MIL-OSI Australia: 2024 Completed matters

To seek feedback on the new self-review guide and checklist for GST classification of products to ensure it meets the needs of taxpayers.

The ATO has developed a self-review guide and checklist for GST classification of products. The self-review guide and checklist is 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.

Feedback will ensure the self-review guide and checklist meets the needs of taxpayers and will help to identify any areas for improvement.

Feedback provided some valuable insights which will be incorporated into the self-review guide and checklist for GST classification of products to improve the documents and ensure they meet the needs of taxpayers.

• Industry representatives
• Advisory firms
• Members of the GST Stewardship Group

Virginia Hernandez, Public Groups
Virginia.Hernandez@ato.gov.au
Phone 03 860 19383

To seek feedback to inform potential public advice and guidance on additional tier 1 (AT1) capital note issuances.

AT1 capital is a key element of the capital structure for Australian financial institutions. The ATO receives numerous applications for binding advice through the rulings system on the tax consequences associated with AT1 capital notes for investors and issuers.

There is currently a high level of maturity and consistency in AT1 capital note issuances, including their terms and features and their tax consequences.

The current approach to providing guidance is on a case-by-case basis. The ATO is considering opportunities to streamline guidance on AT1 capital note issuances and is seeking feedback on whether a Taxation Ruling would eliminate or substantially reduce the incidence of class and private ruling requests.

• Financial Institutions
• Industry bodies
• Tax agents and advisory firms

The feedback received provided perspective on the key issues that stakeholders view as requiring consideration in respect of public advice and guidance in relation to AT1 capital note issuances.

On 10 September 2024, the Australian Prudential Regulation Authority (APRA) issued a Media Release announcing a proposal for banks to phase out the use of AT1 capital instruments. In light of this announcement, the ATO will place the project regarding potential public advice and guidance on AT1 capital note issuances on hold, pending the outcome of APRA’s proposal.

Veronica Richards, Public Groups
Veronica.Richards@ato.gov.au
Phone 02 9374 2067

To understand what guidance is required to assist taxpayers with completion of the supplementary annual GST return.

In 2024–25, the ATO is introducing a new supplementary annual reporting requirement for Top 100 and Top 1,000 taxpayers who have received a GST assurance rating through an earlier GST review.

The introduction of the return will enable us to make informed decisions about future engagements with taxpayers and enhance our treatment strategies and ability to monitor GST risks that arise in the large market.

Targeted consultation provided valuable feedback which is being considered and will be incorporated in the design and implementation of the supplementary annual GST return.

Virginia Gogan, Public Groups
Virginia.Gogan@ato.gov.au
Phone 03 8632 4643

To seek feedback on the 8 recommendations made from the advance pricing arrangement (APA) program review and consider their appropriateness and if additional changes are required to the APA program.

Targeted consultation is required to assess the current state of the advance pricing arrangement program to determine if additional changes need to be implemented following the report recommendations from the APA program review that was completed 30 June 2023.

• Big 4 accounting firms
• Law firm Minter Ellison

Feedback received from the consultations was invaluable in providing the ATO with a better understanding of the market perceptions of the APA Program, including;

• identifying key issues and areas for improvement from stakeholders in the APA Program, particularly following the implementation of the APA review recommendations
• gathering suggested improvements for the APA Program
• providing an indication of how well the ATO is communicating with taxpayers and tax professionals.

The suggestions are being workshopped with internal stakeholders with a view to identifying which proposals can be implemented. Once internal decision-making is complete, these insights will be considered in the updates to the revised APA Practice Statement Law Advice.

Gloria Cassimats, Public Groups
gloria.cassimatis@ato.gov.au
Phone 07 3213 5266

To seek feedback on the frequency, usefulness, and preferred delivery channel of the ATO statement of account.

The ATO issues statements of account for a variety of reasons using different correspondence channels (paper and electronic) and is reviewing options to reduce the frequency of automated statements of account.

The ATO is consulting with taxpayers and their representatives to obtain feedback on:

• the current frequency, usefulness, and delivery method of automated statements of account
• proposed options to reduce the number of automated statements of account issued.

• Individual taxpayers
• Small business representatives
• Tax agents
• BAS agents

Feedback confirmed a preference for:

• a reduction in the frequency of statements of account
• electronic delivery channels.

These insights will be considered in the scoping and design of enhancements to the statement of account.

Peter Moore, Strategy and Support
Peter.Moore@ato.gov.au
Phone 07 3121 7282

To seek feedback on the ATO’s proposed view on the appropriate attribution of risk weighted assets to branches for the purposes of applying the thin capitalisation rules for inward investing entities (ADI).

Foreign banks that conduct their banking business in Australia through branch(es) are subject to Australia’s thin capitalisation rules. The rules require a foreign bank to allocate a minimum amount of equity capital to its branch.

Typically, foreign banks use the safe harbour rule to work out their minimum capital amount. The rule is based on ensuring there is sufficient equity capital funding that part of the risk-weighted assets of the bank that is attributable to its branch.

The ATO does not currently have a published view on how to determine that part of the risk-weighted assets attributable to a branch. Feedback will assist in the development of an ATO view on the topic with the aim of providing certainty and a consistent industry approach.

• Foreign banks with branch operations in Australia
• Industry bodies
• Australian Banking Association
• Australian Financial Markets Association
• Tax agents and advisory firms

Feedback received on the Discussion paper – Thin capitalisation – attribution of risk weighted assets to Australian branches of foreign banks, which closed on 31 May 2024, is being considered for incorporation into the development of a draft practical compliance guidance.

Johanna Tang, Public Groups
Johanna.Tang@ato.gov.au
Phone 02 9374 1689

To seek feedback on public advice and guidance needs for the new measure addressing financial advice fees charged under section 99FA of the Superannuation Industry (Supervision) Act 1993.

The government has announced its response to the December 2022 Final Report of the Quality of Advice ReviewExternal Link by releasing an exposure draft: Delivering Better Financial Outcomes Package – reducing red tape and other measures.

Relevantly, Recommendation 7 seeks to clarify the legal basis for superannuation trustees to charge individual members for financial advice from their superannuation account, as well as the associated tax consequences.

Division 2 of the exposure draft makes amendments to the Income Tax Assessment Act 1997 to ensure that financial advice fees charged under section 99FA of the Superannuation Industry (Supervision) Act 1993 are:

• tax-deductible for the fund
• not treated as superannuation benefits of the member.

Such fees are tax deductible to the fund to the extent that the amount charged to the member’s account was not incurred in relation to gaining or producing the fund’s exempt income or non-assessable non-exempt income. The measure is proposed to have retrospective effect.

The ATO is seeking feedback on whether there are priority issues where public advice and guidance is needed to help superannuation industry stakeholders understand how the new law applies to their circumstances.

• Professional associations
• Superannuation industry representatives
• Advisory firms

Consultation provided valuable feedback which will be considered in the preparation of future public advice and guidance materials.

Ernest Lui, Public Groups
ernest.lui@ato.gov.au
Phone 02 9374 2901

To seek feedback on the ATO’s administrative arrangements for accessing a deceased person’s information, particularly where a grant of probate or letters of administration has not been obtained.

In July 2020, the Inspector-General of Taxation published the report Death and Taxes – An investigation into ATO Systems and Processes for dealing with Deceased EstatesExternal Link.

Recommendation 7(b) of the report recommends the ATO seek feedback on its administrative arrangements for accessing a deceased person’s information, particularly where executors or relatives have not obtained a grant of probate or letters of administration, to determine if the administrative arrangements are satisfactory to external stakeholders or if changes are required.

• Industry representatives
• Relevant government agencies
• Members of

The consultation process identified several proposals for improvements to the administration of deceased estates and the legal framework that supports it.

The administration-related proposals are being workshopped with internal stakeholders with a view to identifying which proposed improvements can be implemented.

The suggestions for improvements that have law implications are being analysed to determine which are suitable for escalating to Treasury for their consideration.

Lloyd Williams, Individuals and Intermediaries
lloyd.williams@ato.gov.au
Phone 02 6216 1030

Following stakeholder feedback on PAG topics, prioritisation and form for the new thin capitalisation measures, we will now be consulting on the high priority topics to develop specific PAG products.

On 8 April 2024, the Treasury Laws Amendment (Making Multinationals Pay their Fair Share – Integrity and Transparency) Act 2024 received Royal Assent.

The ATO is proposing to provide guidance setting out the Commissioner of Taxation’s views on, and approach to, key aspects of the proposed new thin capitalisation rules and debt deduction creation rules contained in Schedule 2 of the Act.

Stakeholder feedback is sought on potential topics, prioritisation and the form of any potential public advice and guidance.

It is intended that only the most important issues arising from the new law will be addressed through the preparation of early ATO public advice and guidance.

Targeted consultation provided valuable feedback which has assisted to identify and develop high priority draft public advice and guidance products. You can keep up to date through the Advice under development program.

Stephen Dodshon, Public Groups
Stephen.Dodshon@ato.gov.au
Phone 02 9374 8791