Business

June 2024

August 2024

Targeted consultation is underway.

To seek feedback to inform potential public advice and guidance on additional tier 1 (AT1) capital note issuances.

AT1 capital is a key element of the capital structure for Australian financial institutions. The ATO receives numerous applications for binding advice through the rulings system on the tax consequences associated with AT1 capital notes for investors and issuers.

There is currently a high level of maturity and consistency in AT1 capital note issuances, including their terms and features and their tax consequences.

The current approach to providing guidance is on a case-by-case basis. The ATO is considering opportunities to streamline guidance on AT1 capital note issuances and is seeking feedback on whether a Taxation Ruling would eliminate or substantially reduce the incidence of class and private ruling requests.

• Financial Institutions
• Industry bodies
• Tax agents and advisory firms

Veronica Richards, Public Groups
Veronica.Richards@ato.gov.au
Phone 02 9374 2067

May 2024

August 2024

Targeted consultation is underway.

To seek feedback to understand what guidance is required to assist taxpayers with completion of the supplementary annual GST return.

In 2024–25, the ATO is introducing a new supplementary annual reporting requirement for Top 100 and Top 1,000 taxpayers who have received a GST assurance rating through an earlier GST review.

The introduction of the return will enable us to make informed decisions about future engagements with taxpayers and enhance our treatment strategies and ability to monitor GST risks that arise in the large market.

• Advisory firms
• GST Stewardship Group
• Large Business Stewardship Group

Virginia Gogan, Public Groups
Virginia.Gogan@ato.gov.au
Phone 03 8632 4643

March 2024

September 2024

Consultation commenced in April on a discussion paper to seek feedback from stakeholders. Comments closed Friday 31 May 2024.

To seek feedback on the ATO’s proposed view on the appropriate attribution of risk weighted assets to branches for the purposes of applying the thin capitalisation rules for inward investing entities (ADI).

Foreign banks that conduct their banking business in Australia through branch(es) are subject to Australia’s thin capitalisation rules. The rules require a foreign bank to allocate a minimum amount of equity capital to its branch.

Typically, foreign banks use the safe harbour rule to work out their minimum capital amount. The rule is based on ensuring there is sufficient equity capital funding that part of the risk-weighted assets of the bank that is attributable to its branch.

The ATO does not currently have a published view on how to determine that part of the risk-weighted assets attributable to a branch. Feedback will assist in the development of an ATO view on the topic with the aim of providing certainty and a consistent industry approach.

• Foreign banks with branch operations in Australia
• Industry bodies
• Australian Banking Association
• Australian Financial Markets Association
• Tax agents and advisory firms

Johanna Tang, Public Groups
Johanna.Tang@ato.gov.au
Phone 02 9374 1689

March 2024

June 2024

Consultation is underway.

To seek feedback on proposed website guidance and examples relating to inbound related party financing by private groups in the property and construction industry.

The ATO is seeking to publish website guidance relating to inbound related party financing by private groups in the property and construction industry with accompanying examples on the ATO Legal Database.

• Private Groups Stewardship Group
• Property and Construction Stakeholder Relationship Forum

Lynette Purcell, Private Wealth
Lynette.Purcell@ato.gov.au
Phone: 08 9268 6091

February 2024

October 2024

Consultation is underway.

To explore possible valuation methodologies for both electricity and petrol expenses of a plug-in hybrid electric vehicle (PHEV).

Practical compliance guideline PCG 2024/2 Electric vehicle home charging rate – calculating electricity costs when a vehicle is charged at an employee's or individual's home provides a methodology for calculating electric vehicle home charging expenses. However, the guideline does not apply to PHEVs, which use a mix of fuels (electricity and petrol) to power the vehicle.

The ATO will consult with key tax and electric vehicle experts on whether there is a possible valuation methodology, that provides a reasonable basis to split the kilometres driven fuelled by electricity or petrol for a PHEV.

• Fringe Benefits Tax Stakeholder Group
• Federal Chamber of Automotive Industries
• Electric Vehicle Council
• Subject matter industry experts

Mark East, Superannuation and Employer Obligations
FBT@ato.gov.au
Phone 02 6058 7124

February 2024

December 2024

Consultation is underway.

To explore opportunities to help small businesses calculate their pay as you go (PAYG) instalments based on current financial performance extracted from business accounting software.

The Modernisation of PAYG instalment systems measure was announced by the government in March 2022 in the Budget 2022–23 (PDF 3.83MB)This link will download a file. Under the measure, companies can choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments. The intent is to improve alignment between PAYG instalment liabilities and profitability, and support companies in managing cash flows.

Small businesses can use software to manage their business operations and meet their tax obligations. The ATO is exploring how data within a small business’s natural digital accounting system could be leveraged to enable the calculation of PAYG instalments based on current financial performance, without the need for legislative change.

This is part of Improve small business tax performance, one of the key focus areas in the ATO corporate plan 2023–24. The ATO is collaborating with partners to build a digital-first tax ecosystem to enable seamless tax reporting from business source systems.

• Tax professional associations
• Digital service providers
• Financial technology providers
• Tax and BAS agents
• Small businesses

Michael Morton, Small Business
Michael.Morton@ato.gov.au
Phone 02 9374 2043

February 2024

December 2024

Consultation is underway.

To understand how, and what types of, ATO macro data could be made available to small businesses to help improve their tax performance.

Small businesses use third-party software, for example accounting software, to manage their business operations, understand and track their financial performance, and meet their tax obligations on time and in full.

The ATO is currently exploring the feasibility of embedding certain macro data and information into small business’ natural digital systems and software. This could include:

• ATO or other government agencies’ benchmark data and benchmark tools
• certain ATO risk rules.

This could assist small businesses and their advisers to:

• identify and understand tax risks and potential processing errors
• make informed decisions on identified tax risks
• compare their financial performance to similar businesses
• build confidence in the ATO’s administration of the tax system.

This is part of Improve small business tax performance, one of the key focus areas in the ATO corporate plan 2023–24. The ATO is collaborating with key stakeholders to build a digital-first tax ecosystem to enable small businesses to better understand their comparative tax performance and identify potential errors or tax risks prior to lodgment. This will help streamline the tax experience and make it easier for small businesses to comply with their obligations.

• Small businesses
• Tax and BAS agents
• Digital service providers
• Financial technology providers
• Tax professional partners
• Small business industry representatives
• Relevant government departments

Michael Morton, Small Business
Michael.Morton@ato.gov.au
Phone 02 9374 2043

November 2023

June 2024

Feedback received on the Consultation paper – Capital raised for the purpose of funding franked distributions, which closed on 16 February 2024, is being considered.

To seek feedback on public advice and guidance needs for the new integrity measure addressing franked distributions funded by capital raisings.

A new integrity measure that prevents certain distributions funded by capital raising from being frankable was recently enacted through amendments contained in the Treasury Laws Amendment (2023 Measures No. 1) Act 2023.

The ATO is seeking feedback on whether there are priority issues where public advice and guidance is needed to help entities understand how the new law addressing franked distributions funded by capital raising applies to their circumstances.

• Corporate tax entities and their members
• Tax professional associations
• Tax practitioners

Virginia Gogan, Public Groups
Virginia.Gogan@ato.gov.au
Phone 03 8632 4643

October 2023

October 2024

Consultation is underway.

To seek insights from digital service providers to inform the design of Division 7A guidance within software products.

Small business can use software to manage their business operations and tax and superannuation obligations.

Division 7A is contained in the Income Tax Assessment Act 1936 and is a complex area of the tax law. Statistically, Division 7A represents a significant part of the tax gap and is an out of tolerance risk.

The ATO has observed a general lack of awareness and understanding of Division 7A by small businesses and their registered tax agents which contributes to this risk.

Digital service providers build software that supports business in maintaining daily operations while meeting tax and superannuation obligations.

Guidance prompts and nudges could be embedded within software products at different touchpoints during a typical Division 7A lifecycle. These prompts would seek to raise awareness of potential Division 7A risks and issues as they arise. Guidance would help small businesses and their registered tax agents take corrective action.

Consultation with digital service providers will ensure Division 7A guidance within software products is viable and adds value for clients whilst also achieving ATO objectives.

• Digital service providers
• Financial technology providers
• Tax professionals

Michael Morton, Small Business
Michael.Morton@ato.gov.au
Phone 02 9374 2043

August 2023

August 2024

Targeted consultation is underway.

To seek feedback regarding implementation of the next phase (Tranche 2) of the Sharing Economy Reporting Regime including:

• public advice and guidance
• reporting requirements (data and lodgment).

Schedule 2 of the Treasury Laws Amendment (2022 Measures No. 2) Act 2022External Link requires operators of electronic distribution platforms (EDPs) to report information to the ATO on transactions relating to supplies made through the platform. This measure implements a recommendation of the report of the Black Economy Taskforce.

Under the measure, EDP operators are required to report transactions that occur on or after:

• 1 July 2023 if it relates to a supply of taxi services (including ride-sourcing) or short-term accommodation
• 1 July 2024 for all other reportable transactions.

The first phase (Tranche 1) of consultation, [202230] Sharing Economy Reporting Regime, considered EDP reporting transactions related to a supply of taxi service (including ride-sourcing) or short term accommodation.

Consultation for Tranche 2 will include all other reportable transactions for all other industries.

• EDPs operating across all other affected industries
• Peak body representatives
• Tax and other professional associations

Vanessa Kelly, Small Business Experience
vanessa.kelly2@ato.gov.au
Phone 02 4223 2851

May 2023

September 2024

Targeted consultation is underway.

To understand the costs and benefits that ‘right time’ tax payments and reporting might have on small business.

Understanding the costs and benefits of ‘right time’ (reducing the time between taxable events, their reporting and any payment) tax payments and reporting is part of Improve small business tax performance and participation by collaborating with partners to build a digital first tax ecosystem, enabling seamless tax reporting from business source systems – one of the key focus areas in the ATO corporate plan 2023–24.

The ATO is exploring the cost and benefits of ‘right time’ (more regular) GST or pay-as-you-go withholding (PAYGW) reporting and/or payments, through the following pilots:

• small businesses using a digital service to pay more frequent GST payments to the ATO
• small businesses changing their GST lodgment cycle from quarterly to monthly
• small businesses represented by a tax or BAS agent who report PAYGW monthly and GST quarterly trialling an earlier PAYGW due date for March 2024 and June 2024.

• Small businesses that subscribe to digital services offering the option to remit more frequent payments of GST
• Small businesses within the retail industry who are currently on a quarterly GST lodgment cycle
• Small businesses who are currently registered for quarterly GST reporting and monthly PAYGW reporting.
• Tax and BAS agents
• Digital service providers
• Financial technology providers
• Tax professional associations
• Small Business Stewardship Group
• BAS Agent Association Group

Michael Morton, Small Business
michael.morton@ato.gov.au
Phone 02 9374 2043

May 2023

June 2024

Targeted consultation is underway.

To explore opportunities to prevent errors and mistakes through software that small businesses use.

Small business can use software to manage their business operations and tax obligations.

The ATO is currently exploring how messaging and prompts could be embedded into software to assist tax professionals and small businesses identify issues that may otherwise be overlooked or not properly understood and help them get their tax right prior to lodgment.

This will include:

• identifying errors and mistakes
• co-designing messages and prompts to reduce common errors and mistakes.

This is part of the Improve small business tax performance initiative. The ATO is collaborating with partners to build a digital first tax ecosystem, enabling seamless tax reporting from business source systems – one of the key focus areas in the ATO corporate plan 2023–24.

• Tax professional associations
• Digital service providers
• Financial technology providers
• Tax and BAS agents

Michael Morton, Small Business
michael.morton@ato.gov.au
Phone 02 9374 2043

March 2023

June 2024

Targeted consultation is underway.

To seek feedback on administrative, compliance and systems impacts with the Implementation of a global minimum tax and a domestic minimum tax measure.

The Implementation of a global minimum tax and a domestic minimum tax measure was announced by the government in May 2023 in the Budget 2023–24 (PDF 2.4MB)This link will download a file. The government will implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from digitalisation of the economy:

• a 15% global minimum tax for large multinational enterprises with the
  • Income Inclusion Rule applying to income years starting on or after 1 January 2024
  • Undertaxed Profits Rule applying to income years starting on or after 1 January 2025
• a 15% global domestic minimum tax applying to income years starting on or after 1 January 2024.

On 21 March 2024, Treasury released the exposure draft materials to implement a global and domestic minimum tax. Treasury is seeking stakeholders’ views on:

• the exposure draft primary legislation, subordinate legislation and accompanying explanatory material
• priority issues that would inform the ATO’s administrative approach and public advice and guidance on this measure
• interactions between the exposure draft primary legislation and provisions in Australia’s existing income tax law as outlined in a discussion paper.

Comments can be submitted to Treasury until 16 April 2024 on the primary legislationExternal Link and discussion paper and until 16 May 2024 on the subordinate legislationExternal Link.

• Large corporations and multinationals
• Professional services accounting firms
• Digital service providers

Adam Peel, International, Support and Programs
adam.peel@ato.gov.au
Phone 07 3213 5230