Co-chair update
The Australian Taxation Office (ATO) gave an overview of practices for government during a caretaker period. Members discussed how the caretaker conventions will impact ATO public advice and guidance, consultations, Treasury and the Board of Taxation. Treasury advised members on the process for announced measures after an election is called.
Public country-by-country reporting
The ATO updated members on the implementation of the Public country-by-country (CBC) reporting regime. The update covered the progress of web content, draft law administration practice statement, the ATO’s proposed registration process, lodgment of the approved form, consultation, exemptions and external communication.
Members sought clarification on the registration process, the approved form and the practical aspects of the lodgment process. They also discussed consequences of not lodging, communications campaigns overseas, and comparisons with the European Union (EU) regime.
The ATO noted member feedback requesting clarification on the ATO's approach to registering for a Public CBC role, including whether such an approach has been adopted in the EU.
ATO service delivery
The ATO updated members on the large market processing picture, including volumes on hand and the current position leading up to Tax Time 2025. There is a focus on resource allocation and the implementation of business improvement strategies which has reduced activities on hand across all processing work. The ATO also discussed aged work for the large market and tax reclaim work types.
The ATO clarified channels available for large businesses and representatives through the Large Service Team (LST), provided insights on requests received by LST, and outlined the focus for the 2024–25 financial year.
The ATO also updated members on its response to feedback from the Corporate Tax Association in July 2024, including current and proposed improvements. The CTA noted some further feedback was sent to the ATO prior to the meeting, which the ATO was still yet to consider.
Pillar Two
The ATO updated members on administrative readiness for Pillar Two, including system readiness, compliance approach, public advice and guidance (PAG), law design, stakeholder consultation and international and external environmental developments.
The primary legislation received Royal Assent in late 2024 and the ATO is continuing to work with Treasury on the subordinate legislation. The system build has commenced and the ATO is engaging with digital service providers. A special purpose working group has been established to seek feedback on the implementation of the project.
Members asked about the ATO’s monitoring of overseas administrations that may impact Pillar Two and sought clarification on the next consultation session topic.
Justified trust
The ATO updated members on the implementation of the Supplementary annual GST return including the rollout of the communication strategy and progress of the pilot program. The ATO is implementing the new annual return for the 2024–25 financial year, for those large businesses who have received a Top 100 or Top 1,000 GST assurance review. The return is being introduced to better tailor engagement with these taxpayers on GST.
The ATO has directly notified all taxpayers required to lodge the return for the 2024–25 financial year. A small number of taxpayers have been asked to respond to the return questions prior to upcoming GST reviews as part of a pilot program. The intention of the pilot is to gain insights on the understandability and functionality of the questions and to inform the approach going forward.
Members discussed the time taken to complete the GST analytical tool (GAT) and what it means for data testing if it is completed effectively. Members also commented on the additional burden of the questionnaire on the GAT. The ATO clarified that the GAT is not just required for this return, it is part of the expectation for appropriate tax risk management and governance.
The ATO will provide an update at the next meeting.
Thin capitalisation
The ATO updated members on its compliance approach to the new thin capitalisation rules and the status of public advice and guidance products being developed.
A new reportable tax position (RTP) question was added to the RTP schedule and instructions for 2025. This requires the disclosure of restructures in response to the debt deduction creation rules (DDCR). The DDCR were enacted on 8 April 2024 to apply to income years starting on or after 1 July 2024. The ATO confirmed the RTP question only applies to taxpayers who have undertaken a restructure in response to the DDCR. Top 100 and Top 1,000 justified trust reviews will consider the application of the new thin capitalisation rules.
The ATO released Draft Practical Compliance Guideline PCG 2024/D3 Restructures and the thin capitalisation and debt deduction creation rules for public consultation on 9 October 2024. Draft Taxation Ruling TR 2024/D3 Income tax: aspects of the third party debt test in Subdivision 820-EAB of the Income Tax Assessment Act 1997 was released on 4 December 2024. Draft Schedules 3 and 4 to PCG 2024/D3 for were also released for public consultation in conjunction with the draft taxation ruling. Stakeholder consultation occurred over December 2024, January 2025 and February 2025. The ATO is reviewing submissions, and an internal working group has been established to consider the matters raised.
Members commented on the unusual practice of including a question on the RTP schedule based on draft guidance. The ATO clarified it is due to the unique circumstances that applied in this situation.
Members also sought clarification on the timing of the application of the DDCR in relation to restructures, and whether submissions on the draft taxation ruling will be made public. The ATO confirmed that a compendium summarising the submissions will accompany the final ruling, in line with ordinary practice.
Compliance risk and emerging issues
Medium public and multinational business engagement program
The program focuses on taxpayers who are part of an economic group controlled by a public or multinational entity with a combined Australian turnover of less than $250 million. The program aims to support these taxpayers to meet their tax obligations and resolve any high risk or emerging issues.
Offshore payments of interest, dividends and royalties – withholding tax obligations
The ATO will continue to engage with taxpayers who have paid interest, dividends or royalties to foreign residents but may not have complied with their withholding tax (WHT) obligations. A Business Bulletin article published on 1 August 2024 provided guidance on WHT obligations. Additionally, web guidance on the Medium public and multinational business engagement program highlights the incorrect payment of WHT as an area of focus for the ATO.
Base rate entity status
The ATO continues to engage with taxpayers who have disclosed in their tax returns that they are a base rate entity (BRE) and have accessed a lower company tax rate they are not entitled to. The ATO is observing a downward trend in the occurrence of inappropriate disclosure of BRE status but continues to identify taxpayers who do not re-assess eligibility each income year as required. The ATO continues to see taxpayers not applying the aggregated turnover rules correctly. For example, taxpayers do not include the annual turnover of any offshore business entities that are affiliated or connected to them. The ATO encourages taxpayers to make amendments or voluntary disclosures to correct BRE status errors.
GST product classification
Supplies of food of a kind marketed as a prepared meal
The updated Draft Goods and Services Tax Determination GSTD 2024/D3 Supplies of food of a kind marketed as a prepared meal was released on Thursday 16 October 2024. The ATO is currently considering the feedback received. The expected completion date will be published to Advice under development – GST issues once confirmed.
Supplies of sunscreen
The ATO released Draft Goods and Services Tax Determination GSTD 2024/D2 Supplies of sunscreen on 14 August 2024. The ATO is reviewing the feedback received. The expected completion date will be published to Advice under development – GST issues once confirmed.
Updated PRRT compliance program
The petroleum resource rent (PRRT) payable population has more than doubled since the introduction of the PRRT deductions cap from 1 July 2023. The ATO has made changes to its approach to PRRT compliance in anticipation of the population increase.
Key changes include differentiating engagements based on a taxpayer’s impact on the PRRT system. Additionally, whilst the highest impact taxpayers will continue to be reviewed annually, the frequency and intensity of engagement will depend on the ATO’s assessment of their level of risk.
The ATO will contact taxpayers in the highest impact economic groups shortly. For more information, email PRRT@ato.gov.au.
LCMSF Version 4.0 consultation
On 24 December 2024, the ATO notified stakeholders that the Local file instructions 2025 and message structure table detailed design were available on the ATO website.
The ATO received additional feedback from some stakeholders in response to the updated instructions and continues to assess whether minor instructional edits or additional instructional examples are required.
On 2 January 2025, ATO systems began accepting Version 4.0 lodgments.
Stakeholders can submit any queries or issues about Version 4.0 using the dedicated mailbox LCMSFversion4@ato.gov.au.
Treasury
Treasury updated members on international taxation and the monitoring of overseas developments, and the next meeting for the United Nations Framework Convention on International Tax Cooperation process scheduled in August 2025.
Submissions on the Review of tax regulator secrecy exceptions consultation paper have closed, but Treasury may accept late submissions. Members raised concerns about the proposed exceptions.
Board of Taxation
The Board of Taxation (the Board) met in February. The meeting included a stakeholder event with professional and peak bodies, with the following challenges and opportunities raised:
- the importance of consultation on new policy development
- complexity and cohesiveness of the tax system
- areas where the compliance burden is not commensurate to revenue or integrity risks
- the importance of evidenced based Board reports.
The Board updated members on the review and redesign of the Voluntary Tax Transparency Code (the Code), which was developed in 2016. After extensive consultation, the Board has finalised the phase one review. The Board provided advice and recommendations to the Treasurer in December 2024.
The Code continues to play an important and positive role but should be redefined in accordance with the current evolving tax transparency landscape.
The Board has commenced the design phase to update and simplify the Code to align with developments in global tax transparency. The design phase involves reviewing objectives, comparing and aligning with global reporting standards and drafting a model template. The Board anticipates finalisation in the second half of 2025.
The next Board meeting is scheduled for May.
LBSG charter
The ATO shared the updated Large Business Stewardship Group charter following its annual review. Members had no comments on the updates and the group accepted the charter as final.
Other business
The ATO invited members to suggest public advice and guidance topics beyond those already shared and stressed the importance of prioritisation for the large market. The ATO is heavily invested in guidance products. The majority, but not all, are driven by the introduction of new law.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Rebecca Saint (Co-chair), Public Groups |
|
ATO |
Fiona Knight, Public Groups |
|
ATO |
Michael Ingersoll, Public Groups |
|
ATO |
Nadia Alfonsi, Public Groups |
|
Australian Energy Producers |
Michael Fenner |
|
Australian Retirement Trust |
Ian Roberts |
|
BHP Billiton Limited |
Andrew Cornish |
|
Big 4 Representative |
Lynda Brumm |
|
BlueScope |
Irene Filippone |
|
Board of Taxation |
Paul Korganow |
|
Business Council of Australia |
Pero Stojanovski |
|
Coles Group |
Adalene Pandeli |
|
Corporate Tax Association |
Michelle de Niese (Co-chair) |
|
Law Council of Australia |
Adrian Varrasso |
|
Microsoft |
Reagan Gruenthal |
|
Property Council of Australia |
Robert Ward |
|
ResMed |
Christian Chan |
|
Telstra |
Kelly Heezen |
|
Treasury |
Diane Brown |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Amanda Keeble, Frontline Business Improvement |
|
ATO |
Louise Andolfatto, International, Support and Programs |
|
ATO |
Michelle Sams, Public Groups |
|
ATO |
Nicole Dykstra, Frontline Business Improvement |
|
ATO |
Rebecca Irvine, Public Groups |
|
ATO |
Stephen Dodshon, Public Groups |
|
ATO |
Varuni Balachandar, Public Groups |
|
ATO |
Virginia Gogan, Public Groups |
Apologies list
|
Organisation |
Member |
|---|---|
|
Australian Banking Association |
Stephen Southon |
|
Multiplex |
Angela Giunta |
|
Treasury |
Marty Robinson |