Welcome and introductions
Tony Poulakis welcomed members to the meeting.
No conflicts of interest were declared. Minutes of the meeting of 27 October 2020 had been finalised and published on ato.gov.au
There was one outstanding action item.
27102020-3-1 – Anthony Barnard to liaise with Australian Border Force (ABF) regarding a longer term solution to floating storage issues.
Michael Hughes advised that the action item related to a combination of issues at the time – COVID-19, reduced oil prices and supplies en route which caused a storage issue. Petroleum Stakeholder Group (PSG) members had queried whether there was a mechanism to simplify the process using offshore vessel storage in extraordinary circumstances. Michael confirmed that the ATO was able to consider extraordinary requests to utilise temporary floating storage arrangements either by licencing or movement permissions where no overseas vessels/crew were involved, however where overseas vessels/crew were involved, clients would need to liaise directly with ABF. The ABF would continue to actively work with all industry stakeholders to facilitate storage as required, noting that there were also other issues to be considered in relation to overseas vessels in addition to excise/customs regimes.
Nathan Dickens noted that the issue had been raised in recent months as rolling lockdowns impacted on fuel stores. Helen Curran noted the prompt assistance of both ABF and ATO over the previous eight months in assisting industry with a quick turnaround of permissions. Helen also noted that the 28 day service standard was sometimes quoted at the time of seeking these urgent permissions however it was not feasible for the operations of industry. It was noted that in most cases permissions were processed quickly. Michael Hughes advised that the issue would be followed up to finalise a process.
Action item |
01092021-1-1 |
Due date |
30 September 2021 |
Responsibility |
Michael Hughes |
Action item details |
Michael Hughes to advise PSG members of an updated process relating to storage permissions. |
Reflections of 2020–21 and compliance focus areas for 2021–22
Michael Hughes noted that the 2020–21 year had been impacted by COVID-19, with aviation fuel clearances well below previous years and petroleum excise collections impacted by various lockdowns. Diesel collections had remained strong, with mining, agriculture, road transport and infrastructure industries less impacted by COVID-19.
The fuel excise tax gap for 2018–19 had been published and was estimated at 0.5% which was a very low gap. The strong tax performance was primarily attributed to the small number of large and highly compliant entities contributing a large amount of the revenue, as well as a strong Excise Client Management (ECM) program to provide support to industry. The fuel excise tax gap estimate for 2019–20 would be published in October.
Michael noted that the ECM program was a critical factor in the risk management of fuel excise for the ATO. The ATO is considering extending aspects of the program to a second tier of excise clients to provide a level of service and greater visibility of their compliance. This was not expected however, to be at the same one-on-one level as larger clients.
During 2020–21, ECMs had responded to urgent requests for advice, requests for permissions and unusual processing or lodgment payment matters, as well as assisting with changes to authorisations, supporting company-based system upgrades or outages and providing assistance to clients to ensure that appropriate processes were in place and that personnel were appropriately trained.
Level of Confidence (LoC) work had recommenced after being deferred, while industry dealt with the impacts of COVID-19. The ATO would work with industry to use regular interactions, periodic reviews of documentation, the claims process and information being shared to ensure that clients have a strong system in place to correctly lodge an excise return. Where gaps were found, the ATO would work with clients to provide assistance. A LoC review had been finalised with one fuel major and the ATO would now work with the client to go through the final sign off and share the outcome with the client. Michael encouraged members to contact their ECM if they wanted to know how their particular LoC was progressing and whether any gaps had been identified.
The compliance program for 2020–21 had included education and support initiatives which mainly related to smaller fuel excise clients. The ATO continued to find that that the level of debt and outstanding lodgment or non-compliance was low for the fuel excise client base. Where issues were identified, the ATO worked with clients to resolve issues and move clients back on track. Our New to Excise Program also supported new clients with a program of three, six and 12 month contacts to provide support for those entering the excise regime.
Approximately 13 clients had benefited from the extension of small business (SB) concessions increasing the SB threshold from $10 million to $50 million. Clients were contacted to ascertain whether they wished to move from weekly to monthly lodgment.
The focus areas for 2021–22 would be a refreshed version of the previous year, with focus also shifting to respond to recommendations from the government’s Deregulation Taskforce. The ATO would also liaise with industry during this time as work continued on the Contemporary Excise Experience program to modernise the excise collections system.
Focus topic – Deregulation Taskforce consultation paper
Industry response to Deregulation Taskforce consultation paper – Nathan Dickens
Paul Hubbard thanked the Australian Institute of Petroleum (AIP) and PSG members for their support to the Taskforce to gain an understanding of issues from a business perspective, including a visit by the Taskforce to a refinery in Geelong and a workshop held in Canberra in March. These and ongoing discussions had provided real examples of practical issues faced by industry when meeting requirements of the current excise and customs duty regime.
Submissions on the public consultation paper had closed on 31 August; this had included a submission from the AIP, as well as other industries dealing with alcohol and fuel excise and customs duty. The Taskforce was now working with KPMG to analyse reform options; Paul encouraged the AIP and industry to share information with KPMG which would provide much greater confidence for government of the compliance cost impacts of proposed reforms. The Taskforce would now consider which options would be recommended, taking into account which might require legislative changes, and which could be recommended for short term implementation or longer phase sequencing.
Nathan Dickens noted the strong public policy and tax policy case for excise reform for some time. Irritants were well known and these had been flagged in earlier consultation with government and more particularly with the ATO in 2015. That earlier work had provided a good foundation for this process. The fuel industry was very supportive of more fundamental reform of the excise and customs duty regime. Nathan noted that the reforms were in line with what industry, ATO and ABF had previously discussed however the Taskforce work, with the assistance of many agencies, was delivering a package with a more conceptual and comprehensive framework with a broader range of industry participants. The AIP considered that all conditions were now established to deliver meaningful benefits for stakeholders and at this stage, there appeared to be no barriers to that, with net benefits to be demonstrated through the costing process.
The AIP submission considered the entirety of the regime, addressing complexities across all transport fuels. In additional to issues related to petroleum and liquid fuel, the AIP had engaged with the gaseous fuels, maritime and upstream petroleum sectors. He noted that the intent of the reform was to define and simplify the system – for less reporting, better payment options and therefore less risk and cost in compliance.
Nathan noted that the AIP and industry had made a considerable investment in their support for these proposals and was keen to see a positive outcome.
Members discussed aspects of the submission including the proposed taxing point. Nathan clarified that industry considered a balance between delivering the best savings for government regulators while preserving operational efficiencies of the underbond system. The taxing point was considered from the perspectives of liquid fuels, gaseous fuels and lubricants sectors. Members also discussed the point of change of ownership in relation to the movement of fuel underbond. Industry noted that if it were streamlined, the underbond system could provide real benefits in working cashflow, supply and logistics. Potential changes to the current licensing system were also discussed as well as issues relating to deferred payment.
Industry updates – roundtable
Nathan Dickens noted the impact of rolling lockdowns creating challenges, however industry was adapting to deal with this. He also noted a full policy development agenda, with the AIP providing advice on issues around minimum stock obligations, critical reform, excise and energy transition initiatives. He noted that the investment of time and resources by industry on the excise reform was indicative of the importance of this for the AIP and its members.
Members reiterated comments by Nathan Dickens about current issues for industry. They also noted their appreciation for ECM support and noted current resource constraints in the ECM team due to recent retirements.
Tony Poulakis referred to succession management planning within the Excise Centre around ECM and other roles to build capability, noting that the relationship management role took time to build.
ATO updates
Contemporary excise experience
Michael O’Rourke provided an update on the Contemporary Excise Experience project which had been reported on at previous meetings. The project intent is to replace the current Excise Collections System and the Generic Payment System to provide a better, more contemporary client experience.
The project was planned over three years and would be delivered in three phases.
Phase 1 of the project was almost complete and would be deployed in late September 2021. The impact on the petroleum industry would be in relation to Product Stewardship for Oil (PSO) program clients having the ability to register and lodge claims online, with an online view of their accounts as currently with other taxes in the Online Service for Business (OSB) and Online Service for Agents (OSA).ECMs would be contacting member companies which recycled oil and applied for the PSO to request a hold on claims while the system was unavailable during implementation in late September.
Phase 2 of the project related to a major component of the excise system and was expected to be completed in September 2022. This would offer excise and excise equivalent goods (EEG) clients with electronic lodgment of excise duty returns and EEG registration returns, claims and amendments, as well as an online view of all excise accounts. These would again be through the OSB and OSA.
Phase 3 was expected to go live in 2023 and would enable online lodgment and processing of EEG authorisations, licensing, settlement permissions, movement permissions and delivery authorities. It was expected that this would be risk rated, with selected clients able to process requests online.
Outbound correspondence would issue to advise of changes in Phase 1 to advise the new process of registering and making claims. PSO clients would be encouraged to lodge using the OSB or OSA applications. ECMs would provide support and ato.gov.au website advice would be updated.
Members queried consultation on Phase 2 of the project, particularly where that client may have upgrades planned to their ERP systems and noting that changes would need to be factored into existing or planned IT budgets. Michael advised that the high level design for Phase 2 had recently been completed. The Enterprise Solutions and Technology area of the ATO would be developing this further advising the type of information which would need to be shared with client IT areas. The Excise Centre would engage with industry during the project. Michael noted that where clients were registered for ATO online, the excise return would be lodged as is currently the case with income tax and GST interactions.
Michael advised that the updated system would work through OSB and OSA where clients would see excise accounts alongside current income tax, GST and other taxes. The system would show previous returns, reminders would be issued when returns were due, and Phase 3 would provide for licence applications for other premises, delivery authorities, permissions.
At this stage, it was not known whether the system would use standard business reporting that some tax lodgments require, however once that detail was known, the Excise Centre would be engaging with clients.
Know our clients framework
Michael Hughes provided an update on this framework, which had been discussed at the 2020 PSG meeting.
The Excise Centre continued to work on integrating a whole-of-client assessment of risk as it related to excise and EEGs. ATO actions and engagement would then be tailored according to that risk. For example, a light touch for a low risk client may lead to automatic renewal of licences or requests for permissions being dealt with in a shorter timeframe. Michael noted that those clients with ECMs would experience that already, as the assurance provided by ECM understanding of businesses lead to a light touch approach. For clients without ECMs, the framework was considering the different approach to light touch and a firmer approach for high risk clients.
The framework would also provide risk assessments for other areas of the ATO for a whole-of-client view. Whether clients had an excellent compliance history for excise may be taken into account when other areas carried out their own risk assessments.
Justified trust update
Michael Hughes advised members that the Excise Centre continued to focus on LoC rather than a more comprehensive justified trust approach. This was also supported by the current low risk and small tax gap in relation to fuel excise.
Michael noted however that the ATO’s longer term plan tentatively included a whole-of-client justified trust position. The Excise Centre would liaise with clients when this moved to a justified trust approach and would leverage off the governance assessment work carried out for income tax and GST to ensure that excise work was fit for purpose as part of a justified trust framework.
Other Business
Tom Watson advised members that Matthew Duckworth of the ABF had moved out of the Trade Policy branch with a permanent replacement to be advised. In the interim, Joshua Hutton was the Assistant Secretary of the Trade Policy Branch.
Tony Poulakis advised members of the upcoming retirement of Michael O’Rourke. Nathan Dickens expressed his appreciation on behalf of industry for the support provided by Michael over many years and noted his strong advocacy of the excise reform initiatives.
Tony Poulakis encouraged members to contact the secretariat if they wished to raise any issues before the next meeting in 2022.
Attendees
Organisation |
Attendees |
|---|---|
ATO |
Tony Poulakis (Chair), Excise Centre, Private Wealth |
ATO |
Anthony O'Connell, Private Wealth |
ATO |
Arisva Tawadros, Private Wealth |
ATO |
Brett O'Neill, Tax Counsel Network |
ATO |
John Kirkpatrick, Private Wealth |
ATO |
Kimley Vacher, Private Wealth |
ATO |
Michael Hughes, Private Wealth |
ATO |
Michael O'Rourke, Private Wealth |
ATO |
Michelle Nourse, Private Wealth |
ATO |
Nathan Lindemann, Private Wealth |
ATO |
Rowena Troth (Secretariat), Excise Centre, Private Wealth |
ATO |
Stasi Polas, Private Wealth |
ATO |
Tony Martiniello, Private Wealth |
Ampol Australia Petroleum Pty Ltd |
Megan Kirkby |
Australian Border Force |
Tom Watson |
Australian Institute of Petroleum |
Nathan Dickens |
BP Australia Pty Ltd |
Louise Macnamara |
BP Australia Pty Ltd |
Michael Mcauliffe |
Department of the Prime Minister and Cabinet |
Anthony Barnard |
Department of the Prime Minister and Cabinet |
Paul Hubbard |
ExxonMobil |
Grace Abinoja |
ExxonMobil |
Stavroula Harlaftis |
Viva Energy Australia |
Helen Curran |
Treasury |
Timothy Woltmann |
Apologies
Organisation |
Members |
|---|---|
ATO |
Bonnie Joshi, Private Wealth |
Ampol Australia Petroleum Pty Ltd |
Jenny Park |
Treasury |
Joshua Toohey |
Viva Energy Australia |
Troy Houston |