Services for Tax Practitioners Key Messages

Services for tax practitioners key messages

/ UNCLASSIFIED External
Title: / Services for tax practitioners
Issue date: / 10 November 2017
Venue: / Robert Ewing Corporate Centre
Australian Taxation Office – 26 Narellan Street, Canberra
Event date: / 26 October 2017 / Start: 9:30am AEDT / Finish: 4:00pm
Chair: / Martin Mane / Facilitator: / Joe Maxymenko
Contact: / Scott Rumford / Contact phone: / (02) 4923 1201
Attendees:
names/section / ATO – Andrew Watson, Anne Soe, Anthony Clarke, Blair Lauchlan, Doipayon Halder, Gary Warne, Helen Adamovich, Ian Scensor, Joe Maxymenko, Lloyd Williams, Martin Mane, Mel Oxman, Ross Mikulinsky, Scott Rumford, Shahzad Malik, Sharna Maltman, Timothy Brown, Timothy Stockbridge, Zonizol Rae.
Industry – Jack Wee (Catsoft), Paul Li (CCH), Kevin Zhang, Mike Denniss (Class Super), Sandeep Gopalan (Impact), Joyce Edmonds, Lex Edmonds (Microtax), Joan Riddoch, Mike Behling, Scott Reid (MYOB), Kevin Johnson, Steven Ivanopoulos (Reckon), Darin Carter, Michael Wright (Sage), Paul Siriwardana, Richard Puffe (Thomson Reuters), Andrew Sprankling, Anthony Migliardi, Kelvin Newton (Xero).
Agenda item: – Welcome and introduction /
·  The Software Industry Partnership Office (SIPO), Software Developer Onboarding Team (account managers) and Increasing Software Services project team have merged to form the Digital Partnership Office (DPO).
·  After-hours support for urgent ATO SBR system incidents is now available for digital service providers (DSPs).
Agenda item: – Future direction and priorities /
Our current priorities are:
1.  Finishing the ELS to PLS transition (so we can switch off ELS completely)
2.  Tax and BAS Agent Portals (transitioning services to ATO Online)
·  Existing portal functions will progressively be made available in ATO Online via a private beta starting in December 2017, with a public beta to follow when we are comfortable that it is performing well.
·  ATO Online should become the default service offering later in 2018, but we will not decommission the portals until everything is working smoothly.
3.  Value added services
·  Our goal is for agents to have the choice to be self-sufficient in their software. We are currently working on a decision making framework regarding retail and wholesale digital services for agents to build a clear and a consistent approach.
Agenda item: – Tax Time 2018 /
Enterprise tax plan – reducing the company tax rate 2018 (CA2018-034)
·  A company that fails the passive income test will pay tax at 30% for 2017-18.
·  The maximum franking credit that can be allocated to a frankable distribution paid by a corporate entity will be based on their applicable corporate tax rate for imputation purposes.
From the 2017–18 income year, a corporate entity works out their corporate tax rate for imputation purposes by:
§  assuming that their aggregated turnover, base rate entity passive income, and assessable income are the same as in the previous income year, and
§  applying the corporate tax rate for the current income year.
·  We have published a draft taxation ruling regarding the carrying on a business test and will communicate the changes for 2017-18 through tax agents.
Agenda item: – Tax Time 2018 /
New treatment of FB for calculation of ATI and rebate income (CA2018-006)
·  The measure also affects labels R and S (spouse tax offset).
·  There are no new labels for Tax Time 2018.
Limit plant and equipment depreciation deductions (CA2018-029)
·  To be entitled to claim depreciation deductions for previously used depreciating assets, all the entities owning the rental property must be included in the list of the eligible entities. Eligible entities are corporate tax entities, superannuation plans (other than SMSFs), public unit trusts, managed investment trusts and unit trusts or partnerships whose members are any of these entities. Thus, if there is a combination of percentage ownership amongst the excluded and included entities, deductions will be denied.
·  There are no new labels or descriptions for Tax Time 2018.
·  We will update tax return instructions, the rental property guide, guide to depreciating assets and other website content for Tax Time 2018.
·  Our communications plan (among other things) includes:
§  creating web banners on ato.gov.au
§  informing rental property owners, industry associations and third parties
§  publishing articles in the tax professionals newsletter
§  posting messages on social media
§  a live stream webcast for tax agents
§  sending articles to the Australian Institute of Quantity Surveyors, requesting them to share it with their members.
Temporary budget repair levy (CA2018-007)
·  No forms are affected by this measure.
Agenda item: – Tax Time 2018 /
Temporary budget repair levy FBT related changes – FBT rate sunset (CA2018-012)
·  The FBT rate is reduced to 47% and the gross-up rates are down to 2.0802 (type 1) and 1.8868 (type 2) for the year ending 31 March 2018.
Tax incentive for start-up (angel) investors (CA2018-015)
·  New labels for the carried forward amount on all returns (removal of code box and addition of new labels for trusts).
·  Pre-fill from the ESIC report for individuals.
·  New CGT exemption code in all returns.
·  Update checks and edits.
·  The new net exempt income label and the new labels on the CGT schedule have been withdrawn.
New arrangements for venture capital investment (CA2018-016)
·  New labels for the carried forward amount on all returns (removal of code box and addition of new labels for trusts)
·  New CGT exemption code in all returns
·  Update checks and edits.
·  The new net exempt income label and the new labels on the CGT schedule have been withdrawn.
Agenda item: – Tax Time 2018 /
Common Reporting Standard (CA2018-020)
·  Approximately 2,500 reportable financial institutions (RFIs) are registered for Foreign Account Tax Compliance Act (FATCA) regime and we believe that the reporting population for the Common Reporting Standard (CRS) will be up to 5,000 based on the number of Australian Financial Services License holders registered with ASIC.
Agenda item: – Tax Time 2018 /
Split D10 label – cost of managing tax affairs and split 24Y label – other income (CA2018-037)
·  This is a discretionary change with no dependant legislation.
·  DSPs also suggested splitting the D9 label (gifts or donations).
Tax deductions for personal superannuation contributions (CA2018-SPR001)
·  Individuals are not eligible to claim a deduction for personal superannuation contributions made to certain types of funds, including:
§  Commonwealth public sector superannuation schemes
§  Constitutionally protected funds
§  Super funds that elect to treat all member contributions to the:
-  super fund as non-deductible, or
-  defined benefit interest within the fund as non-deductible.
·  We are looking to make a list of non-deductible funds available to DSPs.
·  DSPs suggested that there could be an indicator in the pre-fill report for non-deductible funds. We will also look at pre-filling default funds in 2018-19 when the new super reporting regime comes in.
·  We are looking at messages that will alert clients to impacts on their concessional contribution cap.
Tax offset for spouse contributions increase in income threshold (CA2018-SPR002)
·  We will add additional validation to check spouse income.
·  The annual non-concessional contributions cap for 2017-18 is $100,000.
·  We estimate that the claiming population will increase from 10,000 to 15,000.
Agenda item: – Tax Time 2018 /
Removal of anti-detriment rules (CA2018-SPR004)
·  There will be instructional changes for the next two years and then the label will be removed.
Non-concessional contribution cap (CA2018-SPR008)
·  We will place pre-filling of non-concessional contributions on the list of discretionary changes for TT19 onwards.
Total superannuation balance (CA2018-SPR009)
·  We are about to start working on instructions and will seek input on label names.
Agenda item: – Tax Time 2018 /
Transfer balance cap (CA2018-SPR012)
·  The defined benefit income cap is reduced where the taxpayer is only 60 for part of the year.
Agenda item: – Tax Time 2018 /
Country by country reporting phase 2 (CA2018-031)
·  The OECD has published a new version of the XML schema, which we will use for exchanges with partner jurisdictions.
·  Our current domestic CbC report schema will remain at v1.0 until the second reporting period (1 July 2018).
·  Under the administrative solution, reporting entities can lodge part A of the local file with their tax return rather than completing the relevant labels of the IDS.
·  We have received just over 350 lodgments to date, but expect this figure to rise as we approach the due date of 31 December 2017.
·  There are no changes planned for the IDS from a CbC reporting perspective, but we will be consulting with you on other changes to the schedule shortly.
Agenda item: – Additional availability, stability and resilience for ATO systems /
·  We are undertaking a program of work to improve the availability, performance and resilience of the SBR platform. As part of this journey, we recently stood up a cloud instance of the SBR platform. This program may be a multiyear outcome.
·  As part of resilience, we may look to develop an API so DSPs can check the system status and not send anything if service is not optimal.
·  Our architects and designers are looking at a workload routing solution (i.e. should both the on premise and cloud instances handle everything or should services be specific to one solution).
·  An STP TWG focus group has been established to review the SBR conformance and assurance framework. The paper will be discussed at future TWG meetings.
·  Responses to questions:
§  We are working our way through the PwC recommendations in the ATO systems report and will keep you updated on our progress.
§  There are no firm plans to close the SBR1 channel at this stage.

More information is available in the presentation slides at https://softwaredevelopers.ato.gov.au/ATOSwDtaxpractitioners20171026 and change advices at https://softwaredevelopers.ato.gov.au/TT2018changeadvices.

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