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Large Business Stewardship Group key messages 20 July 2021

Information about the key topics discussed at the Large Business Stewardship Group meeting held 20 July 2021.

Last updated 2 September 2021

Co-chair opening statement

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

Rebecca welcomed the following new members:

  • Shahzeb Panhwar, Assistant Commissioner, ATO
  • Faith Harako, Assistant Commissioner, ATO
  • Sam Reinhardt, First Assistant Secretary, Treasury

Members were informed that Michael Fenner was an apology.

The following two action items have been progressed and listed as completed as they are tabled on the agenda:

  • ATO’s approach to governance reviews in the top 1,000 program; establishment of a working group to tailor engagement for the pillar
  • timing of questions included in the Reportable Tax Position (RTP) schedule.

Co-chair, Michelle de Niese, recognised the current COVID-19 restrictions across the country and fatigue across the membership group.

Michelle noted the great work completed in 2020 by the Corporate Tax Association (CTA), Treasury and ATO and the continued need for engagement and flexibility to work together in the future. She expressed appreciation to Treasury for early engagement on Pillar 1 and Pillar 2.

Second Commissioner Jeremy Hirschhorn update

Tax time has commenced with close to two million tax returns processed.

The Your Future, Your Super measure, which looks at performance of super funds to support choice options for individuals, commenced on 1 July 2021. From 1 November, the ‘stapled super fund’ reform will take effect which will reduce multiple super accounts for new employees and increase engagement with individuals' super.

Under the Modernising Business Registers program, progress has been made with Director identification and taking over thirty-two Australian Securities and Investment Commission registers.

Work is being progressed on the next phase of the COVID-19 response, extensions, deferrals and dialling down compliance activities, and other stimulus support to States and government through data roles.

Administrators are collaborating through the Forum of Tax Administrators to work practically on the application of Pillar 1 and Pillar 2.

The ATO app has been refreshed. Members are encouraged to utilise it for personal simple tax affairs. The myGovID access via biometrics provides easy access on personal devices.

Tax gap

Jeremy Hirschhorn outlined the ATO current thinking on tax gap.

The first tax gap was published in 2012, being the GST gap based on a ‘top down’ economic measure. Over the last nine years, comprehensive set of gaps have been published which provide the Australian community with a sense of the health of the tax system.

We are currently operating at 96% effectiveness in the large market after compliance activity, which in comparison to other jurisdictions in tracking well.

With beyond tax gap thinking, the ATO is looking at concepts such as the aspirational gap (what the target is for reducing the tax gap), addressable gap performance (a theoretical minimised tax gap), and gap at risk (what would happen to the gap if resources were reduced or withdrawn).

This year, the ATO is working on moving the total economy GST gap into market segments.

The CTA again requested the ATO consider reviewing its commentary on the large business tax gap and provide a qualitative description of the cause of the large corporate tax gap and an estimate of the number of taxpayers causing the gap. The CTA undertook to reiterate its request to the ATO in a formal letter following this meeting.

Action item


Due date

July 2021


Michelle de Niese

Action item details

CTA to provide the ATO with a formal request to consider reviewing its commentary on the large corporate tax gap to ensure it aligns with that provided for other markets

Corporate transparency

Below are key points that were discussed by the members on Corporate Transparency.

Awareness of the Voluntary Tax Transparency Code (VTTC) in the general community is low and VTTC reports are usually accessed by more sophisticated stakeholders. Members are currently looking at whether there is a more effective way to get the message out to the community.

The Board of Taxation has undertaken a VTTC post implementation review and the report is currently with government. The Board of taxation noted:

  • The report has not been released to the public.
  • The report may no longer be current, given global focus shifts to other matters.
  • Due to the changing environment, the VTTC will be reviewed again in 2022.

The publishing of VTTC and tax performance information is generally viewed as a positive measure for public confidence and community perceptions of large corporates.

Taxpayers are able to report on the justified trust performance in their VTTC reports.

Around 190 corporates have signed up to the VTTC; the majority being Australian based corporates. It would be good to see an increase in foreign head companies signing up to VTTC.

Members discussed whether there are improvements the ATO can make to messaging and website content about large market tax performance. The ATO is in the process of simplifying the website in relation to corporate tax transparency.

ATO compliance risks and emerging issues

Tax governance working group

  • The Tax governance for Top 1,000 virtual workshop was held in May.
  • Draft guidance has been provided to the working group for feedback.
    • The focus is on income tax and the intent is to replicate this for GST to ensure alignment.
    • The draft guidance addresses controls and achieving ratings using four different examples of entity types.
    • The ATO will consult with representatives from the Big 4.

RTP and timing of additional questions

ATO has considered the issue raised at the last Large Business Stewardship Group (LBSG) about timing of additional questions in the RTP schedule.

The ATO invited volunteers to form a working group. The ATO would like to explore:

  • optimal time to add questions and what consultation should occur
  • if there is insufficient time to report or apply a new Practical Compliance Guideline should a new category be created that facilitates an option for a taxpayer to report this.

Director identification

ATO is engaging with Top 100 taxpayers to establish myGovID to prevent fraud and ensure the Australian Business Register is up to date.

A myGovID is required for directors of listed and unlisted companies as well as non-resident directors. Processes are in place for registering non-resident directors.

It was noted that fraudulent activity results in account lockdown and restricted account access.

Treasury update

Budget update:

  • Loss carry back and Temporary full expensing have been extended.
  • A consultation paper on the early engagement measure is open for comments until mid-August.

The Corporate Collective Investment Vehicle start date was announced in the Budget and draft legislation and consultation will occur in the next six months.

Corporate residency draft legislation changes are currently under consultation. There will be a parallel consultation for trusts which was outlined in the 2021–22 Budget.

Further information regarding the fringe benefit tax (FBT) announcement in October 2020 is to be taken offline to see if more information has become available.

Consultation is taking place on patent box, Pillar 1 and Pillar 2. Consultation is expected to start soon on double tax agreements.

A review of explanatory memorandum is being undertaken to consider whether the guidance material is fit for purpose. A draft paper is to be shared with the members later this year.

Organisation for Economic Co-operation and Development update

Treasury provided an update on Pillar 1 and Pillar 2.

One hundred and thirty-two countries are signatories on tax challenges of the digitalisation agreement. Agreement consists of two pillars:

  • Pillar 1 refers to allocation of profits to market jurisdictions.
  • Pillar 2 sets out Global minimal tax.

The implementation plan is focusing on implementation by 2023.

There is an exclusion for extractive industries and financial sector.

The thresholds that are in place will be reviewed after seven years of implementation.

Treasury is consulting between now and October to present Australian concerns at the next G20 meeting.

Issues being considered for Pillar 2 include timing issues with capital equipment, tax versus accounting issues, treatment of research and development (R&D) expenses and interaction of tax treaties and interaction with tax rules of other jurisdictions.

The ATO informed members that a team in the ATO is being established to work through Pillar 1 and Pillar 2 administration challenges.

Practical compliance with practical compliance guidelines

Members expressed concerns over the ability to get into low risk areas based on practical compliance guideline (PCG) examples. The discussion focussed specifically on the draft PCGs dealing with intangibles and hybrids.

PCG examples provide risk spectrum indicators – addressing issues identified but not how to move into low risk area.

Members stated that it would be good for the ATO to also focus on examples for low risk circumstances, not just medium and high risk.

The ATO advised that the examples in PCGs are usually formed on the basis of cases that are under review. For the intangibles PCG, confidential consultation on the examples occurred with advisers and taxpayers.

Members expressed concerns that examples used in PCGs are not practical. The ATO agreed to continue to consult with members on the PCGs and to also include corporates in the confidential consultation process.

Legal professional privilege

The ATO provided an update on the Legal Professional Privilege (LPP) protocol.

The ATO supports taxpayers making LPP claims however, we have concerns that some taxpayers and advisors may be abusing LPP and making claims not properly supportable by law. The ATO has previously set out concerns in relation to LPP claims. See Attachment A – Supplementary information in National Tax Liaison Group (NTLG) key messages 30 November 2018.

A draft LPP Protocol will soon be released for consultation with an NTLG sub-working group. The ATO aims to finalise the protocol later this year.

The ATO would also like to consult with the LBSG. Members were invited to provide feedback on the LPP Protocol, when released, especially in relation to the processes and the level of information that can be provided.

Board of Taxation

The Board of Taxation provided the following updates:

  • R&D announcement – Dual administration consultation dates are available on its website.
  • Capital gains tax rollover work – Advice has been provided to government and no further information is available at this stage.
  • The Board will be seeking submissions on its website shortly on a post implementation review on importation of GST low value goods, focusing on international comparison.

Other business

The ATO advised members that there are no blanket extensions for lodgment of returns, however, extensions may be available on a case by case basis. The ATO has allowed an extension to lodgment of Part A of the International dealings schedule due to timing of software releases and the number of validation errors we are seeing as a result.

Action Differentiation Framework

  • CEO letters – The language has been changed to correlate with partner influencing and assurance on risk rating.
  • External website guidance will be updated with a move away from the risk differentiation framework towards the action differentiation, and will be sent to heads of tax for review prior to publishing them in December 2021.

New Investment Engagement Service

The New Investment Engagement Service commenced on 1 July. The service will provide early engagement for new business investments greater than $250 million. Further New Investment Engagement Service guidance is available on


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

Australian Super

Bevan Grace

BHP Billiton

Premila Roe


Irene Filippone

Board of Taxation

Kathryn Davy

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


Kelly Wong


Megan Williams

National Australia Bank

Steve Southon

Seek Limited

Josie Guastalegname


Ben Guthleben


Maryanne Mrakovcic


Sam Reinhardt

Guest attendees

Guest list




Belinda Darling, Private Wealth


Hector Thompson, Public Groups and International


Jeremy Hirschhorn, Client Engagement Group


Judy Morris, Public Groups and International


Kathrina Weinhonig, Enterprise Strategy and Design


Reveka Kotsiaris, Enterprise Strategy and Design


Tien Phan, Public Groups and International


Apologies list



Adelaide Brighton Cement

Mimi Ferguson

Australian Petroleum Production and Exploration Association

Michael Fenner