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Large Business Stewardship Group key messages 14 October 2021

Information about the key topics discussed at the Large Business Stewardship Group meeting held on 14 October 2021.

Last updated 15 December 2021

Welcome and apologies

The meeting co-chair, Rebecca Saint, opened the meeting and welcomed all members and participants to the meeting and acknowledged country.

Given recent changes to membership, all attendees introduced themselves.

Rebecca acknowledged the contributions of members exiting the group after today’s meeting:

  • Ben Guthleben, Director Taxation, Telstra
  • Therese Stephenson, Origin Energy
  • Josie Guastalegname, Group Head of Tax, SEEK Limited
  • Vivian Chang, Partner Ashurst, representing Law Council of Australia.

Rebecca welcomed Christina Sahyoun the Chief Executive Officer of the Board of Taxation and Abs Osseiran who is representing the Australian Retailers Association, who have joined the group.

Co-chair Michelle de Niese welcomed the group and thanked the ATO for addressing the group’s suggestions for the agenda setting process. Michelle encouraged feedback from all members, especially outgoing Large Business Stewardship Group (LBSG) members.

Justified trust governance and GST reviews

The ATO supplied an overview of the Justified trust program for the Top 100 and Top 1,000.

The ATO thanked members for raising this item and the chance to discuss issues that can provide us with insights on the experience that will be helpful for both taxpayers and our staff to understand where tensions may be and can be used to refine the program.

GST reviews

Assurance ratings for income tax and GST will remain separate. The main reason is that the income tax consolidated group and GST is different. We can still leverage off information provided in both products.

Top 1,000

In a Streamlined assurance review, we will ask for more specific information on GST. It is not just for governance, it is for the other pillars. We do come back and ask a few questions as we want to allow taxpayers the opportunity to show Board-level control 4 (BLC 4) where we look to see if the organisation has put a plan together that the testing will occur.

Members noted that for the top up approach for the review, it would be good to see excise included as there is good governance already. There is an overlap between GST and excise, so it would be more efficient for taxpayers to be able to include all three taxes together. The ATO agreed to explore this and if there is a scope to tailor to the taxpayer’s circumstances.

Members asked about periodic internal testing and if it needed to be independent for GST. The ATO advised, the independence does not need to be external, it can be an internal audit review however, it was noted some companies get an accounting firm to prepare BAS and the tax team provides input. When it comes to governance and testing controls, if the control owner is not the tax function, the ATO considers this to be independent.

Independence is important as it provides confidence of the robustness of governance. Members raised alignment of timing to their respective internal audit programs, which is usually three to five years. The ATO accepts the framework provided by internal audit. The ATO clarified that we are not asking for annual periodic control testing of GST and income tax, given that the testing plan is not normally formulated until internal audit does testing. The ATO expects the company to commit that they will do some testing, or have a plan in place.

The independent third-party testing will address this and is close to being published.

Taxpayer experience with GST review

A Top 100 representative shared their company’s experience with the GST reviews. Key points were:

  • Since the review commenced in July 2020 there has been three requests for information (RFIs) and two GST Analytical tool (GAT) exercises.
  • There have been workshops and process walk-throughs on systems and processes including BAS, and a walk-through of a significant joint venture.
  • Clarification on matters was sought through emails and ad hoc meetings by both parties.
  • There have been 300 pieces of substantive evidence to date.
  • There has been an impact on resourcing as engaging over 50 employees to be able to answer RFIs across 20 different functions in the company.
  • The review has provided insights and been a good learning process. Things that can be improved include:
    • The governance from GST perspective is new and sometimes there can be misalignment between income tax and GST.
    • You cannot assume that income tax governance rating will carry across to GST.
    • Need to ensure that there is a framework for GST with the right controls that is separate to income tax.
    • GST not in cycle for internal audit function and this will limit the stage 2 rating as this will be done in 2 years’ time. The Taxpayer to provide an undertaking to do the GST internal audit at future time and put together a terms of reference before the risk review is completed.
    • Having a lot of joint ventures, the GAT approach presented challenges and there were lots of discussion with the ATO on this.
    • A hybrid approach is being given for joint ventures and applying a bottom-up approach instead.
    • It is very resource intensive as rather than relying on financials, they were relying on billing statements for joint venture and reconciling to GST, billing cycle on heavily audited docs. The financials were provided to the ATO who are completing the GAT. For Top ,1000 taxpayers ATO seeks to populate the GAT with information that the ATO has already obtained and provide to the taxpayer.
  • The ATO was understanding of the resource constraints and supportive of timeframes.

The ATO acknowledged there is scope to consider if, in some circumstances, a provisional rating could be provided. This has also come up in income tax as well, so the ATO will also consider this for GST as well to ensure we are consistent in our processes on how we’re using provisional ratings.

The GAT is intended to be a top-down approach. The ATO does not seek to understand each transition, rather the key variances and we are working with taxpayers about low-resolution GAT approach. This is a learning process for both the ATO and the taxpayer. If taxpayers are spending a lot of time working on the GAT, reach out to the ATO team to discuss where appropriate assumptions can be made.



Treasury is negotiating new tax treaties with Luxembourg and Iceland. The current tax treaty with India is under review. Next year, Treasury is looking to negotiate new tax treaties with Greece, Portugal and Slovenia. Treasury is undertaking public consultations on the outcomes the Australian Government should seek to achieve in treaty negotiations.

Treasury outlined that we have 45 treaties in place and the treaty program is a decision for Government.

Updates on measures

Treasury noted that consultation has concluded on the exposure draft legislation for the employee share scheme measure and the corporate collective investment vehicle measure, and on the discussion paper for the patent box measure.

Treasury will shortly begin consultation on the exposure draft legislation for the self-assessment of the tax effective life of intangible assets. It is working with the ATO to prepare a consultation paper on the corporate residency measure.

Treasury noted that the Bill to increase tax transparency within the sharing economy was referred to a Senate Committee.

Review of new legislation guidance material

The Treasury and ATO are currently doing a review of explanatory memorandums and new legislation guidance material. A joint Treasury/ATO working group is looking at the purpose of guidance material, how effective the materials are, and how they should be developed. Targeted consultation is being conducted by the ATO and Treasury through the National Tax Liaison Group (NTLG).

Legislative updates

Treasury noted that:

  • Three tax measures are before the House of Representatives, including the winding up of the Superpanopticon Complaints Tribunal measure.
  • Five tax measures are before the Senate, including amendments to loss carry back and temporary full expensing, and a measure to remove the tax on refunds of large-scale generation certificate shortfall charges.

A member asked about the status of taxation of financial arrangements for hedging and foreign exchange deregulation. Treasury responded that this is in the pipeline, and that there are a couple of parts to this measure.


Treasury provided an update on Pillar 1 and Pillar 2. Notably, on 8 October, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting released a statement that announced a way forward to address the tax challenges of digitalisation. One hundred and thirty-six out of 140 Inclusive Framework member jurisdictions have signed up, including all G20 and OECD countries. The key items that were agreed to in the October statement are:

  • Pillar 1 – reallocation of taxing rights to market jurisdictions has been settled at 25% of ‘residual profits’ from in-scope multinational enterprises.
  • Pillar 2 – settled on a 15% global minimum tax rate.

A detailed implementation plan was released aiming for an ambitious start date of 2023 for both Pillars. At the OECD, countries are now working on a multilateral convention for implementation of Pillar 1 together with model rules to support domestic legislation. A multilateral instrument is also being developed to implement Pillar 2 subject to tax rules alongside model rules for Pillar 2 global minimum tax.

Treasury is working closely with the ATO and has put forward the need for the OECD to work in close consultation with tax administrations and business to make implementation as easy as possible. The ATO noted the Forum on Tax Administration will hold a plenary session in December, with a possibility this can be held in person.

Board of Taxation

Christina Sahyoun from Board of Taxation (BoT) provided an update on three formal reviews currently under way.

Dual administration of Research and Development (R&D) tax incentive

  • Completed all five stakeholder consultation sessions and received a number of submissions, also having discussions with New Zealand and Canada to understand learnings
  • Working through the feedback and issues and compiling this to include in the report
  • On track to provide the report to Government by 30 November this year.

GST on low value imported goods

  • Post-implementation review of new legislation that was enacted a few years ago
  • Mid-way through, completed public consultations
  • Final report is due by 17 December 2021.

CGT rollover review

Government has requested that the BoT identify and evaluate opportunities to rationalise rollover provisions into a more streamlined set of rules. The BoT is in the process of preparing the final report for government.

Tax Transparency

One hundred and ninety-five taxpayers had signed up to the voluntary tax transparency code. Of those, all but six have published their first report.

ATO compliance risks and emerging issues

The ATO provided an overview of emerging issues.

R&D in software technology

There have been two workshops so far, bringing together AusIndustry, the ATO and relevant software players. This is to understand the records kept by business. The aim is to develop guidance on record keeping that aligns with the software industry and the natural process. The form of the guidance is still to be considered. The focus is on record keeping. No deeper changes are scheduled.

Loss carry back

A few errors have come up in doubling the tax effect. The ATO is working on providing guidance and clarity. Some tools will be issued to help with getting claims completed correctly. Members were asked to get in touch if they become aware of any problems.

Treaty shopping arrangements

These are not new, but the timing is right to engage differently, particularly with the new Multilateral instrument. Some cases in the dispute pipeline are coming through the next actions case pool, the ATO will get messaging out on what we are seeing. We are currently considering the format of this and whether it has a flow on impact to the Reportable tax position (RTP) schedule, and will undertake consultation.

Next actions

Concerns in next actions cases include transfer pricing cases, Intellectual Property migration and intangibles. There will be clear guidance at the end of the Top 1,000 reviews on things that taxpayers can do and the next actions cases will be more focused on certain issues.

Members raised concerns that communication needs to be clearer on the following aspects of next actions:

  • Whether next actions is more a risk concept than an assurance process.
  • Clarity on timeframes for the next actions work including how much time ATO gives between a review and next actions.
  • How many high risk issues are going to next actions and how many issues are going to next actions because the ATO has not had time to review it in the Top 1,000 review.

ATO advised that the Next actions program can take into account what other compliance work has been undertaken, and a Top 1,000 review will happen typically every four years. Feedback was sort from members on this to discuss further at the next meeting.

Top 1,000 Governance guide

The ATO thanked all LBSG members who were part of the working group. The guide has been updated and is currently going through final reviews and will be published soon. The guide will look a bit different, expanding on the context and linking to previous guidance. The guide covers income tax for Top 1,000. GST will be a separate document.

There was some concern the guide would be used as a checklist of minimum standards. The ATO reiterated that the examples are for illustrative purposes only and clarified where the ATO would accept global tax policy having regard to the taxpayer’s size in Australia.

RTP schedule

The ATO shared outcomes from the RTP working group consultation sessions. Some concerns raised at these workshops include:

  • Limited time for taxpayers to self-assess and therefore disclose on the RTP schedule their risk rating under Practical Compliance Guidelines (PCGs) published in the final six months of their income year.
  • Timing of consultation on changes for RTP schedule and instructions.

In response, the ATO has proposed the following changes to address the concerns:

  • A new subcategory is proposed to be introduced for PCGs in the first year they appear on the schedule – You had insufficient time to apply the PCG to your entity's arrangements because the date of the final PCG publication date fell in the second half of your entity's income year, however you will apply and report your entity's self-assessed rating in the following income year..
  • The ATO will bring forward some timing on consultation and introduce two consultation phases:
    • The preliminary consultation in May will provide advance notice on proposed questions on any new public advice and guidance products published to 31 March and changes to other aspects of the schedule and instructions, for example, to lodgment criteria, Category A and B, additional examples or definition.
    • The second consultation in November will be on the final instructions or the final RTP schedule, taking all feedback from May and going through all final recommendations, as preferred by members of the working group.
  • Continually assessing the taxpayer questions.
  • Tightening of language to ensure there is no confusion and no unintended interpretation of questions.

Members welcomed the changes. The changes will be introduced next month.

Action differentiation framework

The action differentiation framework (ADF) is our approach to how we engage with public and multinational businesses. We have been using this framework internally for the last couple of years across the public and multinational business population. We are now starting to tell the Top 100 what their ADF rating is as part of the annual letter to the CEO. This will replace risk differentiation framework ratings.

The ATO updated members on the ADF and Top 100 categorisation.

The taxpayer experience with ADF will be tailored by size, choice of behaviours, evidence of tax affairs, level of risk and, most importantly, the transparency with which taxpayers engage with the ATO.

Under the ADF, taxpayers will be categorised as:

  • Partnering taxpayers engage with us, proactively advise us of issues. High assurance rating, lower risk level relative to clients in population. ATO is a service provider.
  • Encouraging taxpayers are medium assurance taxpayers. There are tax issues however there is a level of co-operation to resolve these tax issues. May have more complex risks.
  • Influencing taxpayers are low assurance taxpayers. High risk and high level of compliance work and lack of transparency, difficulties getting information from the taxpayer. In this category, there will be more audits and there will be use of formal powers to obtain information where required.

Top 100 moderation letters will be tailored using the ADF principles. ADF content on the external website has been updated to reflect this.

The letters are well advanced; tax managers will be able to see them for factual clarification.

Members asked how the ADF applies to income tax and GST if you are one level for income tax and another for GST, how this will impact overall assurance rating. It was noted that this has not been an issue so far however, because of the pace of the GST assurance review, we may not have alignment. The ATO, therefore, needs to be pragmatic on how to move forward, noting income tax is key to the taxpayer engagement therefore we will use this as the guide.

The ADF is used to set the principles behind how we manage engagement with the public and multinational population and how our staff engage taxpayers. Further information about the ADF is available on

Members noted that the terminology around partnering did not quite specify how the ATO will commit to a partnering experience. It was raised that many taxpayers are feeling like they have been through so many reviews already therefore, to be meaningful, it would be good to better differentiate the impact of that service delivery aspect for a taxpayer in the partnering category.

New Investment Engagement Service

The ATO provided an overview of the New Investment Engagement Service (NIES) work program.

The new service offering NIES started this financial year. NIES is designed to address the concern that uncertainty of tax outcomes from investments is preventing business investing in Australia. It is a taxpayer-led engagement – eligible investors can contact NIES and access a team of tax specialists who will provide timely advice to address tax certainty.

While this is investor-led, the ATO does not ask for more information, such as an RFI. Investors inform the ATO of the area of uncertainty and the ATO will advise based on the information given. The ATO will put the ATO specialist in the room to answer questions and the taxpayer can get a contemporaneous view.

The ATO will verify the transaction after it has been entered into. There is an obligation for the investor to advise if there is a material change. As part of this service, the ATO is providing information to the investor on the type of things that we will look for in the Justified Trust program. There is a soft threshold of $250 million. We will be looking at this threshold and comparing it to the transactions occurring in the Foreign Investment Review Board.

To date, three official investors are going through the process. We may see six or so before the end of the year.

The link opens in a new window mailbox is available if taxpayers want to contact the team. ATO is responding within two weeks. Taxpayers who engage NIES will receive written correspondence.

We also deal with Merger and Acquisition transactions through the early engagement process through our Advice and Guidance teams and Top 100 teams. Taxpayers can email if they would like to contact the Advice and Guidance team to request early engagement. We encourage businesses and advisers to continue to access these channels.

Members noted that given this initiative is a government announcement, it would be worth making the NIES more inviting and palatable to new investment and it should be marketed like that.

Draft Taxation Ruling TR 2021/D4

Members wanted to better understand the ATO’s view on replacing the old ruling and the consultation process.

The old ruling is 28 years old and a new ruling has been drafted. TR 2021/D4 Income tax: royalties – character of receipts in respect of software was published on 25 June 2021. It provides the ATO’s view on the circumstances in which amounts for licensing and distribution of software will be royalties under the income tax provisions.

A large number of submissions has been received and there have been several discussions with stakeholders. The ATO noted the reasonable amount of criticism, however, also noted the position indicated in the draft ruling is a position taxpayers have been applying before 2021.

The challenge for the ATO has been the concept of simple use, as described in TR 93/12 Income tax: computer software. The concept of simple use has changed since 1993. Intangible asset did not warrant a payment or withholding tax, we needed to flag to market for continued reliance on TR 93/12 Income tax: computer software.

Members discussed if a draft ruling was the right way to approach the proposed changes given the flow-on complications for business and raised that an options paper could help to allay concerns. The ATO will consider our consultation processes before issuing a draft public ruling.

Legal professional privilege (LPP) protocol

The ATO has commenced consultation on the draft LPP protocol and a meeting with the LBSG sub-group was held on 20 October. Members with any feedback or input, either as taxpayers putting in LPP claims or as advisers assisting them, were invited to provide written feedback by the end of October. The ATO will collate all feedback into a compendium.

The ATO also met with the NTLG sub-group, other consultation forums, key law firms and the Big 5 firms as part of the consultation. The LPP protocol has brought together best practices of an LPP claim.

Other business

Each year, the ATO reviews key achievements of each stewardship group to share publicly. The LBSG secretariat will be in touch with members for their contributions.

The forward work plan for 2022 will be planned with the LBSG secretariat calling for member contributions.

The LBSG discussed was how best to share key messages from the group. Members proposed key messages from each LBSG meeting be included in Business bulletins which the ATO agreed to explore, including which papers could be shared.

Co-chairs farewelled exiting members and thanked them once more for their contributions.


Attendees list




Rebecca Saint (Co-chair), Public Groups and International


Faith Harako, Public Groups and International


Kelly Coleiro (Secretariat), Public Groups and International


Shahzeb Panhwar, Public Groups and International

Adelaide Brighton Cement

Mimi Ferguson

Australian Petroleum Production and Exploration Association

Michael Fenner

Australian Retailers Association

Abs Osseiran

Australian Super

Bevan Grace

Big4 Representative

Andrew Woollard

BHP Billiton

Premila Roe


Irene Filippone

Board of Taxation

Christina Sahyoun

Business Council of Australia

Pero Stojanovski

Corporate Tax Association

Michelle de Niese (Co-chair)

Energy & Resources

Brian Purdy

Group of 100

Marc Lewis

Law Council of Australia

Vivian Chang


Megan Williams

National Australia Bank

Steve Southon

Seek Limited

Josie Guastalegname


Ben Guthleben


Maryanne Mrakovcic


Sam Reinhardt

Guest attendees

Guest list




Alex Affleck, Tax Counsel Network


Belinda Darling, Public Groups and International


Christopher Ferguson, Public Groups and International


Judy Morris, Public Groups and International


Rebecca McGirr, Public Groups and International


Stan Spasojevic, Public Groups and International


Tien Phan, Public Groups and International


Apologies list




Kelly Wong