
• The group could work through the experiences of new-to-business clients, what they must do and their interactions with the system when they register for GST in order to help improve the process for them.
• Updates on the Tax Avoidance Task Force and the work the ATO is doing in the shadow economy space and discussion on the disaggregated tax gap by sector would be beneficial.
• The ATO could program in more meetings with members on specific topics.
• The ATO could more effectively utilise member organisations to improve the operation of the GST system.

Other business

The ATO will undertake a review of the GST Stewardship Group membership in 2023.

Attendees

Attendees list

Organisation	Member
ATO	Will Day (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	Rowan Fox, Small Business
Chartered Accountants Australia and New Zealand	Kevin O’Rourke
Coles Finance	George Nikolaou
CPA Australia	Ken Fehily
Independent member	Jennee Chan
Law Council of Australia	Andrew Sommer
Property Council of Australia	Andrew Howe (Co-chair)
Small business representative	Amanda Gascoigne
The Tax Institute	Bastian Gasser
University of New South Wales	Michael Walpole

Guest attendees

Apologies list

Organisation	Attendee
ATO	Adrian Loh, Public Groups and International
ATO	Andrew Watson, Small Business
ATO	Bianca Armytage, ATO Corporate
ATO	Carmel Rugolino, Enterprise Solutions and Technology
ATO	Claire O'Neil, Lodge and Pay
ATO	Elissa Walker, Enterprise Solutions and Technology
ATO	Ian Ayrton, Small Business
ATO	Jenny Lin, Private Wealth
ATO	Kim Dimmick, Small Business
ATO	Melissa Spurge, Public Groups and International
ATO	Michael Morton, Small Business
ATO	Sheridan Harvey, Policy, Analysis and Legislation
ATO	Tanya O'Çallaghan, Small Business
ATO	Vivek Chaudhary, Lodge and Pay
Treasury	Victoria Henry
VIC Treasury	Georgina Grant

Apology

Apologies list

Organisation	Member
ATO	David Mendoza, Small Business
Australian Banking Association	Chris Plakias
Corporate Tax Association	Paul Suppree
Digital Service Providers Australia New Zealand	Matthew Prouse
Treasury	Geoff Francis

Information about the key topics discussed at the GST Stewardship Group meeting 16 November 2022.