Past, Present, Future -

The Board of Taxation

Karen Payne, CEO

Overview

1. The Board and its reinvention

2. The Tax Agenda

a. How the Board can assist

b. How you can assist the Board

3. The Board’s Agenda and priorities – 2016 - 2017

a. Voluntary Tax Transparency Code

b. Our Projects

c. Stakeholder engagement

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1. The Board and its

reinvention

Board of Taxation 2016

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Michael Andrew AO (VIC) John Emerson AM (VIC)

Chair

Former global chair, KPMG

Deputy Chair

Consultant, Herbert Smith Freehills

Mark Pizzacalla (VIC) Karen Payne (NSW) Neville Mitchell (NSW)

Partner-in-charge, Private

Clients, BDO

Board Member and CEOFormer Partner, Minter Ellison

CFO, Cochlear

Former President, G100

Board of Taxation 2016 cont.

Craig Yaxley (WA) Ann-Maree Wolff (QLD) Peggy Lau Flux (SA)

Lead Tax Partner, WA KPMG Asia Pacific Head of Tax

Rio Tinto

Council member

Flinders University

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John Fraser (ACT) Chris Jordan AO (NSW) Peter Quiggin PSM (ACT)

Treasury Secretary

(ex-officio)

Commissioner of Taxation

(ex-officio)

First Parliamentary Counsel

(ex-officio)

Board of Taxation Secretariat

ATO secondees

Private Sector

secondeesand

consultants

Treasury secondees

The Board’s Secretariat

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The Board in Context

Tax Policy & Objectives

Law Design & Integrity

Tax System Improvement

Operation and Simplicity

Function of the Board

Provide advice to the Minister (Minister for Revenue and

Financial Services and the Treasurer) on:

Quality and effectiveness of tax legislation including

processes for its development and community consultation

General integrity and function of the tax system

Research and other studies and

Other taxation matters

The Board in Context

Board of Taxation

Treasury

ATO

Industry & Professional

Bodies

Business Community

The Board’s Current Approach

Providing real-time

advice across three

broad areas:

Policy design

Legislative design

Administration of

Australia’s tax system

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The Board’s Current Approach

Early input into Budget measures and ideas

Input on major economic initiatives such as the small

business package and innovation statement

Input into the ongoing Research and Development

initiative review

Conducted consultation on the Tax Reform Agenda

Contributed to the resolution of ongoing issues in relation

to consolidation measures

We are an Advisory Board

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2. The Tax Agenda

The Tax Agenda

Incremental reform or change in Australia and overseas

Constrained revenue growth

rapid technological change

uncertainty

unpredictable and challenging global economic conditions

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The Tax Agenda

Kai = Change

Zen = Good

The Tax Agenda in Australia

2016-17 Budget tax measures

Cutting company tax rate

Diverted Profits Tax

Small business measures

Superannuation reforms

implementation of OECD hybrid mismatch rules

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Other Board Reports

2016 - Implementation of anti-hybrid rules

2015 - Debt and Equity Tax Rules

Report 1 Accelerated report released in 2 April 2015

Report 2 Final Report released 4 June 2015

2014

Post-implementation review of Division 7A

Thin capitalisation Arm’s Length Debt Test

Tax impediments facing small business

2013 - Tax arrangements applying to permanent establishments

2011

Taxation treatment of Asset backed financing arrangements

Tax treatment of Collective Investment Vehicles (CIVs)

The Tax Agenda in Australia

Large amount of announced measures to be enacted

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What can the Board do?

Communicate on resourcing

Sounding Board

Collaborative platform where users can raise, debate and

prioritise business and community sector ideas ;

Reduce red-tape and result in compliance savings;

Users take control of the prioritisation process;

Progress change through Regulatory Reform Bills

announced in the 2016-17 Budget

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What can the Board do?

Commencement dates

Drafted to allow for legislative drafting delays and

competing priorities

Example: commencement date for Hybrid mismatch rules

is the later of 1 January 2018 or six months following the

date of Royal Assent

Administrative solutions

Could an administrative solution resolve the issue?

Other ideas

Short term consulting arrangements to manage the back-

load

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3. 2016 – 2017

The Board’s Agenda

and priorities

The Board’s recent activities

Voluntary tax transparency code

Report to government on implementation of OECD hybrid

mismatch rules

Provided advice to government on improving tax policy

development processes

Considered and commented on measures for inclusion in

the 2016-17 Budget

Provided advice on consolidation – deductible liabilities

Involved in targeted consultation on reform options with

the Tax Reform Taskforce

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Priorities for the coming year

Projects

Improving and contributing to policy development

processes

Reducing red tape

Continuing focus on tax transparency

Stakeholder engagement

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3.1 Voluntary Tax

Transparency Code

What Code is designed to do

Response to community concerns

Expectation large businesses be publicly transparent about

their tax affairs.

highlight those that are paying their fair share and to

encourage all businesses not to engage in aggressive tax

avoidance

Drive cultural change within the corporate sector towards

greater tax transparency

help educate the public

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Other Taxes

Not just for corporate income tax.

Can include other Australian taxes paid

PRRT

Royalties

Excises

FBT

GST

PAYG

Payroll taxes

Stamp duties

Land Tax

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Voluntary in nature

Greater and higher quality information

Senior management involvement

NOT a compliance and box checking exercise

Educating the community as to tax contributions

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Catalogue of Signatories

Organisation Financial Year ending for Tax

Transparency Report

Organisation Financial Year ending for Tax

Transparency Report

AGL Energy Ltd 30 June 2016 Mirrabooka Investments Ltd 30 June 2016

AMP 31 December 2016 Mirvac 30 June 2016 (Published)

ANZ 30 September 2016 NAB 30 September 2016

APA Group 30 June 2016 (Published) Newcrest Mining Ltd 30 June 2016

Ausdrill Ltd 30 June 2016 Orica Limited 30 September 2016

Australian Foundation

Investment Company Ltd

30 June 2016 Rio Tinto 31 December 2015 (Published)

AWE Ltd 30 June 2016 SEEK Limited 30 June 2016

BHP 30 June 2016 South32 30 June 2016

BP Australia 31 December 2016 Stockland All key elements of the Code have

been adopted with the exception of the

tax contribution summary of corporate

taxes paid which will be implemented

from the 2017 financial year onward.

Cochlear 30 June 2016 (Published) Telstra Progressive implementation starting

FYE 30 June 2016 – fully compliant

FYE 30 June 2017

Commonwealth Bank of

Australia

30 June 2016 Transurban Limited 30 June 2016

Djerriwarrh Investments Ltd 30 June 2016 Treasury Wines Estate Limited 30 June 2016

EnergyAustralia 31 December 2016 Vicinity Centres 30 June 2016 (Published)

Fairfax Media Limited 30 June 2016 Viva Energy Holding Pty Ltd 31 December 2016

Iluka Resources Limited 31 December 2015 and is likely to

be publicly released in August or

September 2016.

Wesfarmers Limited 30 June 2016

Lendlease Corporation Limited 30 June 2017 Westpac 30 September 2016

Lion 30 September 2016 Woodside Petroleum Limited 31 December 2016

3.2 Projects

Board Projects

Asset merger roll-over relief

Definitions applied under State and Federal Tax Laws

Stocktake of inconsistencies between core concepts within

Federal and State tax laws which are impediments or

create barriers for businesses

Alignment of tax and accounting concepts

Targeted areas where the tax law could be aligned to

accounting concepts to reduce red tape

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Board Projects cont.

Targeted trust simplification

Custodial arrangements

High wealth individuals and residency

Review of current residency rules for individuals

Tax and the sharing economy

Consider ways in which Australia should tax the sharing

economy

Shadow economy

Responses to address tax avoidance through the cash and

shadow economy

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Shadow Economy Overseas

JURISDICTION APPROACHES

FranceCash payments of over 1000 Euros have been banned for French citizens, as

well as cash payments of over 10,000 Euros for foreign citizens

DenmarkStated goal of eradicating cash by 2030. Likely to be followed in other Nordic

countries (entirely cashless societies).

Hong Kong

Increasing the types of vendors and service providers who accept the

electronic “Octopus” contactless smart card (now includes transport, retail,

parking, online-payments, self-service kiosks and public services), thereby

further reducing the need for cash transactions

Portugal

The Government organised a lottery in 2014 for people who demanded

receipts for goods and services they purchased, with prizes including Audi

motor vehicles

Shadow Economy Overseas

JURISDICTION APPROACHES

United Kingdom

Her Majesty’s Revenue and Customs (HMRC) has used a variety of publicity

campaigns to encourage people to report undeclared income

HMRC also recently gained greater powers to obtain data from payment providers

and businesses intermediaries to identify hidden economic activity

HMRC is currently consulting on making access to licenses or services for

businesses conditional on being registered for tax and for new sanctions to be

applied to those who repeatedly and deliberately participate in the hidden economy,

including penalties and monitoring of repeat offenders

New Zealand

New Zealand Inland Revenue (NZIR) investing in a specific “Hidden Economy”

programme, complete with national marketing campaigns (“e.g. Declare it all or risk

everything” and “Crackdown on Cashies”)

NZIR also encouraging anonymous whistleblowing on shadow economy activity

3.3 How you can

contribute

How you can contribute

Register on our website to receive regular updates – and when you

see a project that you want to be involved with – contact us directly

Register on our Sounding Board and contribute your ideas for tax

system improvement to the Board’s Sounding Board platform

Review and Comment on Tax Ideas of others on Sounding Board

Participate in formal Board consultations

Attendance at monthly Board stakeholder events – usually informal

breakfasts and lunches

Submissions to Board discussion and working papers

Membership of Board working or consultation groups

Follow us on twitter @taxboard_au

Send us an email TaxBoard@treasury.gov.au

Questions?

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