Co-chair update
The Australian Taxation Office (ATO) noted the recent release of the 2024–25 ATO corporate plan. This is Commissioner of Taxation Rob Heferen’s first corporate plan, and his foreword outlines the key activities the ATO will focus on to continue to deliver for the community and government in the year ahead.
Justified trust
The ATO updated members on the roll-out of the Top 1,000 combined assurance program differentiated approach. There are quicker response times to requests for information in some cases, but there are still delays. The ATO will continue to monitor the situation and sought feedback on the differentiated approach. Members asked for information on the turnover of ATO teams allocated to the program and the turnaround time from the ATO’s perspective.
Regarding the Top 100 program, the ATO aims to bring engagement into real time and will apply a tailored approach. The ATO is receiving positive feedback and taxpayers are trying to keep on real time. This is an opportunity for taxpayers to work with the ATO and to understand that the ATO does want to get them into real time, but there is no set formula. Members discussed resourcing, internal processes and the frequency of ATO meetings.
The ATO also discussed the Supplementary annual GST return including member feedback, timing of implementation, and the communications strategy. Members sought clarification on how the Supplementary annual GST return interacts with the context of a Top 100 taxpayer.
Compliance risk and emerging issues
GST product classification self-review guide and checklist
A self-review guide and checklist for GST classification of food and health products was published on 1 August 2024. The self-review guide and checklist are designed to provide taxpayers with practical step-by-step guidance to:
- undertake regular self-review of the GST classification of their supplies
- assess the robustness of business system processes and controls that directly impact the decisions on GST classification of supplies.
Taxpayer Alert TA 2018/4 Accrual deductions and deferral or avoidance of withholding tax
The ATO reminded members that taxpayers who have paid interest, dividends and royalties to a non-resident that are subjected to withholding tax, have an obligation to lodge the PAYG withholding annual report by 31 October each year based on a PAYG withholding year that ends on 30 June.
Petroleum resource rent tax (PRRT)
There have been substantial changes regarding payment and lodgment for PRRT as the 'deductions cap' is now law and takes effect from 1 July 2023, with retrospective application. The corresponding Regulation was registered on the Federal Register of Legislation on 6 August 2024.
Tax deductions – trustee risk reserves
The confirmed view on the general deductibility of payments made by a super fund to its trustee is published, see Taxation Determination TD 2024/6 Income tax: trustee risk reserves: deductibility of payments made by a superannuation fund to its trustee. The publication follows the release of draft guidance in December 2023. There are no substantial changes to the Commissioner’s view expressed in the draft determination.
Local File/Master File (LCMSF) Schema Version 4.0
Advanced draft instructions supporting LCMSF Schema Version 4.0 were sent to stakeholders for their review and discussed at subsequent liaison meetings in August. Final instructions will be published online before the first lodgments, which will occur from 1 January 2025.
Research and Development (R&D) tax transparency
The first publication of data for R&D tax transparency is expected later in the calendar year before the release of the corporate tax transparency report. The published data will relate to the 2022 income year for companies with income years that started on or after 1 July 2021. This publication will include the R&D entity’s name, Australian business number (or Australian company number) and the amount representing the R&D entity’s notional deductions claimed reduced by any feedstock adjustments for the year.
Goods and services tax: supplies of sunscreen
Draft Goods and Services Tax Determination GSTD 2024/D2 Goods and services tax: supplies of sunscreen was published on Wednesday 14 August 2024. The draft GSTD clarifies how the law applies to modern sunscreen products, which are increasingly being developed and marketed as having other benefits, such as moisturising and tint.
Member comments
Members requested additional details regarding the release of the R&D tax transparency report and the ATO's planned approach. The release is being handled by the ATO's Private Wealth team, who are familiar with the processes used to support the annual release of the corporate tax transparency report.
Members expressed confusion regarding the changes to the LCMSF Schema, specifically about its target audience and purpose. The ATO clarified that the changes are intended to provide clearer guidance and serve as a standardisation. Teams are currently reviewing the feedback received in the submissions.
Findings reports
The ATO will release 5 findings reports online, with a new central landing page for easy accessibility. Members discussed trends in the Top 100 and Top 1,000 findings reports and the ATO advised of additional datapoints being explored for future reports. Members queried the data on rulings with the ATO noting it rules on the facts that are presented. The ATO highlighted themes it has been vocal about and provided clarification on the timing of rulings for a particular taxpayer segment.
Members discussed the ATO’s annual release of tax gap information and suggested community discussion would benefit from more granular information about the make-up of different market tax gaps. The ATO noted that the published suite of tax gaps is comprehensive compared with other jurisdictions and had been expanded since first being published. While the tax gap theory and methodology is complex and necessarily a ‘look back’ view of a jurisdictions tax administration performance, the ATO will continue to review how the information can be improved for public consumption.
Thin capitalisation changes
The ATO updated members on the implementation of the thin capitalisation and debt deduction creation rules new measures.
On 24 July 2024, the ATO published Thin capitalisation web guidance to assist entities that need to apply the new thin capitalisation rules.
On 26 August 2024, The ATO published Debt deduction creation rules and Division 7A web guidance to increase awareness amongst privately owned groups of the recent commencement of the debt deduction creation rules.
On 8 May 2024, the ATO published a summary of public advice and guidance (PAG) topics raised by stakeholders and how these will be prioritised, see ATO PAG consultation topics and prioritisation. Three priority PAG topics were immediately resourced:
- a practical compliance guideline (PCG) on restructures in response to the new thin capitalisation rules
- a public ruling dealing with key aspects of the third-party debt test
- guidance on the interaction of the new thin capitalisation rules with the transfer pricing rules.
The ATO’s Advice under development program provides the expected publication date for the draft PCG and public ruling.
Board of Taxation
Board member Ian Kellock will be extended for 3 years from 12 August 2024. A meeting will be held in Perth on 6 September 2024 and 2 external stakeholder consultations will be undertaken with Indigenous businesses and the oil and gas sector.
The Board recently held an external stakeholder session with industry bodies on tax transparency and appeared on a CPA podcast to talk about its role, and current and future focus areas.
Corporate residency
Treasury updated members on corporate residency, noting entities have started publishing as part of their annual report. There has been positive feedback on the guidance and on Assistant Minister Leigh’s press release.
Members noted they have been able to work through the changes and have established practices for the future.
Treasury
Treasury updated members on:
- the review of R&D, noting policy matters can be followed up by Treasury
- the proposed royalties measure announced by the government
- proposed changes to taxable Australian real property (TARP).
Treasury also noted Pillar Two legislation has passed in the House of Representatives. Regarding securitisation vehicles, subordinate legislation will follow the passage of primary legislation.
Additionally, public country-by-country reporting was introduced into Parliament and referred to a Senate committee who recommended it be passed. Once legislation is passed the final list of specified countries can be issued. The government considered the submissions and aligned it more closely with the EU reporting.
Future Made in Australia was also introduced into Parliament on 3 July 2024 and referred to a Senate committee.
Foreign investment review
The ATO gave an update on recently announced changes to the foreign investment review process. The government's announcement on Reforms to strengthen Australia’s foreign investment frameworkOpens in a new window in May 2024 focused on streamlining the framework to deliver a stronger, faster and more transparent approach to foreign investment. The announcement highlighted the government’s intention to use the foreign investment framework to better align foreign investment with the multinational tax agenda. The ATO is working closely with Treasury on implementing the changes.
Other business
The ATO will follow up on feedback provided regarding large business service offerings and noted the Service Delivery business line has restructured and is now called Frontline Operations. The ATO also gave an update on the timeline for the Large Business Stewardship Group membership refresh and integrity declarations.
Attendees
|
Organisation |
Member |
|---|---|
|
ATO |
Rebecca Saint (Co-chair), Public Groups |
|
ATO |
Fiona Knight, Public Groups |
|
ATO |
Michael Ingersoll, Public Groups |
|
ATO |
Michelle Sams, Public Groups |
|
ATO |
Nadia Alfonsi, Public Groups |
|
Australian Energy Producers |
Michael Fenner |
|
Australian Retirement Trust |
Ian Roberts |
|
Big 4 Representative |
Alia Lum |
|
BHP Billiton Limited |
Premila Roe |
|
BlueScope |
Irene Filippone |
|
Board of Taxation |
Paul Korganow |
|
Business Council of Australia |
Pero Stojanoski |
|
Corporate Tax Association |
Michelle de Niese (Co-Chair) |
|
Multiplex |
Angela Giunta |
|
South32 |
Brian Purdy |
|
The Tax Institute |
Pete Rhodes |
|
Treasury |
Kathryn Davy |
Guest attendees
Guest attendees list
|
Organisation |
Attendee |
|---|---|
|
ATO |
Harjit Singh, Office of the Chief Tax Council |
|
ATO |
Jennifer Farley, International Support and Programs |
|
ATO |
Megan Croaker, Public Groups |
|
ATO |
Rebecca Irvine, Public Groups |
|
ATO |
Stephen Dodshon, Public Groups |
|
ATO |
Youssef Halabi, International Support and Programs |
Apologies list
|
Organisation |
Member |
|---|---|
|
ATO |
Hector Thompson, International, Support and Programs |
|
Australian Banking Association |
Darren Norman |
|
Group of 100 |
Marc Lewis |
|
Law Council of Australia |
Adrian Varrasso |
|
Property Council of Australia |
Kelly Wong |
|
Treasury |
Diane Brown |
|
Treasury |
Marty Robinson |