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  • Consultation Steering Group meeting minutes 23 May 2014

    Meeting details


    Australian Taxation Office
    Latitude East, Level 12, Room 706
    52 Goulburn Street






    Andrew Mills, Second Commissioner, Law Design and Practice


    Nicholas Backhouse, Tax Systems Division, Treasury (acting Co-chair)


    Andrea Allen


    0403 399 747


    Jonathan Woodger

    Acting Chief Tax Counsel, ATO

    Megan Yong

    Assistant Deputy Commissioner, Compliance Group

    Peter Coakley

    Assistant Commissioner, ATO Corporate

    Martin Jacobs

    Assistant Commissioner, ATO Policy Integration, Integrated Tax Design

    Deepti Paton

    Director, Adviser, Tax Industry Liaison and Consultation

    Keith James

    Board of Taxation

    Frank Drenth

    Corporate Tax Association

    Robert Jeremenko

    The Tax Institute

    Mark Friezer

    Law Council of Australia

    Matt Hayes

    Institute of Chartered Accountants in Australia

    Keith Clissold

    Association of Taxation and Management Accountants

    Mark Morris

    CPA Australia

    Lance Cunningham

    Institute of Public Accountants

    Andrea Slattery

    SMSF Professionals Association of Australia


    Rosy Mihalj

    Australian Taxation Office


    Gerry Antioch

    General Manager, Tax System Division, Treasury

    Tony Greco

    Institute of Public Accountants

    Michael Croker

    Institute of Chartered Accountants in Australia

    Peter Strong

    Council of Small Business, Australia

    Andrea Allen

    ATO Consultation Hub

    Guest attendees

    Chris Jordan

    Commissioner of Taxation

    Sue Sinclair

    First Assistant Commissioner, ATO Corporate

    Commissioner’s opening remarks

    The Commissioner opened the meeting with remarks in relation to recent happenings at the ATO, including:

    • the recent release of the ATO’s Strategic Intent which includes the ATO’s vision, mission and values statement and next layer of planning including strategic goals and risks. The next layer includes a high-level design for 2020, client experience principles and a description of our desired culture
    • the ATO’s broader rethink about the traditional model of active compliance in light of the very high percentage of taxpayers that comply voluntarily
    • the ATO’s commitment to maintaining focus on taxpayer engagement and service delivery, despite changes to funding and staffing recently announced in the Federal Budget
    • the importance of tripartite, early engagement to identify and facilitate improvements to the tax system. All key stakeholders in the tax system have a responsibility to actively raise matters for consideration by the Steering Group.

    Progressing identified matters / recap on action items

    Statutory remedial powers (SRPs) for the Commissioner

    Treasury outlined the context for a SRP, (that the Government is looking to explore a range of alternatives to deal with the demand for legislative change) of which a SRP may be one.

    Members suggested that any public consultation process on a SRP should include examples of when such a power may or may not apply in practice, so that the public could obtain an indication of how such a power may be exercised. Any further examples raised during a public consultation process should also be captured as candidates for exercise of the discretion.

    Members queried the wisdom of restricting such a power to not be applicable to overcome a precedent set by a Court decision, since in some cases the outcome of a Court case may still be out of sync with the policy intent of the legislation.

    Members noted that should a SRP be introduced, the date of application of the exercise of the discretion may be a contentious issue.

    Members noted that the SRP Working Group process ran well, with a number of planned meetings in quick succession, a clear outcomes-focussed agenda and capable Chairmanship.

    Members queried the need for confidentiality in relation to this consultation. However, members acknowledged that this was the first such consultation conducted before Government announcement and that best practice in this area would likely develop over time and with further experience.

    Action item CSG 235/1: Members to provide comments on the Statement of Intent to the Consultation Steering Group secretariat by Thursday, 29 May 2014.

    Identifying amendments to the current trust provisions which may have a deregulatory impact

    Members noted that a focussed effort on lowering the compliance cost of dealing with the trust provisions was a worthwhile project, and that the list circulated ahead of the meeting appeared to be a good start towards identifying major irritants.

    A member queried whether certain items on the list should be considered ‘deregulatory’ in nature.

    Members noted that this project may give rise to two streams of work – in relation to Collective Investment Vehicles and all other trusts.

    Action item CSG 235/2

    • Consultation Steering Group secretariat to add additional matters raised by members in the meeting to the current list and circulate to members by 28 May 2014
    • Members to circulate revised list amongst their membership as appropriate and respond with any further matters to add to the list by 13 June 2014

    [Post-meeting note] As this list was circulated to members on 2 June 2014 the due date for comments has been set as 27 June 2014.

    • Once the list is finalised, Steering Group to set up a limited-life working group of a workable size with subject matter experts to progress action on the list, via Steering Group secretariat.

    Other action items from February 2014 meeting

    Members agreed to further action on the following action items.

    CSG 142/3 Consultation on legislative protection for taxpayers that have relied on ‘do not proceed’ tax measures

    Andrea Slattery to provide Steering Group Secretariat with additional information on concerns in relation to this measure.

    CSG 142/10 Sharing the stakeholder register

    ATO is to respond on the frequency at which these lists will be updated.

    CSG 142/11 Matters that are ‘out-of-scope’ of the ATO’s consultation arrangements

    Members noted that a matter being denoted as ‘out-of-scope’ creates the impression that the ATO has decided not to deal with the matter. ATO to revisit what matters are ruled ‘out-of-scope’, including by considering how to denote when a matter has been dealt with in another way (for example via updating guidance).

    CSG 142/12 Stewardship committees

    The Steering Group will revisit this topic at later meetings.

    Members agreed to close the following action items

    CSG 142/4 Progressing announced but un-enacted ‘proceed’ measures list – testing capacity for additional external input

    CSG 142/5 Consultation on ‘targeted anti-avoidance provision’ to replace the previously announce repeal of section 25-90.

    Members agreed that at this stage, this was a matter for Government decision rather than consultation.

    CSG 142/6 Superannuation un-enacted and removed measure – SMSF bank verification and requirements for rollovers in particular to SMSFs)

    This matter is being managed via the Superannuation Industry Advisory Group.

    CSG 142/7 Superannuation – removal of the 10% rule

    This matter is being progressed via the ATO’s red-tape reduction list.

    CSG 142/8 ATO website issues resolution

    CSG 142/9 Better targeting ATO surveys.

    In the context of evolving compliance practices, ATO to consider how best to achieve the outcome sought (to reduce compliance costs by better targeting ATO compliance surveys).

    Scan of current tax and superannuation consultation matters

    Dividend washing compliance action

    Members noted concerns in relation to the recent dividend washing compliance action, as follows:

    • the ATO commenced compliance action on the basis of a view that was not finalised at the time of commencement of the compliance action.
    • a member noted that initially the only publicly available information in relation to the ATO’s actions was in the media. Following this, the associations raised concerns. The outcome of these discussions (i.e. extension to the self-amendment deadline) was communicated by the associations until the ATO updated its website.
    • in many instances, taxpayers (that were represented by tax agents) were nevertheless contacted directly, which a member considered was contrary to the ATO guidelines when contacting clients of tax practitioners.
    • members noted that an impression had been created in the market-place due to the planned legislative amendments that the ATO was of the view that the current law was permissive of dividend washing and that this behaviour would only fall foul of the law from 1 July 2013. The ATO noted that it had always been the view that Section 177EA applies to such arrangements, but that the Commissioner would be required to make a determination under that section for each taxpayer that had engaged in such behaviour.
    • members also queried the need for the legislative amendment if the same taxpayer behaviour could be addressed via existing provisions. Treasury agreed to take this feedback on board.

    Members broadly agreed that this process could have been better managed. The ATO noted that several lessons had been learned from this process and that these lessons would be borne in mind in relation to future compliance action.


    Members noted that consolidation was increasingly a key area of concern as the status of a range of announcements remained unclear, and advisors were routinely advising on an uncertain view of the current state of affairs.

    Action item CSG 235/3

    Martin Jacobs and Jonathan Woodger are to co-ordinate and compile a list of outstanding ‘consolidation’ issues that will be circulated to obtain feedback on completeness from external consolidation experts, ahead of the announced 2015 Treasury consolidation review.

    Red-tape reduction efforts

    Action item CSG 235/4

    ATO to circulate list of potential ‘red-tape reduction’ measures to members, for further contribution by members and discussion at future meetings.

    Treasury update and Tax White Paper

    Treasury noted that the Government had announced that the Tax White Paper process and the Federation White Paper process would be run concurrently.   

    Members raised concerns about the progress in legislating the ‘to proceed’ announced but un-enacted tax and superannuation measures.

    Certain members supported the reintroduction of the Treasury forward work program for tax measures. 

    Board of Taxation reviews

    Keith James noted that a number of Board reviews were currently on-foot:

    • The post-implementation review of Division 7A, the Reviews of the Thin Capitalisation Arm’s Length Debt Test and the Debt and Equity Tax Rules were progressing well in line with set deadlines.
    • All key stakeholders had agreed that in the context of the Review of Debt and Equity tax rules, the narrower question on the ambit of section 974-80 should be accelerated.
    • The review of tax impediments facing small business was progressing rapidly in accordance with its tight timeline.

    Consultation Steering Group interaction with TIES process

    Members agreed that the Consultation Steering Group could provide valuable input in determining how best to deal with issues on the TIES register (in light of the available options of administrative or legal solutions).

    Action item CSG 235/5

    Consultation Steering Group secretariat will co-ordinate and send TIES issues register along with the ATO’s matters for consultation register to Steering Group members ahead of each meeting, for discussion at future meetings.

    Stewardship committees (LBLG and the ATPAG) and consultation on shift from ELS to SBR

    Members noted that the LBLG had benefitted from a rethink of the running of that forum, including greater external involvement in agenda setting and the group being co-chaired by Frank Drenth on the CTA’s behalf.

    Members expressed concerns in relation to the function of the ATPAG, centred on the forum being a source of information from the ATO rather than consultation. Members also noted that it was unclear how the ATO was consulting to work with practitioners to assist the transition from ELS to SBR by 2016.

    Action item CSG 235/6

    ATO is to investigate and report back to the Steering Group the health of the ATPAG stewardship committee and the progress of consultation on the transition from ELS to SBR.

    New matters for future consultation

    • NTLG working group on ‘safe harbours’
    • Website design for small business, including the ATO’s project in relation to reworking correspondence
    • ATO review of the current offering in relation to forms of public ATO guidance
    • ATO administration of the test case litigation program (on June NTLG agenda for further discussion)
    • The tax consequences of the proposed revision of section 254T
    • The tax consequences of the Paid Parental Leave levy

    Health of the consultation arrangements

    Effectiveness measures

    Members discussed how to test ‘effective’ consultation. Members broadly agreed that it may not be best to set metrics for measurement, but that it would be worthwhile outlining some best practices.

    Action item CSG 235/7

    ATO is to circulate a summary of ‘what a good consultation process looks like’ for member’s review and comment.

    Action item CSG 235/8

    ATO to provide Steering Group with list of any ‘outliers’ such as matters on the register that had been there for six months or longer and remained unresolved, ahead of future meetings.

    ATO consultation arrangements post implementation review

    Members agreed that the consultation arrangements were broadly progressing satisfactorily, but that it was too early to conduct a post-implementation review.

    Members were of the view that the best timing for a post-implementation review would be approximately February 2015 as resources should currently be invested in making the current arrangements work (rather than in a review.)

      Last modified: 21 Jan 2015QC 43897