GST - States and Territories Industry Partnership meeting - 5 November 2015
Record of meeting
Venue: Queensland Treasury, 33 Charlotte Street, Brisbane
Date: 5 November 2015
Desley Croker - ACT
Christine Havas - CWLTH
Harold Glenwright - NT
Daniel Fielding - QLD
Julie Sinclair - SA
Mini Balasingham - VIC
Jenni Skyner - WA
Martyn Lyons (Secretariat) - ATO
Margaret Lake (Minutes) - ATO
Attending via phone
Joan Cram - NSW
Rachel Johnston - TAS
Robert Enright - ACT
Adam McIntosh - NSW
Notional GST – Unimproved land – A neutral evaluation for an unimproved land dispute was received on 15 April 2015 and supported the ATO view. Although there were some issues that this neutral evaluation matter did not address. The ATO is therefore seeking to progress at least one further neutral evaluation to address and provide guiding principles on the other unimproved land issues.
Local Government class action – The ATO is aware of a potential class action by an advisor on behalf of more than 70 local Government bodies. It is understood that the proposed class action seeks to argue that a notional GST cannot be imposed on the state, and therefore local Government, as it is forbidden by section 114 of the Constitution.
Taxable Government Grants and Payments – On 15 October, the Hon Kelly O’Dwyer MP, Assistant Treasurer and Minister for Small Business, introduced the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015 to Parliament. The Bill includes the proposed new measure for government grants and payments reporting. The start date for this reporting measure has been deferred until 1 July 2017 to give reporting entities more time to prepare. The first report is expected to be due by 28 August 2018.
Reinvention of the ATO – The reinvention processes taking place within the ATO will transform how the ATO will go about its core business to become a contemporary and service-oriented organisation. While there are no Government sector specific reinvention initiatives, there are a number of initiatives currently underway which will impact on the Government sector experience for GST.
GST States/Territories Industry Partnership meeting, agendas, minutes and related papers are not binding on the Tax Office or any of the States or Territories referred to in these papers. While every effort is made to accurately record the views expressed, the wording necessarily represents a summary of statements of general position only, and care should be taken in interpreting those statements. These papers reflect the position at the date of release (unless otherwise noted) and readers should note that the position on any issue may subsequently change.
1. ATO updates
A neutral evaluation for an unimproved land dispute was received on 15 April 2015 which supported the ATO view. A redacted version of this neutral evaluation was provided to advisers and major government land organisations.
The evaluation by Mr Raymond Finkelstein QC is considered by the ATO to be unequivocal, thoroughly researched and well-reasoned. The main principle from the evaluation of Mr Finkelstein can be paraphrased as being an alteration to land in its natural state which has the effect of increasing its value or increasing its usefulness will result in there being an improvement to the land. The ATO considers that the principles from this evaluation can and should be applied to other cases to identify when a human intervention is an improvement.
There are other unimproved land issues that this neutral evaluation matter did not address. The ATO is seeking to progress at least one further neutral evaluation to address other unimproved land issues.
The ATO considers that it is appropriate and efficient use of resources for any further neutral evaluation to be considered by Mr Finkelstein. However, there is general disagreement by advisers and the major government land organisations with use of the same neutral evaluator for future evaluations.
The ATO has held a number of teleconferences with advisers and major government land organisations to discuss unimproved land issues and scenarios, with the latest being a workshop teleconference on 11 August 2015.
The ATO discussed the outcomes of the neutral evaluation received on the 15 April 2015 which was favourable to the Commissioner. Mr Finkelstein had taken a view that the appropriate comparison is to the land in its natural state and not to whether the human intervention contributes to the land’s highest and best use. Also, in ordinary usage an ‘improvement’ to land is a physical alteration or addition which results in an enhancement in the value of the land from the value in its natural state, as well as an alteration or addition which for an occupier will improve the usefulness of land when compared with its natural state.
There have been subsequent discussions between the ATO and advisors on section 38-445 of the GST Act and also aspects of Item 4 of the table in Subsection 75-10(3) as these aspects were not considered in the evaluation.
Advisors have also raised their concern with using the same evaluator. The ATO considers that the evaluation was independent and sound and that the same evaluator should be used to determine further principles to be applied.
Members raised the issue of land that had improvements but those improvements had now lost their usefulness or have been ‘exhausted’. The ATO advised that consideration should be given to all human interventions and not just to individual interventions that may have been exhausted. Also, the focus should not be solely on the loss of usefulness in human interventions for a particular party but rather whether the human intervention would not be of use to any entity.
Members also raised examples and issues involving supplies of subdivided land from larger lots and the determination of any improvements to the individual lots. In these situations, the focus should be on what is being supplied and, in determining whether there are improvements on the land, consideration needs to be given to whether there are any improvements on the individual subdivided lots being supplied. It would be less likely for large scale subdivisions to be unimproved for section 38-445 purposes as many subdivisions involve individual lots that have been cleared and possibly otherwise improved.
Action item 05112015/1
ATO to provide members with a redacted version of the neutral evaluation received on 15 April 2015.
Post meeting response
A copy of the redacted version of the neutral evaluation was provided to members on 11 November 2015.
Local government class action
The ATO is aware of a potential class action by an advisor on behalf of more than 70 local Government bodies. It is understood that the proposed class action seeks to argue that a notional GST cannot be imposed on the state, and therefore local Government, as it is forbidden by section 114 of the Constitution.
The issues for notional GST and local Government bodies were discussed between the ATO and members. The ATO advised they were maintaining a watching brief on the issue.
Government grants and payments – Introduction of Bill
On 15 October, the Hon Kelly O’Dwyer MP, Assistant Treasurer and Minister for Small Business, introduced the Tax and Superannuation Laws Amendment (2015 Measures No. 5) Bill 2015 to Parliament. The Bill is now available on the Parliament websiteExternal Link.
During the consultation process a number of submissions were made and, as a result, the Bill has changed since it was released as an exposure draftExternal Link. In relation to government grants and payments reporting, the following changes were made:
- The start date for the reporting measure has been deferred until 1 July 2017 to give reporters more time to prepare. The first report is expected to be due by 28 August 2018.
- To provide certainty for reporters, reporting will remain on an annual basis until at least 1 July 2020.
- The term ‘financial benefit’ in table item 2 in section 396-55 of Schedule 4 has been replaced with the term ‘consideration’ as defined in the GST Act.
- Reporters must submit a corrected report within 28 days of becoming aware of a material error in a submitted report.
We will continue to keep you informed as the law progresses and we work towards implementing the reporting system.
If you have any questions please email email@example.com or contact Robert Muscat on 03 9275 4834 or Scott Anderson on 03 9285 1882.
ATO emphasised that this new measure has been deferred until 1 July 2017 and the first reports will not be due until 28 August 2018. Members raised two issues which have been addressed in the action item below.
There was also discussion on government grants in general and the ATO compliance approach to their mistreatment. ATO advised that their preferred position is for grant payers and recipients to determine the GST treatment of the grant correctly under the law and to only treat a grant as taxable when it is taxable. There is reduced risk when the GST treatment of a grant is treated incorrectly by both the payer and the recipient as the transaction would be revenue neutral. Inconsistent GST treatment and potential loss of revenue is more likely to arise where government grant providers pay a taxable grant and issue a Recipient Created Tax Invoice (RCTI) as the government entity paying the grant will claim an input tax credit (ITC) as they hold a tax invoice but the grant recipient may not remit the GST on the supply. In these situations the ATO would need to take compliance action to address any unremitted GST by the grant recipient.
Action item 05112015/2
ATO to provide a response to the following issues raised by members:
- Under the Exposure Draft for Government grants and payments the annual report is not intended to include any payments made to payees using credit/debit card transactions. Is it likely that that this may change into the future with such payments brought back into the scope of payments under the annual report for Government grants and payments?
- Can the ATO advise how the data collected under the Taxable Payments Reporting – building and construction industry is used for compliance purposes and if the data will be pre-filled to the tax returns of payment recipients?
Post meeting response
- Government grants and payments
The annual report should not be used to report any payments made to payees using:
- The government entity’s credit or debit card processed through the payee’s merchant terminal or online, for example, EFTPOS or credit/debit card transactions
- Financial institution – BPay system
- PayPal system, or
- Other specialised payment systems (For example, direct debit arrangements).
The above payments will be captured by a separate reporting regime, Third Party Reporting of ‘business transactions made through electronic payment systems such as credit and debit cards and online payments’. This regime is contained in the same Bill and details are included in Table item 9 in Section 396-55 of Schedule 4.
Other payments, such as payments made by electronic funds transfer, cash and cheque will need to be reported on the annual report for the Government grants and payments.
- Taxable Payments Reporting – building and construction industry
The system addresses the following compliance problems identified as prevalent in the building and construction industry:
- Non-lodgment of tax returns
- Omitted contractor income
- Not complying with GST obligations
Since the introduction of the reporting system in the building and construction industry, the ATO has seen significant improvements in voluntary compliance. This is likely to be a result of contractors knowing they are being reported on, and the information being made available in pre-filling for individual contractors, helping them and their tax agents prepare correct tax returns.
The ATO also uses the information reported in our data matching activities to identify contractors that continue to do the wrong thing and to follow up with them. This has included taking action where tax returns and activity statements have not been lodged and where tax returns that are lodged do not include all reported income. We also identify and take action where there are GST compliance issues.
The ATO has published a report detailing analysis of the taxable payments reporting system in its first year of operation. The report can be found here: Taxable payments reporting – effectiveness measurement (PDF, 320 KB)This link will download a file.
Machinery of Government
The three month period, specified by the Commissioners determination in notices of decision about treating certain documents as tax invoices, usually commences on the date specified in the Administrative Arrangements Order (AAO) or proclamation for the machinery of government change to take place.
The ATO advised, at the last GST STIP meeting, that it was considering extending the standard three month period to six months for situations where the Commissioner has exercised his discretion to treat certain documents as valid tax invoices during machinery of government changes.
The current approach has been addressed by way of a determination issued to the Treasury Department of each State and Territory and generally covers most routine MOG changes within a jurisdiction.
Extensions of this time are considered on a case by case basis and our analysis of such requests over the last two years indicates that the majority of Government organisations are able to comply with their obligations within the three month period. Therefore given the impact to only a small number of Government organisations, and the low level of compliance risk for GST, it was determined to maintain the status quo of our current policy and practice.
Government organisations should contact us as soon as possible if they believe it may take longer than three months to have their tax invoices compliant. Members are also encouraged to contact their Client Relationship Managers in these situations so that both parties can work to find practical and tailored solutions.
Members made the comment that some major machinery of government changes can involve an application lodged by one entity but made on behalf of multiple entities and this would result in a lower number of PBR requests. The ATO acknowledged this but still considered the numbers as low. Rather than seeking extended periods of time immediately for all entities when a MOG change occurs, any entity that cannot comply within the three month period should lodge an individual request for an extension of time outlining their circumstances once it is known that the time frame is not achievable for them.
2. Division 81 government fees and charges
Is a fee for a licence to occupy Crown lands subject to GST?
Fees applicable to the granting and retention of a licence to occupy Crown land would be covered by subsection 81-10(4) of the GST Act because they relate to a permission or licence imposed under an Australian law.
However, are these fees covered by paragraphs 81-10.01(1)(c) or 81-10.01(1)(g) of the GST Regulations and therefore subject to GST? That is, are the fees:
- A fee for hire, use of, or entry into a facility?
- A fee or charge for a supply of a non-regulatory nature?
Pursuant to the relevant Act, the Minister may grant an occupation licence to a person to occupy particular Crown lands for such purposes as the Minister thinks fit. Licences granted are for a maximum period of 5 years for a fee subject to an annual rental review. The fee is inclusive of GST and specified in the terms attached to the licence.
Fees applicable to the granting and retention of a licence to occupy Crown land would be covered by subsection 81-10(4) of the GST Act because they relate to a permission or licence imposed by an Australian law. Regulation 81-10.01 lists fees and charges which constitute consideration. Paragraph 81-10.01(1)(c) prescribes a fee for hire, use of, or entry to a facility, except for an entry fee to a national park. The fees imposed under the licence are not precluded from GST by regulation 81-10.01 unless the fee falls under paragraph 81-10.01(1)(c).
The GST Act does not contain a definition of a facility. The meaning of ‘facility’ provided by the Macquarie Concise Dictionary (4th Edition) includes ‘something that makes possible the easier performance of any action’. The granting of an occupation licence allows for authorised activities to be undertaken on the land but does not does not make possible the easier performance of those activities.
The ATO provided an opinion on the meaning of ‘facility’ at the GST States & Territories Meeting (STIP) on 12 September 2012 at Question 5 of Appendix 1. This question related to a national park and the buildings contained in the park. It was concluded that a national park is a facility but this appears to be based on a national park being a flora and fauna reserve open to the general public and preserved in its natural state for their benefit and use. Any buildings within the park are considered to be integral and ancillary to the park contributing substantially to its enjoyment.
On this basis it does not appear that an occupation licence relates to a facility for the purposes of paragraph 81-10.01(1)(c).
Class ruling CR 2013/25 deals with a number of fees and charges. These fees and charges are set out under different headings and the fees that would most likely apply for an occupation licence are grouped under the heading ‘Leases’. The ‘Fee for occupying Council footpaths’ is similar to an occupation licence in the sense that it provides a right to occupy a portion of government land for a particular purpose. This would be an exclusive right for the restaurant. Such a fee is stated to be exempt pursuant to paragraph 81-15.01(f) of the GST Regulations.
There is a ‘Fee for lease of unused public road to owner or lessee of adjoining land’ that also appears under the same heading of the ruling. However, this fee is stated to be taxable under section 9-5 of the GST Act. These 2 fees appear to be similar in that they provide a permission to occupy government land but have a different GST outcome.
Paragraph 48 of the ruling provides the reason why the footpath fee is considered to be exempt. It is a permission for the purposes of section 81-10(4). Paragraph 47 refers to leases but does not provide a clear reason why the fee for lease of unused public road is not exempt. Both fees appear to fall under section 81-10(4) as a permission, authority or licence to occupy government land and, as such, should be excluded from GST unless the exclusion is overridden by the regulations.
The footpath fee is determined to be of a regulatory nature thereby satisfying paragraph 81-15.01(1)(f) of the regulations which deems the fee not to constitute consideration. The regulatory nature would be the control of the use of the footpath. A footpath is generally for public use by pedestrians but a permit may be issued to allow limited use by a restaurant. A lease of unused public road appears similar. The public road was for use by the general public but this use has been regulated by the issue of a lease. Treating the lease of unused public road as subject to GST appears inconsistent with the footpath decision which makes it difficult in assessing the GST status of other similar fees and charges.
An occupation licence regulates the use of government land and, in my view, would be similar to either the footpath fee or the unused public road fee. Being a fee for a supply of a regulatory nature made by an Australian government agency, the occupation licence would fall under paragraph 81-15.01(1)(f) of the regulations and would not be a fee to which regulation 81-10.01 applies.
Whether a fee for a licence to occupy Crown land is subject to GST will depend on the specific facts and circumstances of the fee and the characteristics of the Crown land.
Under section 81-10 of the GST Act, an Australian fee that relates to, or relates to the application for, the provision, retention or amendment under an Australian law of a permission, exemption, authority or licence is not the provision of consideration for a supply unless it is of a kind prescribed by the GST Regulations.
The regulations that could apply to make fees for licences to occupy Crown land consideration for a supply and subject to GST are:
- A fee for hire, use of, or entry to a facility, except for an entry fee to a national park (paragraph 81-10.01(1)(c) of the GST Regulations)
- A fee or charge for a supply of a non-regulatory nature (paragraph 81-10.01(1)(g) of the GST Regulations)
A fee for hire, use of, or entry to a facility
When applying paragraph 81-10.01(1)(c) of the GST Regulations it is not what the licence is for that is the determining factor. Rather it is what the fee is being paid for that needs to be determined. The fee will be covered by paragraph 81-10.01(1)(c) if it is a fee for:
- hire of a facility
- use of a facility
- entry into a facility, except for fees for entry into a national park.
Therefore, while a licence may allow for use or entry to a facility, if the fee paid is not a ‘hire’, ‘use’ or ‘entry’ fee, the fee will not be covered by paragraph 81-10.01(1)(c).
The word 'facility' is not defined in the GST Regulations or the GST Act and therefore takes its ordinary meaning. The Macquarie Dictionary gives 'facility' the following meanings:
1. something that makes possible the easier performance of any action; advantage: transport facilities; to afford someone every facility for doing something.
9. a building or complex of buildings, designed for a specific purpose, as for the holding of sporting contests.
Definition 1 of 'facility' provides its central meaning, whereas definition 9, a specialised meaning.
Facility is defined in the Oxford DictionaryExternal Link as:
A place, amenity, or piece of equipment provided for a particular purpose: cooking facilities, facilities for car parking, a manufacturing facility.
It can be seen from these definitions that the ordinary meaning of the word ‘facility’ is very broad. A facility includes:
- something that makes possible the easier performance of any action
- a place, amenity, or piece of equipment provided for a particular purpose
- a building or complex of buildings, designed for a specific purpose, as for the holding of sporting contests, etc.
Crown land that is a park, sporting field, sporting complex or car park will be a facility. Crown land that is mere vacant land that is not designated for a particular purpose may not be a facility.
Ultimately whether a fee that relates to a licence to occupy Crown land is a fee for hire, entry or use of a facility will be determined by the particular facts in each case.
Fee or charge for a supply of a non-regulatory nature
‘Non-regulatory nature’ is not defined in the GST Act or the GST Regulations. The ATO publication Payments to government agencies under Division 81 provides:
7. What is the treatment of a fee or charge that is regulatory?
The non-commercial activities of government agencies are outside the scope of GST. The term regulatory captures those supplies made by a government agency if that agency is legislatively empowered to make the relevant supply and the supply is to satisfy a regulatory purpose.
Examples of fees or charges that have a regulatory character include:
- a charge for providing a copy of a birth, death or marriage certificate
- a compulsory inspection fee for checking that the foundations of a building comply with a building code
- a fee for reviewing a film to give it an appropriate audience rating before it can be exhibited at a public cinema
- a fee for land registry services such as titling, valuation or surveying undertaken by a government agency in providing those services
- a fee for towing and impounding a vehicle, if a traffic offence has been committed
- a fee for impounding animals
- a fee for releasing seized abandoned shopping trolleys.
Guidance can also be found in the Explanatory Statement to the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 2) which provides:
Supplies that are not regulatory in nature
Item  - paragraph 81-10.01(1)(g)
This paragraph ensures that the non-regulatory activities of government are subject to GST. This paragraph applies to supplies of goods and services for which fees are imposed where the consumer is provided with something that lacks a regulatory character. That is, the fee or charge does not arise under an Australian law which is intended, for example, to regulate behaviour, ensure consumer protection and ensure compliance with certain standards. The paragraph applies even though it may be the sole responsibility of a government agency to supply the goods or services for which the fees are imposed, and such supplies are in the public interest.
The following are examples of fees and charges that do not have a regulatory character:
- A fare charged for travel on a transportation service;
- A fee paid by the media to a council for immediate access to traffic information; and
- A fee charged for exclusive rights to a mausoleum or burial plot.
A supply of Crown land that is in the nature of a lease of land in return for rent, will generally be a supply of a non-regulatory nature. Leasing of land will generally be a commercial activity of the relevant Government body and would not be to regulate behaviour, ensure consumer protection nor ensure compliance with certain standards.
However whether fee for a licence to occupy Crown land is a fee is for a supply that is non-regulatory in nature will depend on the particular facts in each case.
3. GST technical update
Discussion of recent legislative changes, judicial decisions and published ATO rulings and guidance with GST impacts for government entities.
4. Reinvention of the ATO
Our reinvention process is looking to transform how the ATO will go about its core business to become a contemporary and service-oriented organisation.
While there are no Government sector specific reinvention initiatives, there are currently a number of initiatives underway which will impact on the Government sector experience for GST.
- Dispute resolution – Change in mindset of staff to resolve disputes as early as possible, including greater use of in-house facilitation, early neutral evaluation and settlements as well as the functional separation of objections work.
- Modernising advice – The ATO is transforming ato.gov.au to improve the way in which general advice content is presented and adopting a client centric approach to providing written guidance, including developing the myRuling initiative to give taxpayers immediate rulings in certain simple situations.
- Compliance through software – Providing details of business rules tests to software developers to effect a ‘prevention rather than audit’ approach.
- BAS simplification – Focussing on reducing the activity statement labels that must be completed.
- Co-operative assurance – Encouraging a shared assurance relationship with the ATO.
- Digital by default – Transitioning to contemporary delivery of inbound and outbound information digitally. Data suggests that digital uptake by government entities is relatively low.
- Safe harbours – Identifying situations where the ATO is comfortable with taxpayers operating within certain boundaries effectively adopting a ‘swimming between the flags’ approach.
There was general discussion on the reinvention initiatives across the ATO which impact the Government sector.
Action item 05112015/3
Members sought further information on the use of safe harbours for GST.
Post meeting response
The ATO is happy to consider any proposals for which a safe harbour may be appropriate in reducing compliance costs.
At this stage, there are no government specific safe harbour proposals. However, the safe harbours working group has progressed a number of opportunities:
- A proposal on barter transactions has in principle endorsement and further consultation will now occur with the Corporate Tax Association in fine tuning the details and assessing compliance cost savings.
- The Consumer Owned Banking Association (COBA) has been engaged in relation to a credit union safe harbour. A small working group of the ATO and COBA members has met and considered various options. A preferred option has been identified and the ATO is now working on the further detail and data analysis and COBA members are being asked for details of compliance cost savings. The Retirement Living Council has met to consider the possibilities and a meeting with the ATO is expected in the coming few weeks.
- The group has also considered a safe harbour in the area of international shipping and a proposal is being developed in consultation with the shipping industry.
Action item 05112015/4
Members sought further information on the tests to be incorporated into software both as a preventative strategy and under the proposed GST Integrity of Business Systems co-operative assurance model. In particular, if a Government organisation incorporates such tests into their own internal software will the participation incentives of being placed in a lower risk classification and not being subject to GST integrity of business systems risk compliance activity for a specified period be made available to them?
Post meeting response
We are currently working with software developers to determine which of the IBS tests can be built into software to make front end assurance more effective and will release these more broadly once we have determined their efficacy.
With regard to the co-operative assurance model we are part way through a staged roll-out to key-taxpayers in the large market and, assuming this is successful, we intend to expand to other markets including government. While some benefits may differ incentives around risk categorisation and removal from review and audit pools will remain as they are a key feature of the model.
A copy of the IBS Cooperative Assurance Agreement Documentation was provided to members on 5 January 2016.
5. General business
5.1 Removing irritants and better support
We would like to continue to work with the States and Territories to identify irritants for government agencies and receive suggestions on how the ATO can better support the government sector.
Members raised concern with new Proof of Identity (POI) procedures to verify authorised contacts for Government organisations which included requests for their personal information.
Action item 05112015/5
Members sought further information on the following ATO procedures:
- POI for Government organisation contacts, in particular if there were other ways to satisfy POI rather than having to provide personal information, such as personal TFNs;
- Removing out of date contacts;
- Current form for new registrations of Government organisations
- Digitisation of ATO systems and the ability to register government organisations through the portal, in addition for the ability to scan and email registration forms through the portal.
Post meeting responses
- The ATO takes seriously its obligations to ensure that information relating to a government entity is not inadvertently disclosed to a person who is not an authorised contact. The most effective means of doing so is by conducting proof of identity on the individual person and this requires access to that individual’s account using their TFN.
- Removal of out of date contacts must be instigated by an authorised person. This can be undertaken online through the business portal, by phone or in writing.
- To obtain a copy of the current registration form, government entities can contact us on 13 92 26. This form is not available electronically through the ATO website to ensure that it is not inadvertently used by non-government entities.
- Until the government entity has an ABN, it is not possible to lodge forms electronically through the business portal. The ABN registration form should be signed by an authorised contact person and posted to the address listed on the form or it may be faxed to us on 1300 130 905. Once the entity has an ABN and an AUSkey is given, other forms can be lodged electronically through the business portal.
5.2 Future GST impacts for States and Territories
We would like the States and Territories to consider the following questions for discussion at the meeting.
- What issues from a GST perspective do the States and Territories anticipate in the future?
- How will the States and Territories be equipped to respond to these impacts?
- What challenges to sustainability of compliance do the States and Territories face over the next few years?
- How effective (easier, contemporary, cost effective, more tailored) is the design of existing ATO systems for the administration of GST?
- How can any deficiencies be shaped to become more effective?
Members commented that the GST landscape is quite settled at the moment and there are not a lot of issues other than property issues for unimproved land, infrastructure projects and development leases.
5.3 Other business
Integrity of Business Systems (IBS)
There was discussion on the outcomes from the Government workshops held in 2014 for Integrity of Business Systems. ATO advised that any risk workshops that were to be held as a result of identified risks with the Governance and risk management checklists would have been completed by now.
Action item 05112015/6
Members sought information on the effectiveness of the IBS Government workshops and whether there would be any work of a similar nature in the future?
Post meeting response
The IBS Government Workshops program has now been completed, and no additional workshops are planned at this stage. The workshops provided assurance that the majority of government departments were reporting correctly and had business systems that delivered an acceptable level of risk. However, there were some instances where weaknesses were identified in governance, systems or controls that had either already resulted in GST errors, or had the potential to cause errors in the future. Our active compliance areas have been working with these departments to ensure systems are effective, and we will continue to monitor the outcomes and intelligence collected.
The strategic approach we are adopting for the IBS risk is that pre-lodgment prevention is better and more cost effective that post-lodgment detection and treatment, and we are continuing to work on ways to improve the effectiveness of pre-lodgment assurance strategies.
Action item 05112015/7
Members sought information on the use of Annual Compliance Arrangements into the future.
Post meeting response
The ATO will continue Annual Compliance Arrangements (ACA) with Clients, where relevant, for the duration of existing arrangements. However, future engagement and assurance approaches will be tailored based on risk. ACAs are for “key taxpayers” under the Risk Differentiation Framework (RDF). Government Business Enterprises continue to be included in the RDF. However, government departments and agencies are now excluded from the RDF. For Government clients that are included in the RDF but assessed as “Lower Risk” or are not included in RDF, ACAs will not usually be seen as the right approach.
5.4 GST STIP minutes
The minutes from the last GST STIP meeting held on 24 March 2015 have been published on the ATO website and can be accessed via this link – GST States and Territories Industry Partnership minutes – 24 March 2015.
5.5 Next meeting
The next meeting is scheduled for March 2016 with a date to be advised.
Record of meeting of the GST States and Territories Industry Partnership forum held on 5 November 2015. The members are treasury representatives from each state and territory across Australia who meet biannually to discuss technical or administrative issues impacting GST compliance across the Government sector. The ATO provides secretarial support.