2. Welcome by the Commissioner of Taxation
The Commissioner welcomed members to the meeting and provided a brief background to his professional career. He introduced Deputy Commissioner Shane Reardon who is heading the new Public Groups and International business line, replacing Deputy Commissioner Mark Konza. He outlined a number of key issues and topics under development in the ATO which are beginning to be realised and implemented and their impact on large business.
The Commissioners’ Statement
The Commissioners’ Statement 2013–14 which was published in June sets out the ATO’s direction for the coming year and the key areas that the Commissioners would like the ATO to build on to enhance our performance and reputation. He said that much of what is in this statement is reflected in some of the reviews and changes he has driven since taking on the Commissioner role. This statement sends a strong signal to all taxpayers about the ATO’s direction for the future.
Changes to medium and large income tax compliance lines
The Commissioner announced changes to the ATO’s medium and large income tax compliance business lines. The ATO has recently reviewed its approach of using turnover levels to allocate client responsibilities across these business lines to identify potential improvements. He advised the group that we will now focus on public and private groups and said that adopting this new approach to allocating client responsibility will allow us to concentrate more on these areas of similarity. The Medium business line will be known as: Private Groups and Wealthy Individuals, and the Large Business and International business line will be known as: Public Groups and International.
Review of consultative arrangements
The Commissioner updated members on the review of our consultative arrangements (members were first briefed on this review at the previous Large Business Advisory Group meeting of 18 April 2013). He informed members that the ATO Executive recently endorsed the recommendations of this review. Central to the new framework are our eight stewardship committees, one of these being this forum, the newly named Large Business Liaison Group (formerly Large Business Advisory Group). He emphasised that our relationship with large business is very important and this liaison group will continue to be a key consultative forum for the ATO.
Independent Review Function
The Commissioner also updated members on the progress of the Independent Review Function (members were first briefed on this review at the previous Large Business Advisory Group meeting of 18 April 2013). The new independent review function began on 1 July 2013. It gives large business a ‘fresh set of eyes’ to independently review their cases. He said there are a number of cases on hand ready to test the new review process.
Early Engagement Rulings program
Another key focus for the ATO is the early resolution of issues. The Commissioner said that through this process it is his intention to bring the ATO and taxpayers together to discuss and clarify issues and encourage full disclosure on all sides early in the process. He explained the Early Engagement Rulings pilot which is designed to improve the client experience for those large business taxpayers who seek private and class rulings from the ATO. When the pilot was completed in June this year 46 rulings had been finalised and significant cycle time improvements had been achieved. For private rulings lodged by the professional firms on behalf of their clients, cycle times achieved ranged from 15 to 28 days. Feedback to date from pilot participants has been very positive.
Compliance in focus
The Commissioner highlighted some key focus areas in our new online Compliance in Focus publication which replaces the previous Compliance Program publication:
- Base Erosion Profit Shifting (BEPS) is a key focus this year. Where companies adopt aggressive structures we will look closely at their tax affairs.
- Deputy Commissioner Mark Konza will lead an ATO taskforce investigating suspected profit shifting and restructuring to minimise or avoid tax payable in Australia. Mark will be working within the OECD guidelines and providing insights to help guide our input into future OECD policy development.
- The ATO is looking closely at the growth of e-commerce businesses and the opportunities they may be using to circumvent existing tax laws governing when profits are taxable in Australia.
Specialist recruitment program
Finally, the ATO will be recruiting senior audit managers and targeting the large firms accounting for applicants. This is part of a greater transformation we are currently initiating to better target specialist staff and also to bring greater external experience to the ATO. Positions will be advertised in mid-August.