National Tax Liaison Group key messages 23 February 2023

Information about the key topics discussed at the National Tax Liaison Group meeting 23 February 2023.

Last updated 8 May 2023

Key highlights

The implementation of an Integrity declaration for members of ATO Stewardship groups was discussed. A review of the integrity declaration’s language will be undertaken before this is implemented with National Tax Liaison Group (NTLG) members.
Members acknowledged the importance of consultation as a part of good decision making. Members agreed that when confidentiality is required, clear processes and communication of information handling protocols are beneficial to ensure sensitive information is handled appropriately.
Members had 2 post-implementation review-type discussions regarding the consultation process for 2 recent consultation matters. The ATO received positive feedback in relation to transparency and providing feedback. Members asked the ATO to consider the length of time over which certain consultation matters are conducted as part of its upfront planning. Members also asked that the purpose of each consultation event be clearly articulated and managed to ensure meaningful progress is achieved.
Members were provided with a final draft of the ATO’s new framework for consultation. The NTLG has previously assisted to shape this document via discussions in 2022. The document is still subject to editorial review before it is launched internally and published on ato.gov.au
The ATO provided an update on the Taxpayer’s Charter consultation, to which multiple submissions were received. The ATO will provide feedback to parties who submitted a submission. The ATO is consulting internally regarding its new draft Charter and will request further feedback from the NTLG in near future.
NTLG focus areas – members agreed that future meetings will be based on themes of strategic importance. The themes identified included digitalisation, the future of the tax profession, cyber security and fraud, service delivery and dispute resolution.

Opening comments

Kirsten Fish, Second Commissioner, Law Design and Practice Group, ATO; Peter Godber, The Tax Institute

NTLG co-chair Kirsten Fish welcomed members and with external co-chair Peter Godber outlined some changes in the secretariat team.

The co-chairs noted the important role consultation has in improving the ATO’s processes and advice and guidance products. Peter further welcomed the opportunity to clearly outline what NTLG members need to know, understand and do to ensure they are meeting their obligations to the ATO (including conflicts of interest and confidentiality requirements).

External organisations are looking for additional guidance from the ATO in relation to confidential consultations. The organisations are reviewing their internal processes and guidelines for engaging in consultation.

Integrity declaration

Kirsten Fish, Second Commissioner, Law Design and Practice Group, ATO

Members discussed the intended introduction of an annual integrity declaration for the NTLG. A copy of the draft integrity declaration template was provided to members prior to the meeting.

The ATO noted that it had been considering the introduction of an integrity declaration as a risk management control and it reflects good governance. The intention is that all members of ATO Stewardship groups will be required to sign the integrity declaration on an annual basis.

The declaration will ensure members of our Stewardship groups and the ATO have a common understanding of members’ obligations, including in relation to expectations, confidentiality and conflicts of interest.

Whilst NTLG members supported the use of an integrity declaration in principle, they expressed their need for clarity surrounding the obligations that are being placed upon NTLG members when participating in Stewardship group conversations. Presently, the drafting of some elements of the declaration make it difficult for some members to sign the document.

Members further commented that external participation in consultation may decrease if there is an excessive burden placed on consultation participants to comply with the obligations the ATO places may impose on participants.

Members requested that the draft document clarify:

obligation relates to ‘Australian’ tax and super systems
concept of ‘control’ in relation to affairs of business particularly for an individual and the affairs of a medium to large business
for an organisation/association, whether the representative should attest to the existence of proper processes or governance in place
whether a statement of tax record could be used.

Members also suggested the ATO consider referring to existing obligations that exist for tax practitioners rather than repeat these in the integrity declaration.

The ATO agreed to review the document and encouraged members to provide additional feedback for consideration.

Action item	NTLG 2302/1
Due date	In progress
Responsibility	Kirsten Fish
Description	Revision of the Integrity declaration The ATO will review the wording of the integrity declaration and discuss with David Watkins and Jerome Tse.

Treasury

Laura Berger-Thomson, First Assistant Secretary, Personal and Indirect Tax and Charities Division, Revenue, Small Business and Housing Group, Treasury

Treasury provided an update on developments since the last NTLG meeting. This included an update that the government had established a new Economic Inclusion Advisory Committee since the last meeting. Treasury also provided an update on the following items in response to NTLG member requests:

announced but unenacted measures of the former government regarding cash payments and taxation of financial arrangements
the tax treaty program
abolition of the Administrative Appeals Tribunal (AAT)
Multinational Tax Integrity and Tax TransparencyExternal Link
Treasury Laws Amendment (2023 Measures No.1) Bill 2023External Link (recently introduced)
Non-arm’s length expense rules for superannuation fundsExternal Link.

Treasury noted the announcement of the abolition of the AAT. Members were reassured that cases will transition from the AAT to the new federal administrative review body if they are not resolved by the time the AAT is abolished.

Section 100A

Fiona Dillon, Chief Tax Counsel, Office of the Chief Tax Counsel, ATO, Justin Dearness, Assistant Commissioner, Office of the Chief Tax Counsel, ATO

The ATO advised it would be issuing a Decision Impact Statement on Guardian, which in addition to the General Anti-avoidance rules, considered the application of Section 100A.

Post-meeting update – On 7 March 2023, an out of session discussion was held with interested members.

Consultation matters

Anthony Bach, Assistant Commissioner, Office of the Chief Tax Counsel, ATO, Liz Hardcastle, Assistant Commissioner, and Lloyd Williams, Director Individual Client Experience, Individuals and Intermediaries, ATO, Adam O’Grady, Assistant Commissioner, and Ziva White, Technical Leader, Individuals and Intermediaries, ATO

Members raised 2 matters on which to conduct a review on the consultation activities.

Working from home PCG

Members observed there had been a significant delay from the end of consultation to the release of the draft Practical Compliance Guideline (PCG). Members anticipate that the late release will cause compliance issues particularly in the unsophisticated taxpayer segment.

The ATO acknowledged that it would have been preferable for the consultation process to proceed earlier, however, as there were multiple stakeholders involved in the process, this took longer than initially planned. A significant amount of time and effort went into testing the web guidance with focus groups, with the initial testing occurring with the Tax Practitioner Stewardship Group (TPSG) in the very early stages of consultation. The ATO acknowledged that it is aware of the impact of the changes outlined in the PCG.

The ATO will use multiple communication channels to provide information to taxpayers, including:

ATO social media
paid advertising campaign
email campaigns.

The ATO received positive feedback in relation to transparency and providing feedback on this consultation. Members asked the ATO to consider the length of time over which consultation is conducted as part of its upfront planning, with an observation that the matter was conducted over a longer period than perhaps necessary.

Client agent linking

Members confirmed the need for clear boundaries for the ATO’s online client agent linking process. The linking process enables taxpayers to authorise a specific tax agent to link their account and act on their behalf electronically.

Members questioned the ATO’s plan for further consultation on this matter. It was acknowledged that the past consultation that had occurred would have benefited from the ATO outlining a clear purpose at the outset of the consultation process.

The ATO acknowledged and thanked members for their feedback, which will be considered as part of continuous improvement.

Confidential consultation

Peter Godber, The Tax Institute; David Watkins, Chartered Accountants Australia and New Zealand; Laura Berger-Thomson, First Assistant Secretary, Personal and Indirect Tax and Charities Division, Revenue, Small Business and Housing Group, Treasury; Fiona Dillon, Chief Tax Counsel, Office of the Chief Tax Counsel, ATO, Hoa Wood, Deputy Commissioner, Individuals and Intermediaries, ATO, Kate Wilson, Assistant Commissioner, Enterprise Strategy and Design, ATO

Consultation, including confidential consultation, is an important part of the ATO’s role to effectively manage and shape the tax, superannuation, and registry systems. Members reiterated the value of consultation and noted it contributes to good decision making, can mitigate unintended results and can improve services and advice to the community.

The ATO noted there will be situations where consultation needs to be confidential. The ATO highlighted safeguards which are in place to ensure the integrity of our consultation processes such as requiring individuals to sign confidentiality agreements. Members agreed that when confidentiality is required, clear processes and communication of information handling protocols are beneficial to ensure sensitive information is handled appropriately.

Members requested clarity on the following:

ATO and government security classifications (for example, what does a document rating of 'Official' mean outside of government, and how should this be treated?).
Whether a standing confidentiality agreement could be considered between the ATO and an professional body/organisation.
The difference between targeted consultation and confidential consultation.
In cases where an individual has been requested to sign a confidentiality agreement, can that individual share with an
- assistant for the purposes of getting ready for the meeting
- expert in his/her immediate team
- immediate team
- organisation?

Members also requested that the ATO:

Consistently provides guidance/principles to ATO staff which clearly outlines when consultation is confidential and when it is not.
Be clear when scheduling a meeting with the ATO about that status of the meeting. That is, does confidentiality apply to the meeting’s existence, content and/or the attendees.

The ATO noted its interest in the actions external organisations are taking to increase governance where this is needed. Members noted that some proposals include:

improving centralised record keeping
considering whether an organisation’s head of regulatory affairs should maintain a central register of confidentiality agreements
a voluntary code of conduct
reviewing internal guidelines.

The ATO acknowledged this matter requires further discussion with members.

ATO consultation framework

Kate Wilson, Assistant Commissioner, Enterprise Strategy and Design, ATO

Members were provided with a final draft of the ATO’s new framework for consultation. The NTLG has shaped this framework through discussions throughout 2022. This framework will replace the ATO’s consultation protocol which has guided consultation approaches since 2015. The framework demonstrates the ATO’s commitment to ‘good’ consultation activities and centres around 6 principles:

purposeful
targeted
timely
accessible
transparent
evaluate and review.

These principles will guide ATO staff and others involved in consultation (from early planning, to conducting consultation, to finalising outcomes).

The document is still subject to editorial review before it will be published on ato.gov.au

Proposed consultation

Fiona Dillon, Chief Tax Counsel, Office of the Chief Tax Counsel, ATO; Anthony Klein, Member, Tanya Titman, Member, Board of Taxation; Michelle Calder, Acting Chief Executive - Board of Taxation Secretariat

The ATO noted that it has a range of consultation activities planned, including:

Public consultation in relation to a draft Practical Compliance Guideline PCG 2023/D1 Electric vehicle home charging rate - calculating electricity costs when charging a vehicle at an employee's or individual's home which is scheduled to commence in March 2023.
Targeted consultation shortly, to consider whether updates to Taxation Determination TD 95/60 Income tax: are fees paid for obtaining investment advice an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for taxpayers who are not carrying on an investment business? should be considered
Targeted consultation on Intangibles arrangements (Final Practical Compliance Guideline), with stakeholders who provided submissions on draft Practical Compliance Guideline PCG 2021/D4 Intangibles Arrangements

The Board of Taxation noted that an extension to the reporting date for its digital assets review has been granted until 30 September 2023. The Board noted the period of consultation has been completed and that it was now analysing the issues that have been raised from consultation. The Board noted a wide range of issues had emerged from the consultation process and some of the key matters being considered are as follows:

record keeping and compliance requirements
the capital/revenue distinction
ATO public guidance.

The Board also reported it had reached out to a number of international revenue authorities (United States, United Kingdom, Canada, Singapore, and New Zealand) and had received feedback from all but the UK at this stage (with the expectation the UK feedback would be received imminently).

Potential new matters for consultation

Jerome Tse, The Tax Institute; Elinor Kasapidis, CPA Australia; Anthony Klein, Member, Tanya Titman, Member, Michelle Calder, Acting Chief Executive Officer, Board of Taxation; Emma Rosenzweig, Deputy Commissioner, Superannuation and Employee Obligations, ATO

Members complimented the ATO on Practice Statement Law Administration PSLA 2021/3 Remission of additional superannuation guarantee charge although members are concerned about the punitive nature of the penalties with late compliance. Members felt that a review by the Board of Taxation may be appropriate. The Board confirmed that the usual process for referring matters to the Board was for the issue to be initially raised via Treasury. Members offered to submit a written submission on the matter to Treasury for further consideration.

Taxpayer’s Charter

Kath Philp, Assistant Commissioner, External Engagement and Governance, ATO Corporate, ATO, Kristy Milan, External Engagement and Governance Manager, ATO Corporate, ATO

The ATO confirmed 34 submissions on the Taxpayer’s Charter consultation had been received. There were 4 themes throughout the feedback:

Community awareness and accessibility – the Charter is too lengthy at 65 pages with international equivalents being 1 to 5 pages in length. Feedback suggested that increased awareness of Charter would be beneficial.
Enforcement of the Charter – the Charter needs to have clear pathways of taxpayer’s rights.
ATO staff awareness – this is considered essential with staff adhering to the Charter in every interaction.
Modernised – the Charter should reference modern digital, data and cyber security landscape. It also needs to consider client situations particularly financial hardship and vulnerability.

Presently, the ATO is engaging internally and will provide NTLG members a proposed Charter for their feedback.

The ATO will provide feedback to those who submitted submissions on how their feedback has been considered and incorporated.

Members encouraged the ATO to consider further community consultation (for example, non-English speaking community groups).

2023 NTLG meetings

All members

Members agreed that NTLG meetings in 2023 will be based on themes of strategic importance. The themes identified included:

Digitalisation
Cyber security and fraud
Service delivery
Dispute Resolution.

The topics are intentionally broad to allow flexibility in creating agenda items. Under each topic, it has been proposed that a variety of discussion leads from the ATO, or other government agencies be sought, and potential to host member-led discussions.

Members suggested cyber security and fraud as the theme for the next meeting in April 2023.