GST Stewardship Group key messages 30 July 2024

Public Groups' justified trust assurance programs

The Australian Taxation Office (ATO) provided an overview of the Top 100 and Top 1,000 GST justified trust assurance programs. The ATO explained how the 2019 introduction of a dispersed delivery model for GST led to the Public Groups Client Experience area taking responsibility for administering/collecting GST in the large market.

The number one GST risk in the large market was around governance, systems and controls. The ATO observed high error rates accompanied by high rates of voluntary disclosures when businesses were contacted by the ATO.

Following the introduction of justified trust assurance programs, justified trust has driven improvements in tax performance and businesses' assurance ratings have improved. While the ATO acknowledged some aspects of the programs come with increased cost and effort, this is reflective of increased expectations of government and the community. The ATO endeavours to keep these costs and efforts to a reasonable level.

In the Top 100 GST assurance program, the ATO said that more than 90% of businesses achieve medium to high level assurance results.

In the Top 1,000 combined assurance program, the ATO is starting to see improvements in outcomes for GST governance, with increased numbers of taxpayers achieving stage 2 or 3 ratings. Stage 1 ratings for governance is a key reason taxpayers do not achieve an overall high assurance rating.

The ATO provided an update on recent changes to the Top 100 and Top 1,000 programs as publicised in the Business bulletin.

The ATO also provided an update on recent consultation on how GST disclosures could be enhanced to reduce the likelihood and intensity of justified trust reviews.

Member comments

Members commented that both the GST and income tax justified trust assurance programs are now working more holistically.

It was noted that sometimes the ATO doesn't use a bespoke approach in subsequent reviews that are undertaken. The ATO noted it can be difficult to compare individual taxpayer experiences as all taxpayer situations are different.

A member outlined a situation where a taxpayer received 3 different justified trust letters from the ATO and had to deal separately with each communication.

Members asked whether the ATO is planning to coordinate its justified trust assurance programs with the provision of public guidance in specific areas. The ATO advised that in situations where no public guidance is available, justified trust teams liaise with internal experts to form a view based on the relevant facts and circumstances. This view is then communicated to the individual taxpayer.

The Corporate Tax Association noted it regularly meets with the ATO's justified trust program leads to talk through a range of issues.

GST guidance and compliance products

The ATO explained considerations in determining what public advice and compliance products to develop, including prioritisation and the type of product, such as binding or non-binding.

The ATO takes a consistent approach when developing public advice and guidance (PAG), with governance provided by an ATO Public Advice and Guidance Steering Committee chaired by the ATO’s Chief Tax Counsel. Factors considered include:

• a demonstrated community need (that is, prevalence, community interest, independent perspective)
• a demonstrated strategic need (that is, whether the PAG is integral to an ATO strategy and/or government initiative)
• the consequences of not delivering (that is, urgency, financial impact or the availability of mitigation strategies other than PAG).

The ATO explained the specific considerations for developing 3 recent GST guidance products relating to the ATO’s GST financial services and insurance strategies, including their purpose and why it was not appropriate for them to be binding ATO Public Rulings. In each case, the guidance:

• reflected the application of existing ATO views in Public Rulings to specific practical circumstances
• was primarily outlining compliance messages
• was for a limited audience
• was preceded by engagement with particular industry participants and/or relevant industry groups.

The ATO is committed to providing purposeful, effective and timely PAG and is keen to hear from members on opportunities to improve its approach in this regard.

Member comments

Members observed circumstances where ATO auditors may not understand the nuance of messages in PAG and queried whether further support needs to be provided to auditors. While support is provided to audit staff when PAG is developed, the ATO will consider what further opportunities there are to support audit staff in the future.

Acknowledging that the ATO does not consult on every guidance product, discussion explored what engagement options the ATO might consider in future with members. This focused on situations where there may be benefit in discussing the ATO’s reasons for taking a particular approach to a guidance product, even where the ATO is not seeking feedback on the actual ATO position taken.

Members noted they would appreciate visibility of the ATO's internal forward work program of potential GST PAG issues so they can provide their views on the relative priority of potential issues being considered.

The ATO will consider what options might be available and update members at a future meeting. The ATO noted members are always welcome to provide submissions to the ATO on priority PAG topics. In doing so, it is important for members to address the factors for determining the development of PAG.

Community and industry insights roundtable

Members raised the issue of GST and tax law partnerships, a topic discussed at meetings in the past few years. There was general discussion on where things are up to and examples that have been or might need to be provided. The ATO said it would revisit this topic and would like to receive examples from members that could be included in public guidance on the issue.

Members discussed GST in the digital age, the approach that Malaysia is taking in 2025 regarding GST e-invoicing, and how that could be a model for Australia and our own evolving GST system.

A member raised the visibility of GST group registrations, noting they are unable to see members of their GST group through Online services. The ATO will investigate opportunities for improvements.

The ATO noted the Service Delivery Group has recently restructured and changed its name to Frontline Operations Group. An update will be provided at a future meeting.

Other topics of discussion included:

• slow processing of GST grouping notification forms
• ongoing issues surrounding GST registrations for non-resident entities including proof of identity
• the need for greater levels of ATO guidance for specialist mobility housing being provided through the National Disability Insurance Scheme
• alternative dispute resolution not being pursued on behalf of taxpayers.

Sharing Economy Reporting Regime

The ATO provided an update on the implementation of the Sharing Economy Reporting Regime (SERR).

Engaging with electronic distribution platforms (EDPs) and other key stakeholders, such as professional associations and peak industry bodies, builds a deeper understanding of the business models of affected EDPs. This helps to identify issues early and ensures the ATO has the necessary information and support in place to assist EDPs to collect and report SERR data.

The ATO has done a lot of work in building awareness with people undertaking 'side hustles'.

Member comments

Members noted some sellers do not believe they are in business, rather, they believe they are carrying on an enterprise. Therefore, some sellers may not have Australian business numbers.

More established platforms have a detailed registration process; however, others are less sophisticated. The ATO will review reported data and work with platforms to increase matching rates with ATO-held information.

Members observed it would be helpful if the visibility of the SERR process could extend to tax agents being able to see if their clients are using sharing platforms, noting accuracy and completeness will be ongoing issues.

As the measure evolves, the ATO will use data and work with the tax profession to help taxpayers lodge correctly and reduce their risk of getting into debt.

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

Guest attendees

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