NTLG minutes, June 2014

Meeting details


Function Room 12.720

ATO Latitude East building

52 Goulburn Street, Sydney


19 June 2014






Andrew Mills, Second Commissioner Law Design and Practice


Andrea Allen


03 9285 1132


Andrew Mills (Acting Chair)


Neil Olesen


Andrew England


Jonathan Woodger


Peter Coakley


Deepti Paton


Andrea Allen (Secretariat)


Roger Brake


Steve French


Keith Clissold

Association of Taxation and Management Accountants

Mark Morris

CPA Australia

Andrew O'Bryan

CPA Australia

Sue Williamson

CPA Australia

Frank Drenth

Corporate Tax Association

Michelle de Niese

Corporate Tax Association

Michael Croker

Institute of Chartered Accountants in Australia

Grant Wardell-Johnson

Institute of Chartered Accountants in Australia

Tony Stolarek

Institute of Chartered Accountants in Australia

Tony Greco

Institute of Public Accountants

Lance Cunningham

Institute of Public Accountants

Mark Friezer

Law Council of Australia

Adrian Varrasso

Law Council of Australia

Geoff Boxer

National Tax and Accountants Association

Mark Chapman

Taxpayers Australia

Robert Jeremenko

The Tax Institute

Michael Flynn

The Tax Institute

Prof. Graeme Cooper

The Tax Institute

Stephanie Caredes

The Tax Institute (Professional Bodies' Agenda Submissions Co-ordinator)


Chris Jordan

Commissioner (Chair)

Rob Heferen


Gerry Antioch


Greg Nielsen

CPA Australia

Stephen Healey

The Tax Institute

Guest discussion leads (in order of appearance)

Martin Jacobs


Steve Vesperman


Michael Cranston


Michael Monaghan


Tanya Jarzynski


Andrew Watson


Debbie Hastings


Grahame Tanna



NTLG agendas, minutes and related papers are not binding on the Australian Taxation Office (ATO) or any of the other bodies referred to in these papers. While every effort is made to accurately record 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. These minutes have been formally endorsed by the members.

Agenda summary

  • Meeting open
  • Workshop
  • Item 1 – Issues of significance in the tax policy and law design space
  • Item 2 – Changes in ATO operations
  • Item 3 – Electronic service delivery to tax professionals
  • Item 4 – Other business

Meeting Open

  • Andrew Mills (Acting Chair) opened the meeting and noted alternates and apologies, including an apology from the Commissioner of Taxation.
  • Andrew noted the Commissioner’s commitment to the work program and success of the NTLG, and intention to be fully briefed on discussions ahead of his attendance at the September NTLG meeting.

Chair’s opening remarks

Andrew Mills provided members with an update on recent happenings at the ATO, including:

  • The recent appointment of Jeremy Hirschhorn to the role of Chief Tax Counsel and Kirsten Fish to the role of Deputy Chief Tax Counsel. Jeremy and Kirsten are both highly experienced in tax technical matters and leading change and are welcome additions to the ATO’s senior leadership team;
  • The transformational program Reinventing the ATO being driven by the ATO Executive and the recent release of the ATO’s Strategic Intent which further builds on concepts such as participation and compliance, the client experience and contemporary service delivery;
  • The ATO’s continued focus on service delivery and maintaining connections to the community and relationships with key stakeholders in the face of changes to our workforce in response to recent Budget announcements;
  • The recent launch of TaxTime 2014. The biggest change this year is myTax, our new, streamlined online return, which we’re expecting at least 1.4 million Australians to take up; and
  • Ongoing efforts to support Australia’s Presidency of the G20 in 2014 which includes continuing our role to combat global tax problems and implement the 2013 OECD Action Plan on Base Erosion and Profit Shifting (BEPS).

Finalising the NTLG Charter

Members noted that the draft Charter was broadly in-line with the principles and outcomes arising from the March NTLG workshop, subject to the following comments:

  • The Terms of Reference should be updated to acknowledge the NTLG’s role in identifying significant issues of the day;
  • The language of the Charter should reflect the capacity for NTLG members to raise all concerns or comments on updates; and
  • Descriptions of routine, operational matters in relation to the NTLG should be moved into a separate document, to allow the Charter to reflect the high-level principles underpinning the committee.

Action item NTLG 1906/1:

ATO to update the draft Charter to incorporate comments provided and circulate a final draft to members (along with a separate document outlining the routine operational matters for reference) by Wednesday, 2 July, 2014 for comment.

Once finalised, Charter to be published onto the ATO website.

End of example

The draft NTLG work-program

The NTLG work program currently reflects a range of focus areas for ‘in-depth discussion’ at future meetings, i.e. areas in relation to which NTLG members consider that the Group can identify and drive significant improvements to the tax system. The work program is intended to facilitate forward-thinking and advance planning.

Members broadly noted that the topics on the forward work program reflected topic areas that were appropriate for consideration by the NTLG, and suggested the addition of the following topics:

Action item NTLG 1906/2:

Further suggestions for additions to the NTLG work-program are welcome at any stage, and should be directed to the NTLG Secretariat (NTLG@ato.gov.au).

End of example

NTLG Action items

Members agreed to close the following NTLG Action items:

  • NTLG 1403/1 (NTLG Charter, changes in practices and procedures and work program) – to be progressed as Action Item NTLG 1906/1.
  • NTLG1403/2 (Treasury to follow-up with ICAA in relation to managing the potential effect of changes in the tax environment on accounting opening and closing tax balances.) – Actioned out of session.
  • NTLG1403/3 (Andrew England to distribute list of identified priority areas in relation to the ‘do not proceed’ tax measures list on which the ATO is actively working.) – Actioned out of session.
  • NTLG1403/4 (NTLG members to provide Treasury with intelligence/information on estimated changes in compliance costs due to potential increased data exchange/reporting requirements.) – For further consideration in due course as required.
  • NTLG 1403/6 (NTLG member projects on information collection, safe harbours and areas of the law that are difficult to comply with) – to be progressed as Action Items NTLG 1906/8, 1906/9 and 1906/10 respectively.
  • NTLG1403/7 (Input from NTLG members in relation to how the ATO can improve its administration of PSLA 2011/27 is welcome via the NTLG Secretariat.) – Revised practice statement to be issued for public consultation, likely in July 2014.
  • NTLG1403/8 (Impact of Portal outages) – referred to and progressed by the ATO Tax Practitioner Advisory Group.

Members agreed to refer NTLG Action Item 1403/5 (external input on how the ATO’s relationship with tax practitioners should be managed structurally) to the ATO Tax Practitioner Advisory Group.

Segment 1 - Issues of significance in the tax law interpretation, policy and law design space

Current Treasury priorities and work program

Roger Brake (Treasury) outlined current work program and priorities, which focus on:

  • Progressing Budget announcements and the Government’s election commitments;
  • Progressing the ‘to proceed’ announced but un-enacted tax and superannuation measures list by the end of the 2014 calendar year;
  • Australia’s Presidency of the G20 and the OECD’s Action Plan on BEPS; and
  • The Tax White Paper process.
  • Roger also noted that Treasury priorities are shaped by ongoing challenges in negotiating limited resources against demands, especially in light of the requirement to reduce staffing numbers.
  • Members queried whether Treasury would be re-instating its public ‘work program’. Roger noted that Treasury saw merit in a public work program and was considering how best to structure that, before engaging with Government. The demand for a public work program would be relayed to Government.

Implementation / administration of legislative changes

Discussion focussed on:

  • Members raised the potential for employees to move away from cash salary using salary sacrifice to reduce their tax under the temporary budget repair levy, as the higher FBT rate is for two years only.
  • Roger Brake (Treasury) noted it was a deliberate policy choice to have the FBT rate adjusted for only two years, due to the compliance costs that would arise if the FBT rate was increased for periods which aligned with the standard income tax year.
  • The ATO encouraged members to raise and discuss with the ATO specifics of any emerging arbitrage opportunities that they are concerned may not be covered by existing ATO guidance on salary sacrifice arrangements.
  • Andrew England (ATO) noted that Integrated Tax Design was working with other areas of the ATO to continue providing administrative guidance to help taxpayers and advisers negotiate the uncertainty with un-legislated announcements such as the repeal of the tax loss carry back provisions and the instant asset write-off.
  • Other Integrated Tax Design activities centred on advocacy priorities aligned with the Reinventing the ATO program (such as One-Touch Payroll).

G20 Tax Symposium

Michael Croker (ICAA) shared reflections from the recent G20 Tax Symposium in Tokyo:

  • The symposium provided a valuable opportunity for discussion between revenue authorities, business, advisors and policy makers on opportunities and challenges arising from the OECD’s action plan.
  • The symposium highlighted the need for OECD nations to work closely with and support non-OECD nations due to differing levels of readiness between revenue authorities in relation to the capacity to collect, use and share information.

It was noted that Treasury had separately advised the outcomes from the symposium would be soon published.

Members noted the importance of appropriate transparency around discussions and outcomes of such events.

Outstanding tax measures

Members noted that many outstanding tax measures had not been captured in the (then) Assistant Treasurer’s press release of 14 December 2013, and suggested that Treasury consider whether to advise Government to publicly note that any measures not mentioned in that press release should be considered discontinued.

Roger Brake (Treasury) noted that a concerted effort had been made to provide certainty about how issues will be handled via the press release, but that the specific outcome of some measures was still uncertain due to ongoing review processes (for example in relation to TOFA and consolidation).

Treasury welcomed comments on which measures members considered were still outstanding.

Action item NTLG 1906/3:

NTLG members to consider whether to refer measures which may still be ‘outstanding’ (i.e. not captured in the Assistant Treasurer’s press release of 14 December 2013) to Treasury for further discussion.  

End of example

Segment 2.1 – Reinventing the ATO

Plans to shape the future client experience

Steve Vesperman (ATO) noted that:

  • The ATO is currently in the process of designing the client experience of the future tax and superannuation system. The design is intended to make it easy for people to comply and difficult not to.
  • Early examples of this work include the introduction of the Independent Review function, the increased focus on alternative dispute resolution and settlements, streamlining delivery of information to the small business market, MyTax and ATO mobile apps.
  • A significant part of this program focuses on better use of technology, driving changes in ATO culture and becoming more responsive to community needs and expectations of the ATO.
  • As part of the design process, the ATO will be consulting and co-designing with a range of stakeholders (including the professional bodies) via a range of mechanisms, including targeted workshops.

Action item NTLG 1906/4:

NTLG members that are interested in getting involved (or in nominating members to be involved in) the co-design process as part of designing the future client experience to contact NTLG Secretariat (NTLG@ato.gov.au).

End of example

Members noted the need to ensure that the potential evolutions in the taxpayer / tax advisor relationship are taken into account in shaping the future client experience, including by progressing discussions from the recent Tax Practitioner Conference.

NTLG member input on ‘changes in interactions with the ATO’

  • Neil Olesen (ATO) noted that a central driver of the Reinventing the ATO program is to change the user-experience, and that NTLG member views on any changes in that user-experience would be a valuable benchmark against which to assess the impact of a range of ATO initiatives.
  • NTLG members noted that:
    • A shift towards a more sensible approach being taken and ATO officers being a little less ‘risk averse ‘had become increasingly noticeable in the past few months.
    • Members had noticed an increased focus on early and effective dispute resolution. For example, in order to settle an outstanding matter in relation to the use of small business benchmarks, the ATO in-house facilitator took the opportunity to visit the premises of the business to understand its circumstances. The focus in some business lines was now shifting to ways in which to avoid disputes.
    • Members noted the need for the ATO to ensure transparency via public guidance in relation to consistent positions taken in the context of settlements (i.e. if specific views were being applied broadly).
    • Members noted that Independent Review has been a worthwhile process for those involved. Members noted the approximately 50/50 ATO/taxpayer favourable findings ratio in relation to Independent Reviews with interest, and acknowledged that more effective early resolution of disputes may cause this ratio to change in the future, or for taxpayers to not seek an independent review.
    • Certain projects being driven through the consultation arrangements (e.g. improving the pre-compliance lodgment review process via the Large Business Liaison Group) have been welcomed by taxpayers and are creating expectations of future improvements in the user-experience.
    • Members expressed some concerns with current Proof of Identity procedures in relation to outbound ATO calls. The ATO acknowledged concerns with confirming that such calls have originated from the ATO and reiterated that taxpayers and advisers always have the right to request a reference number and ring the ATO back to ensure that sensitive information is only shared via secure channels. The ATO is also working on the introduction of voice authentication / identification technology.

Segment 2.2 – Strategic ATO initiatives

Project DO-IT

  • Michael Cranston (ATO) referred to Attachment 2 which noted that over 100 disclosures have already been received, with total additional income disclosed over $8 million. [Post-meeting note: as at 13 June 2014 net additional income disclosed was around $12million] The ATO has also received almost 200 expressions of interest from taxpayers that intend to lodge a disclosure but are seeking more time to finalise their disclosure.
  • Members noted that the statistics to date suggested that take-up of the disclosure offer has been slow and steady, but this may be partly because taxpayers may leave it to the last minute to file their disclosure.
  • Michael Cranston noted that the ATO was satisfied with progress to date and that anecdotal feedback had been that a lot of taxpayers were getting their affairs in order before filing, especially where their arrangements were complex.
  • The ATO is currently in the process of writing directly to taxpayers that may be in a position to avail themselves of the disclosure initiative to encourage disclosure.
  • Members noted that additional publicity in relation to the terms of this initiative (including that this is a ‘last time’ offer and potential penalties for those that hold out) would be beneficial.
  • Members also noted concerns within the tax community caused by commentary on this initiative that Project DO-IT was not legally binding and did not prevent the ATO from seeking to amend outside the four year window, or (for example) repatriated trust capital could be taxed under section 99B.
  • Michael Cranston reiterated that the ATO was seeking to come to an appropriate outcome in each circumstance in line with the principles underpinning this project. For example repatriated funds where accumulated profits for the last four years (or income in relation to those profits) are taxed, under Project DO IT will generally not face further taxation. The ATO will work on these on a case by case basis and provide certainty under a deed. Michael welcomed NTLG member advice on how the ATO could rectify any misconceptions in relation to the project.
  • Michael noted that the ATO had embarked on a sustained and targeted communications campaign involving but not limited to media. The Tax Institute, CPA Australia and the ICAA noted that each organisation would be happy to assist in publicising this initiative via available channels and noted initiatives already underway such as CPD sessions and webinars.

Action item NTLG 1906/5:

Michael Cranston to contact NTLG members to explore potential for further use of communications channels in relation to Project DO-IT.

End of example
  • Members noted that the ATO should be cognisant of conflicts of interest between advisers and taxpayers that may prevent disclosure. This may occur, for example, where the adviser that had set up the questionable tax structure was still advising the same taxpayer on whether to disclose via Project DO-IT.

Revision of the risk differentiation framework for high wealth individuals in light of the recommendations of the Australian National Audit Office (‘ANAO’)

  • Michael Cranston noted significant work had been done within the ATO to ensure that the Risk Differentiation Framework (‘RDF’) had been refined and targeted in the past few years (including in the later years of the ANAO’s review period).
  • Further revisions will include differentiating more clearly between taxpayers that are ‘high consequence’ versus ‘high risk’. These revisions would be reflected in the next version of the Tax compliance for small-to-medium enterprises and wealthy individuals booklet which is due to be issued in the coming months.
  • Michael Cranston confirmed that the taxpayer experience of the ATO’s application of the RDF should not change significantly, but that any changes in line with the implementation of ANAO recommendations would be explained.

The Tax Practitioner Conference and the ‘Systemic Drivers of Change’

  • Michael Monaghan (ATO) provided an overview of the ‘Systemic Drivers of Change’ project and the recent Tax Practitioner Conference which focused on collaboratively shaping the future of the tax professional / ATO relationship and the transition from ELS to Standard Business Reporting (‘SBR’).
  • Members agreed that the workshop had been a worthwhile endeavour and successful in engaging the profession and kick-starting an important conversation.
  • Next steps: A series of further co-design workshops would be driven in conjunction with the ATO Tax Practitioner Advisory Group to address and resolve a number of practical issues identified in relation to the transition from ELS to SBR. These workshops would involve tax professionals, the ATO and software providers.
  • Members agreed that the Consultation Steering Group should also be kept abreast of ongoing consultation activities.
  • Members noted that it would be helpful for the NTLG to be provided with a high-level overview of activity currently being undertaken to drive this transition.

Dividend washing

  • Andrew Mills noted that many lessons had been learned in relation to the ATO’s involvement in the tax law change and compliance action to address dividend washing, including:
    • The ATO should have clarified its view on the applicability of section 177EA and the argument for tax law change (i.e. that a targeted amendment is a lower compliance cost alternative to address dividend washing) much earlier in the process to prevent confusion in the market place.
    • While the ATO’s decision to communicate directly with taxpayers had been made after consideration of the Guidelines, this decision in the prevailing circumstances may not have been warranted.
  • Andrew Mills also noted that as the current compliance action only reflected data mining in relation to trading on a select number of stocks, the ATO would be undertaking further compliance action over coming months based on trading in relation to a broader range of stocks.
  • Members noted concerns with the retrospective nature of the ATO’s compliance action.
  • Andrew Mills noted that the ATO had consistently applied the same view of the law since dividend washing had come to the ATO’s attention.
  • Andrew also noted that two contrary private binding rulings issued in early 2013 and withdrawn shortly afterwards were not a sufficient basis to assert that the ATO’s actions had contributed to taxpayers adopting that differing view. This is especially the case where taxpayers had adopted the differing view outside that short time-frame.
  • Andrew Mills also noted that industry and professional body submissions had been broadly supportive of that draft ATO view which was subsequently finalised as TD 2014/10.
  • Members queried whether it was possible for the ATO to consider what the appropriate action should be in each circumstance i.e. whether it was always appropriate to cancel the whole imputation benefit. Members queried whether taxpayers can submit a methodology for calculation of the amendment for the ATO’s consideration.

Action item NTLG 1906/6:

NTLG Secretariat to clarify the current approach to amendments for taxpayers that have engaged in dividend washing.

[Post-meeting note and ATO response: The ATO is of view that taxpayers can self-amend to remove the imputation credits flowing from shares “purchased back” on the special market. This means the taxpayer would continue to be entitled to the imputation credits on the original shares held.

The ATO would be happy to consider alternative apportionment methodologies on a case-by-case basis (with regards to the additional imputation credit benefit) to determine if they are appropriate.

Members interested in discussing this matter in further detail should contact Deputy Commissioner Tim Dyce via the NTLG Secretariat (NTLG@ato.gov.au) or directly.]

End of example
  • In response to a member query, Treasury noted that the legislative amendment was considered worthwhile due to the expected decrease in compliance cost to address the underlying concern, rather than reliance case-by-case on the general anti-avoidance provision.

Action item NTLG 1906/7:

Members agreed to refer the Guidelines to the ATO Tax Practitioner Advisory Group for consideration as to whether these Guidelines remain current and appropriate.

End of example

Health check of ATO’s consultation arrangements

  • Members noted current ATO consultation activities and ongoing efforts to address concerns in relation to the operation of certain forums (e.g. the GST Advisory Group).

Segment 3 – Red-tape reduction

Current red-tape reduction activities

Andrew Watson (ATO) led a discussion on the ATO’s current red-tape reduction activities.

In light of the summaries circulated to NTLG members before the meeting in relation to red-tape reduction initiatives being driven by other stewardship committees and the Consultation Steering Group, members noted that:

  • The summaries in relation to activities of other stewardship forums reflected differing levels of progress in this space across the sectors. The ATO confirmed that high-level brain storming sessions were being converted into action plans with an intention to implement ideas as and when possible. It was also noted that certain forums were further advanced than others in this endeavour.
  • Members noted that aspects of the summary provided were too high-level to facilitate NTLG member comment on the initiatives being considered. NTLG Secretariat agreed to include further detail in future summaries, especially as and when other committees increase consultation efforts in this space.
  • Further ideas raised by members for consideration included:
    • Considering whether the ATO should be setting base case levels under which the veracity of a deduction would not be considered. The ATO noted that this was a valid idea but would likely have significant revenue implications.
    • Delaying the date from which taxpayers can lodge tax returns until after pre-filled information becomes available. Members also noted that the application of the penalty provisions may need to be considered with increasing reliance on ‘push’ tax returns.
    • The capacity for the ATO to provide guarantees on primary tax (rather than penalties and interest only) where taxpayers have relied on ATO tools (such as the employee/contractor tool) in good faith and in line with the facts and circumstances of their case. The ATO agreed that this idea was worthy of further exploration.
    • Further exploring the capacity for the ATO to set parameters in which taxpayers will be ‘deemed to comply’. Members noted the need to ensure that such rules are applied consistently across market segments to avoid perceptions of favouritism.
    • Identification of pressure points in relation to difficult areas of the law e.g. the application of the maximum net asset value test in the small business CGT rules, especially the application of valuation processes – potential to explore administrative guidance / solutions.
    • Capacity for the ATO to further rely on advisors to undertake quality assurance work in relation to (for example) details on CGT schedules especially cost base calculations.
    • Capacity to simplify requirements in relation to the capital allowances schedule, especially the delineation between repairs and maintenance and improvements e.g. consideration of rules of thumb such as if the spend is less than 80% of the original value of the capex spend, then an immediate deduction should be allowable.

Action item NTLG 1906/8:

ATO to make a recommendation to NTLG members on how best to progress consideration of red-tape reduction ideas raised at the June NTLG meeting i.e. whether ideas should be referred to other committees or business lines for further consideration.

End of example
  • Roger Brake (Treasury) noted that the agency will be consulting on potential red-tape reduction ideas in the coming months, including consideration of the most appropriate manner in which to progress such ideas (e.g. some significant changes may be best considered as part of the Tax White Paper process).

NTLG member project: Capacity for increased use of safe harbours to decrease compliance costs in low-risk areas

  • Michelle DeNiese (Corporate Tax Association) noted that a working group comprised of NTLG member associations had considered and prioritised approximately seven potential ideas for the use of ‘safe harbours’ within the tax system.
  • The Working Group would be in a position to circulate a draft discussion paper on these ideas to the balance of the NTLG membership in about a week, with the intention of collaborating with the ATO to progress these ideas out of session.

Action item NTLG 1906/9:

NTLG members and relevant ATO experts to explore the feasibility of ideas in the draft NTLG discussion paper on ‘safe harbours’ out of session, for further discussion at the September NTLG meeting.

End of example

Reducing the compliance costs of ATO information collection

  • The ATO noted that work was ongoing in relation to whether ATO compliance surveys were well-targeted and effective, but that consideration should be given to whether all such surveys should go through a co-design process as a matter of course.
  • The ATO is currently considering strategies to improve audit capability, including the potential to co-design with tax and legal professional associations and business to develop guidelines to better support information requests e.g. what information is reasonable to ask for? Members expressed an interest in feeding into this process when appropriate.

Action item NTLG 1906/10:

NTLG Secretariat to alert ATO project team of NTLG member interest in providing input into the consideration of guidelines to better support information requests.

End of example
  • Members noted that information requests in the Public Groups and International market increasingly involved an initial discussion between the taxpayer and the ATO over a draft questionnaire, with the intention of differentiating between questions that could be answered quickly and questions that would warrant a more formalised process. This process was proving lower-cost and more worthwhile for both taxpayers and the ATO.
  • Peter Coakley (ATO) noted that the ATO is currently undertaking a project to identify and streamline all communications to taxpayers, and that this project may be appropriate for further discussion at the September NTLG meeting.

Segment 4 – In-depth focus areas

4.1 ATO input into tax policy and law design processes

  • Tony Stolarek (ICAA) queried how consultation could support Integrated Tax Design’s current focus and priorities.
  • Andrew England (ATO) noted that the Integrated Tax Design function had a range of priorities focussed on:
    • Assisting other business lines in adopting design methodologies for implementation of new policy and administrative improvements, such as the Reinventing the ATO program;
    • Providing governance and law and administrative design expertise for the implementation of tax and superannuation measures.
    • A small number of tax advocacy priorities largely focussed on tax policy changes that may be necessary to support the Reinventing the ATO program e.g. One Touch Payroll.
    • Supporting Treasury’s work in costing tax and superannuation priorities via the ATO’s Revenue Analysis Branch.
  • Members agreed that a high-level overview of the range of Integrated Tax Design activities and priorities should be publicised to address any concerns of a resource imbalance between ATO and the Treasury in relation to tax policy.

Action item NTLG 1906/11:

NTLG Secretariat to circulate an overview of Integrated Tax Design’s activities, staff allocations and priorities to NTLG members.

End of example

Andrew England also noted that Integrated Tax Design would continue to seek and welcome external input in driving its priorities via the Consultation Hub, Consultation Steering Group and/or the balance of the ATO’s Consultation Arrangements.

Roger Brake (Treasury) noted that the agency was supportive of external involvement in costing processes to improve outcomes and clarify assumptions, but that it was not always appropriate to consult. For instance, there would be little benefit in consulting on some simple costings and there may be instances where Government does not wish to undertake pre-announcement consultation. Treasury would continue to deal with these issues with the Government on a measure-by-measure basis.

4.2 ATO approach to test case litigation

Andrew Mills noted that the current test case litigation program has been in place for approximately 20 years in largely the same format and subject to the same criteria, and should be reviewed in light of the ATO’s revised mission and values.

Mark Friezer (Law Council of Australia) outlined current concerns with the program, including:

  • Whether the program facilitates the proactive identification of test cases in relation to which the law should be clarified.
  • Confusion in relation to the dual objectives of the program i.e. to identify test cases and provide funding on an ’as needs’ basis, compounded by a lack of transparency as to how these twin objectives are negotiated by ATO decision makers.
  • A lack of understanding within the profession as to the decision making process in relation to test case funding applications.
  • The operation of the funding deed, including pressure to reduce costs and the resulting impact on case preparation, especially where the taxpayer is not a ‘pro bono’ client and only proceeding to litigation due to the public interest in clarifying the law.

Meeting discussion focussed on:

  • The need to review and clarify the criteria against which test case funding applications will be assessed, including the balance between consideration of the financial circumstances of the taxpayer and the benefit for the tax system in clarifying the operation of the law.
  • The need to review the funding mechanics to allow appropriate funding of ‘test cases’. Alternative methods (such as the potential to come to an agreement as to costs) should also be considered to supplement the current all or nothing funding model.
  • The need to approach the program in a proactive manner i.e. consider what issues need to be clarified and work with the profession to identify appropriate test cases.
  • How to increase transparency of decision making in determining test case funding applications.

Action item NTLG 1906/12:

Debbie Hastings to refer points raised during NTLG discussion in relation to the test case litigation program to the Dispute Resolution Working Group for further consideration and consultation, with a view to reporting back to the NTLG in September on progress / potential solutions.

End of example

Other business

Compliance program / Compliance in focus

  • Members queried what the ATO’s plans were for the release of the Compliance Program / Compliance in Focus in 2014.
  • Neil Olesen (ATO) noted that the ATO was rethinking the best way to inform various market segments as to continuing or new compliance risks identified by the ATO. This included the potential to stagger the release of such information or leverage off existing publications targeted at certain market segments (such as the Large Business and Tax Compliance booklet or the Tax compliance for small-to-medium enterprises and wealthy individuals booklet.)
  • Neil noted that the ATO would consult in determining the best way forward. Members were broadly supportive of this approach.

Tax transparency measure

  • Members queried the ATO’s plans for the release of taxpayer information for company taxpayers with gross income greater than $100 million (as currently required by legislation).
  • Neil Olesen noted that the ATO planned to soon begin consulting on the best way to disclose and contextualise such information, subject to Government views.
  • Neil also noted that the ATO had a role in explaining work done to ensure community confidence in companies’ compliance with tax laws. This includes the ATO considering both a ‘local’ and a ‘global’ context when evaluating compliance.
  • Members agreed that consideration should be given to producing joint guidance to users of published information on the potential for miscommunication. Such ideas should be further explored via the consultation process.
  • Members noted the reported comments (in the AFR in January 2014) of the then Assistant Treasurer, suggesting that the current tax transparency measures go too far. Members queried if this meant that the Government was considering changes. Members came to the conclusion that in the absence of any announcement to the contrary, they should assume no changes at this stage.

Current operation of NTLG

  • Members were broadly of the view that the forum’s shift towards the goals agreed to at the March workshop was a work in progress.
  • Members suggested that alternate methods for sharing information, particularly meeting papers, be considered (e.g. Govdex).
  • Members agreed that consideration should be given to appropriate allocation of meeting time between agenda items ahead of future meetings.

Action item NTLG 1906/13:

NTLG Secretariat to investigate alternate methods by which to share / disseminate information and meeting documents.

NTLG Secretariat to work with NTLG members to progress action items out of session and set future NTLG agendas in line with agreed objectives.

End of example


There being no further business, the Chair closed the meeting at 3.30 PM and thanked members for their attendance and contributions.

The next NTLG meeting will be held on Thursday, 18 September 2014 in Melbourne.

    Last modified: 11 Sep 2014QC 42353