Community and industry insights roundtable
Members noted the Australian Taxation Office (ATO)'s decision impact statement in response to the Federal Court’s decision in Simplot Australia v Commissioner of Taxation [2023] FCA 1115, will be a great help to the food industry. Members appreciate the ATO consulting on a range of food classification issues. The ATO advised that a range of draft public advice and guidance, including determinations, are being progressed.
Members gave negative feedback on several ATO processes, including the GST grouping notification process. The ATO advised that a range of strategies have been employed to reduce backlog and improve processing times.
The group discussed the issue of tax adjustment notes in the retail and energy sectors.
Members questioned the status of consultation on changes to the 4-year rule. The ATO intends to provide information on its advice under development page on ato.gov.au in early 2024.
Members noted they are seeing increased activity around carbon trading and other clean energy activity.
The group noted the complexity of GST issues around retirement villages. Discussion covered the evolution of traditional models into hybrid systems and build-to-rent models, and the guidance that may be required as this area evolves and changes.
Members discussed how to improve processes for GST property settlement, specifically issues around Form 2 and whether it can be incorporated into the Property Exchange Australia (PEXA) system or made obsolete.
Members noted an increase in clients experiencing vulnerability and queried the ATO’s approach to these taxpayers. Some clients who are struggling to meet their tax commitments are also managing issues such as debt, domestic violence and homelessness. The ATO’s Small Business area will discuss the development of an overarching ATO framework for supporting vulnerable taxpayers to meet their tax and superannuation obligations with stewardship group members, impacted stakeholders and senior ATO representatives and come back to the group in 2024.
ATO Second Commissioner Jeremy Hirschhorn joined the meeting to acknowledge the contributions of member George Nikolaou who is leaving the group after more than 10 years of service. Jeremy spoke of stewardship groups’ important, ongoing role in improving the health of the tax system.
Fraud and the GST system
The ATO advised that the unprecedented increase in GST-related refund fraud that led to the establishment of Operation Protego is contained.
Lessons from Operation Protego are being used to strengthen the ATO's systems against future attacks. The ATO is conscious of implementing security improvements that do not act as a handbrake on new business start-ups.
The ATO is focused on external fraud and financial crime efforts leveraged across ATO business lines, other government departments and agencies, and international organisations. The ATO works with external partners, seeks intelligence to understand, and continually calibrates and designs new, innovative controls to counter, emerging fraud threats.
The ATO is developing even better working-level relationships with a range of financial institutions to improve knowledge and intelligence on future possible GST-related fraud.
Public Groups GST focus 2023–24
The group was advised of key GST focus areas for public and multinational businesses in 2023–24 and member feedback was sought.
The ATO gains assurance for public and multinational businesses through the Top 100 GST assurance program and Top 1,000 combined assurance program. The ATO also has risk-based programs of work focused on reviewing specific higher priority or emerging GST risks.
From a risk perspective, key GST focus areas include product classification, real property, accommodation and retirement villages, international GST, financial services and insurance, and correct reporting, systems and governance.
The ATO spoke about the GST hub within its Public Groups client experience area, which has an internal and external focus.
Members discussed the level of resources required for justified trust reviews. The ATO advised that as the programs mature, more taxpayers are experiencing less intensive activity as justified trust has been reached. The ATO incorporates feedback from taxpayers into its programs.
The ATO has engaged with several public and multinational businesses undertaking build-to-rent developments. Overall, compliance has been good with only a few issues identified. ATO guidance for build-to-rent developments was raised by members, with several noting a lack of guidance on when a partly completed build-to-sell project transitions to build-to-rent.
Lodge and Pay debt reset program
The ATO updated members on the ATO debt book, with a focus on activity statement and GST debt. Small businesses continue to represent the majority of GST collectable debt.
The ATO's debt collection approach has changed to rebalance tax payment priorities. The aim is to shift taxpayer payment behaviours. It is expected to lead to noticeable changes for taxpayers and intermediaries.
The ATO advised members of the small business lodgment penalty amnesty program, running from 1 June to 31 December 2023. The program provides an incentive for small businesses to lodge certain overdue obligations through the remission of failure to lodge penalties.
The ATO is working with businesses that continue to struggle with existing debts to understand whether there’s a genuine likelihood of recovery or whether exiting is the right approach.
Members discussed the ATO’s approach to dealing with vulnerable taxpayers.
Developing a forward work program for 2024
Topics raised for agenda items in 2024 included:
- microbusiness' low levels of GST and tax knowledge and information the ATO provides to new, GST-registered businesses
- Public Groups 2023–24 GST focus areas including product classification; international GST; financial services and insurance; real property, accommodation and retirement villages; and incorrect reporting (systems and governance)
- the ongoing digitalisation of the GST system, with a focus on e-invoicing and the OECD’s Tax Administration 3.0, incorporated in the work of the Improve small business tax performance initiative
- the greater use of e-technology in audits (particularly for large businesses)
- issues arising when the ATO’s technical provisions don’t interact well and how to make these provisions work better together
- the Sharing Economy Reporting Regime and how it interacts with GST
- closer engagement with other industries, such as drugs and medical devices, health and beauty, on GST classification issues, following what the ATO has done with food.
2023 reflections
Members praised the volume and quality of communications the ATO is providing to the group, particularly the transparency and level of detail on sensitive topics.
Members commented on the quality of the meeting pack, noting its professional, well-designed look.
Members like the abridged meeting pack to share with their networks and gather feedback ahead of the meeting but would like to receive it earlier to have more time to receive feedback.
Legislation and ATO updates
Members were provided with an opportunity to ask questions on updates which included:
- legislation and consultation
- news and program updates
- GST discussions at other ATO stewardship groups
- GST public advice and guidance
- GST litigation.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Hector Thompson (Co-chair), International, Support and Programs |
|
ATO |
Andrea Wood, International, Support and Programs |
|
ATO |
Rajitha Srikhanta, Office of the Chief Tax Counsel |
|
ATO |
Rowan Fox, International, Support and Programs |
|
ATO |
Will Day, Small Business |
|
Australian Banking Association |
Chris Plakias |
|
Chartered Accountants Australia and New Zealand |
Kevin O’Rourke |
|
Coles |
George Nikolaou |
|
Corporate Tax Association |
Stephanie Caredes |
|
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 |
|
The Tax Institute |
Bastian Gasser |
|
University of NSW |
Professor Michael Walpole |
|
Wesfarmers Limited |
Caryn Bovell |
Guest attendees
|
Organisation |
Attendee |
|---|---|
|
ATO |
Anna Longley, Lodge and Pay |
|
ATO |
Brett Martin, Fraud and Criminal Behaviours |
|
ATO |
Jenny Lin, Private Wealth |
|
ATO |
Jeremy Hirschhorn, ATO Executive |
|
ATO |
Melissa Spurge, Public Groups |
|
ATO |
Virginia Gogan, Public Groups |
|
ACT Treasury |
Nicole Wong |
|
NSW Treasury |
Jane Cheung |
|
Treasury |
Victoria Henry |
Apologies
|
Organisation |
Member |
|---|---|
|
ATO |
Kath Anderson, Individuals and Intermediaries |
|
CPA Australia |
Ken Fehily |
|
Small business representative |
Amanda Gascoigne (Co-chair) |
|
Treasury |
Emma Baudinette |