GST Stewardship Group key messages 12 November 2024

Community and industry insights roundtable

Members discussed a range of issues, including:

• artificial intelligence
• Supplementary annual GST return
• processing documents and forms
• Online services for legal firms
• merchant fees and increased use of cash
• changes to Relationship Authorisation Manager
• Director Penalty Notices and ATO debt.

Driving improved reporting outcomes

Insights from pilots, initiatives and engagements have helped shape a work program with a focus on seamless and increased frequency of reporting and payment for small businesses as part of the future digitalised tax experience. The ATO will incrementally move towards this future tax experience, including:

• raising awareness within the small business community about the option and benefits of reporting monthly, expected to commence in November 2024
• applying the Commissioner of Taxation’s discretion to change a business’s GST reporting cycle to monthly for those small businesses with a poor compliance history of non-payment or lodgment and incorrect reporting. This initiative is expected to commence in February 2025 for selected small business taxpayers.

The ATO is investigating the best ways to raise awareness of monthly reporting options within the small business community and is focused on enhancing the understanding of the benefits and impacts on small businesses, bookkeepers and accountants.

Member comments

• Small businesses are sensitive to compliance costs when switching from quarterly to monthly reporting. Members queried whether the benefits of monthly reporting outweigh increased costs. The ATO noted evaluation will be an important element of the initiative, which will provide further insights at a greater scale on benefits and impacts.
• Building in incentives, including monetary incentives, could encourage businesses to move to monthly reporting. Bill payments would be reduced if paid monthly instead of quarterly.
• Paying monthly might be difficult for certain industries, such as construction, where natural business cycles may fluctuate. An industry lens will be applied as part of evaluating the initiative.
• Members asked whether the impact of Payday Super has been factored into the ATO's planning. The ATO has considered the impact of Payday Super in designing the initiative and may support small businesses to prepare for more frequent reporting and payment of tax obligations.

ATO's payment and lodgment strategy

The ATO briefed members on debt levels with a focus on GST and PAYG withholding and outlined steps to drive improvements in payment. Quicker action makes it easier for businesses to get back on track. A significant amount of existing debt is less than 12 months old.

A new approach is being implemented to shift payment behaviour by using additional support from financial advisers and other intermediaries to help taxpayers. This has already resulted in more phone calls and payment outcomes. The ATO is also developing a Vulnerability framework.

The ATO briefed members on a restructure in the Service Delivery Group, which became Frontline Operations Group on 15 July 2024.

Member comments

• Members addressed the large volume of Director Penalty Notices being issued, with tax clinics having very limited capacity to help a cohort of vulnerable people. While the implementation of the ATO helpline is a good concept, there are some teething problems.
• Members questioned limitations on ATO payment plans to 2 years. The ATO noted it is difficult for taxpayers to maintain payment plans over a long period, with many defaulting within 12 months.

Legislation and ATO update

Members had the opportunity to ask questions on updates prepared by the ATO and Treasury. The group discussed how and when the ATO can provide visibility to stewardship groups regarding upcoming public advice and guidance.

GST gap

The group discussed GST net and gross gap estimates, and how they have increased in the past 2 years since the COVID-19 pandemic. The latest gap update includes an uplift to the shadow economy which is higher than the Australian Bureau of Statistics estimate historically used. Over the past 12–18 months, the ATO has worked to develop a bottom-up GST gap which will be used in the ATO annual report from 2024–25 onwards.

Member comments

• Members asked whether the impact of Protego GST fraud is included in GST gap numbers. The ATO confirmed it has factored in a higher non-recovery rate to reflect the impact of Protego.
• Members asked whether issuing DPNs has an impact on the size of the GST gap, with the ATO noting it does not make explicit adjustments for this.

GST financial services

A key focus area of the ATO's GST Financial Services and Insurance strategy is the issue of taxpayers using GST apportionment and attribution approaches that do not align to current ATO views. Some taxpayers continue to rely on dated ATO interactions, despite the issuance of updated public guidance.

Member comments

• It can be difficult for taxpayers to align with ATO guidance when the guidance is highly fact dependent. The ATO explained that public guidance provides key principles for taxpayers to follow, and it is not possible to deal with every factual scenario. It is important for taxpayers to apply the principles to their specific circumstances. The ATO will seek to engage with individual taxpayers in areas of ambiguity.
• When public guidance is issued, the ATO should be prepared for private ruling requests on issues or factual circumstances not covered by the guidance. A member queried the time taken to finalise some private rulings in these circumstances. The ATO is prepared for private ruling requests in such circumstances; however, often the issues are highly complex, further information is required from the taxpayer, and internal experts must be engaged. As a result, complex private ruling requests take time to finalise.

2024 review and 2025 forward work program

The ATO will seek member feedback on what worked well in 2024 and what could be improved as well as suggested agenda items for 2025 meetings.

Attendees

Attendees list

Organisation	Member
ATO	Hector Thompson (Co-chair), International, Support and Programs
ATO	Andrea Wood, International, Support and Programs
ATO	Darryl McCarthy, International, Support and Programs
Australian Banking Association	Chris Plakias
Australian Bookkeeping Association	Kerrie Jarius
Chartered Accountants Australia and New Zealand	Kevin O'Rourke
Corporate Tax Association	Stephanie Caredes
CPA Australia	Ken Fehily
Digital Service Providers Australia New Zealand	Matthew Prouse
Independent Member	Jennee Chan
Law Council of Australia	Rhys Guild
Property Council of Australia	Elke Bremner
RSM Australia	Sam Mohammad
Small Business Representative	Amanda Gascoigne (Co-chair)
The Tax Institute	Bastian Gasser
University of New South Wales	Professor Michael Walpole
Wesfarmers limited	Caryn Bovell

 

Guest attendees

Guest list

Organisation	Attendee
ATO	Allan Partington, International, Support and Programs
ATO	Andrew Nutman, Public Groups
ATO	Anita Challen, Frontline Risk and Strategy
ATO	Anna Longley, Frontline Risk and Strategy
ATO	Anthony Siouclis, International, Support and Programs
ATO	Bill Neskovski, Public Groups
ATO	Jenny Lin, Private Wealth
ATO	Michael Morton, Small Business
ATO	Nadia Alfonsi, Public Groups
Department of Treasury and Finance, Victoria	Matthew Yeung
Queensland Treasury	Simon Mahler
Treasury	Juyeon Lee

 

Apologies list

Apologies list

Organisation	Member
ATO	Narda Phillips, Enterprise Solutions and Technology
ATO	Sonia Corsini, Individuals and Intermediaries
ATO	Will Day, Small Business
Treasury	Emma Baudinette