Key highlights
- Members acknowledged the work undertaken by the ATO and Treasury into the review of new legislation guidance products.
- The ATO provided members with data on its Litigation and Test Case program.
- Griffith University and Curtin University presented a snapshot into their Tax Clinic operations covering the variety of programs and services offered to their clients and the community. They noted that their students benefit greatly from the work experience undertaken at the clinic on both a professional and personal level.
- The ATO outlined the steps involved in escalations and complaints processes available to taxpayers.
- Members acknowledged the depth and detail of the new ATO corporate plan 2022–23 and expressed interest in consultation on improving small business tax performance.
Opening comments
Andrew Orme, Acting Second Commissioner, Law Design and Practice Group, ATO; Peter Godber, The Tax Institute
National Tax Liaison Group (NTLG) co-chair Andrew Orme welcomed members and advised that he is presently replacing Kirsten Fish, who is on leave. The external co-chair Peter Godber noted the value members placed on consultation with the ATO and the work on the revised ATO Consultation framework. Members are strongly supportive that it will build trust and confidence as we work together.
Treasury
Diane Brown, Deputy Secretary, Revenue, Small Business and Housing Group, Treasury; Laura Berger-Thomson, First Assistant Secretary, Personal and Indirect Tax, Charities and Housing Division, Revenue, Small Business and Housing Group, Treasury
Treasury advised:
- They are working on the Budget which will be delivered on 25 October.
- The Budget will address the outcomes of the government’s consideration of announced but unenacted measures.
- Tax treaty negotiations continue with Greece, Slovenia and Iceland. The treaty with India is being progressed and they are close to an agreement with Portugal.
- Progress continues on OECD Pillars 1 and 2 with Pillar 2 reasonably settled. Ongoing discussions and negotiations are occurring for Pillar 1
- Consultation on the exposure draft on franking distributions and capital raising has recently closed. Members observed that there have been substantive submissions from their members on this topic. Treasury acknowledged the feedback and noted that it was valuable.
- There are currently 4 bills in Parliament
- Treasury Laws Amendment (Electric Car Discount) Bill 2022
- Treasury Laws Amendment (No. 2) Bill 2022
- Treasury Laws Amendment (2022 Measures No. 3) Bill 2022
- Treasury Laws Amendment (Australia-India Economic Cooperation and Trade Agreement Implementation) Bill 2022.
Review of new legislation guidance products
Fiona Knight, Deputy Commissioner, Office of the Chief Tax Counsel, ATO; Lisa Clifton, Assistant Commissioner, Tax Counsel Network, ATO; Andre Moore, Law Division, Treasury
Members were provided with the final report of the findings from the joint review by ATO and Treasury on the process for supporting new tax laws with extrinsic materials and ATO guidance. The review complemented a separate review by Treasury on Explanatory Memoranda (EMs). The report outlines the 7 best practice principles that have been developed. These principles shaped the 5 recommendations of the review:
- Consideration of Public Advice and Guidance (PAG) issues when designing new law
- Prioritisation of new law issues which may require guidance
- Determining the appropriate PAG channel and product
- Improved external visibility of decisions to develop new law guidance
- Continue to refine the drafting and content of Ems.
These recommendations were informed by internal and external consultation processes.
The ATO acknowledged the importance of embedding, in a consistent manner, the recommendations in ATO and Treasury processes for the development of legislation and law guidance so that this becomes standard practice.
In undertaking the EM review, Treasury engaged digital content experts to improve the quality and consistency of EMs noting that these improvements will continue to evolve. Treasury will have a greater focus on incorporating more policy context into its EMs.
Members questioned if the new approach to drafting EMs has been applied recently as the recent EM on franking distributions does not provide the policy context. Treasury noted the feedback and will discuss this with the drafting team.
Members raised the importance of Treasury providing feedback in response to submissions. Treasury acknowledged there previously was a formal process, however this has not been the case recently due to resourcing and other priorities.
Members identified the proposed Technology Investment BoostExternal Link deduction uses the terminology ‘digital operation’ which is a new term that will need clarification.
Action item |
NTLG 2210/1 |
Due date |
12 December 2022 |
Responsibility |
Laura Berger-Thomson |
Description |
Treasury to provide members with further relevant information regarding the Technology Investment Boost deduction. |
ATO Litigation program
Justin Byrne, Law Council of Australia; Fiona Knight, Deputy Commissioner, Office of the Chief Tax Counsel, ATO
The purpose of this item was to provide information on the ATO’s litigation, including test cases, program. In 2021–22 litigation case numbers have returned to pre-COVID-19 levels. During this time:
- the ATO resolved over 18,600 objections
- 440 applications were made to the Administrative Appeals Tribunal (AAT) / the Court system
- 455 decisions were made by the courts.
Only a very small number of dispute matters result in litigation. The data indicates that less than 5% of audit adjustments are objected to and, of those that do, less than 3% result in an application to the AAT / the Court system. Of the litigation cases over 65% were resolved prior to hearing, mainly due to the production of appropriate evidence.
During 2020–21, the program experienced a spike in activity, particularly in the number of AAT cases. This was due in part to the large number of stimulus cases – 223 cases in 2020–21 in comparison to 45 cases in 2021–22. For cases resolved during 2021–22 the proportion of decision favourable (partially or wholly) to the Commissioner is approximately 70–80%.
Funding for test cases is dependent on the case meeting the criteria outlined on ato.gov.au. Cases must involve issues where there is uncertainty or contention about how the law operates and it is in the public interest to be litigated.
Many cases are declined because the criteria are not met. Last year, of the 22 cases nominated for consideration, only 2 were approved (5 cases were approved in the prior year). Of the cases that are rejected, the panel generally finds that these can be determined by applying existing precedent.
The ATO invited members to identify any other aspects of the ATO Litigation program they would like to discuss.
ATO corporate plan 2022–23
David Allen, Deputy Commissioner, Enterprise Strategy and Design, ATO
The ATO provided a summary of its 2022–23 Corporate Plan noting that there are 7 key focus areas:
- Improve small business tax performance
- Deliver innovative business registry services
- Implement targeted strategies to address collectable debt
- Expand the use of Single Touch Payroll data
- Transition to new data centre
- Manage cybersecurity
- Enable data and digital investment through sustained efficiencies.
Members identified that improving small business tax performance will be challenging. The ATO noted that the initiative is focused on improving small business by collaborating with partners to build a digital first tax ecosystem; enabling seamless tax reporting from business source systems. It will be a long-term project with consultation to occur as appropriate.
ATO processes for complaints and escalations
Justin Byrne, Law Council of Australia; Kath Philp, Assistant Commissioner, ATO Corporate, ATO; Faith Harako, Assistant Commissioner, Public Groups and International, ATO; Richard Mold, Assistant Commissioner, Objections and Review, ATO
Members were presented with an overview of how the ATO complaints, objections and escalations processes work and interact.
The ATO advised that:
- escalations are available to taxpayers
- a taxpayer subject to an audit or a review will typically receive a case plan or notification letter which sets out the escalation points
- we are mindful of concerns that using an escalation process could be seen negatively
- the best approach is to raise issues as early as possible with the compliance team in the first instance and to advise the compliance team if there is to be an escalation made outside of that team
- in certain circumstances, if the issue involves a complex technical dispute, the case team may engage officers from our Tax Counsel Network or other subject matter experts
- sometimes taxpayers escalate too quickly and to an inappropriate level.
The ATO complaints process involves a complaints resolution officer who is not involved with the case. Over 85% of complaints are resolved within 15 business days and while the outcome may not align with the taxpayer view, the taxpayer is provided with the opportunity to be heard. In next year’s annual report, the ATO will publish more in-depth detail about complaints and what element of the Taxpayers' Charter they relate to.
Members observed that for escalations involving a technical issue, it seems to be difficult to gain access to a subject matter expert. The ATO advised that an issue should not be escalated directly to the ATO’s Tax Counsel Network (TCN). However, if TCN has been involved in a case, they would usually be available, together with the case team, for discussion.
Tax clinics
Richard Mold, Assistant Commissioner Objections and Review, ATO; Brett Freudenberg, Clinic Director, Griffith Tax Clinic; Annette Morgan, Clinic Director, Curtin Tax Clinic
The National Tax Clinic program is an Australian Government initiative which provides free independent advice for people who cannot otherwise access paid tax professional advice because of low income, geographic location and/or other extenuating circumstances.
Presently, the tax clinic program is run through 15 universities throughout Australia. The ATO is not involved in the everyday operations of clinics but provides administrative and governance support and assistance.
The 4 main activities undertaken by tax clinics include:
- provision of advice to clients to improve their understanding of the tax system
- representation of taxpayers and small businesses when they need to interact with the ATO
- offering educational programs to assist the community on matters of interest
- advocating for clients when systemic tax-related issues are identified.
Griffith University and Curtin University tax clinics provided an overview of the day-to-day operations of their tax clinics and outlined some of their past achievements and future objectives.
Members commented on the lack of capacity of its members to provide support on a pro bono basis especially in regional areas. Members were appreciative that tax clinics helped to bridge this gap.
Members suggested that the retired tax agent community might be supportive and willing to engage to assist in some capacity.
Action items update
NTLG 2204/1 – Measuring the effectiveness of public advice and guidance
The ATO provided an updated paper to members as part of the meeting papers. Members are to consider the information and were encouraged to respond to the questions originally posed in the April 2022 paper.
NTLG 2204/2 – Digital assets and Transactions
Members provided the ATO with a copy of the joint submission lodged with the Board of Taxation in response to the Board’s Review of the Tax Treatment of Digital Assets and Transactions in Australia. Members noted that an out-of-session conversation with relevant stakeholders could be considered to finalise this item.
NTLG 1911/1 – Establishment of NTLG sub-group to consider compliance costs
Members provided written comments to Assistant Commissioner Andrew Watson following their meeting with academics. Members sought a final conversation with Andrew before closing the item.
NTLG 2208/3 – Operation Protego
Members were provided with a link to a recent podcast featuring Assistant Commissioner Michael Morton. This podcast contains information on ways in which professional organisations can support the Operation Protego initiative.
NTLG 2208/1 – Consultation refresh – Consultation framework and principles
The ATO advised that work is continuing, with the intention to provide an updated consultation framework to members in November for their feedback.
NTLG 2208/2 – Consultation refresh – Professional association representative obligations
Members confirmed work is still underway.
Attendees
Organisation |
Attendees |
|---|---|
ATO |
Andrew Orme (Co-chair), Law Design and Practice |
ATO |
Jeremy Hirschhorn, Client Engagement |
ÁTO |
Martin Pook, Office of the Chief Tax Counsel |
ATO |
Robyn Theacos (Secretariat), Enterprise Strategy and Design |
Chartered Accountants Australia and New Zealand |
David Watkins |
Chartered Accountants Australia and New Zealand |
Michael Croker |
Corporate Tax Association |
Michelle de Niese |
CPA Australia |
Alexis Kokkinos |
CPA Australia |
Elinor Kasapidis |
Institute of Public Accountants |
Tony Greco |
Law Council of Australia |
Justin Byrne |
The Tax Institute |
Peter Godber (Co-chair) |
The Tax Institute Professional Bodies Coordinator |
Julie Abdalla |
Tax Clinic (Curtin University) |
Annette Morgan |
Tax Clinic (Griffith University) |
Brett Freudenberg |
Treasury |
Diane Brown |
Treasury |
Laura Berger-Thomson |
Apologies
Organisation |
Member |
|---|---|
The Tax Institute |
Jerome Tse |
Law Council of Australia |
Angela Lee |