“As taxpayers are becoming more accustomed to the expectations of the regulator and its data requirement, it’s a good time to look at how to provide better data driven capability within your organisation as well as the supply, management and decision making around tax data,” he said.
“Systems are not the be-all and end-all, but they are an enabler for tax function subject matter experts to make their deliverables easier to achieve and more effective overall,” Hung added.
New way to work together
Since 2016, the ATO has applied justified trust through a program of assurance reviews of Top 100 and Top 1,000 taxpayers to ensure large public businesses, multinationals and superfunds are paying the right amount of tax and have the right tax governance processes in place. It also has a top 500 and top 5,000 program in the private wealth sector.
Ultimately, the intention is to forge a new way for taxpayers and the ATO to work together to manage tax risk and bolster community confidence in the corporate tax system.
Thirty per cent of the Top 100 achieved a high level of assurance by June 30 this year from the ATO, up from only six per cent a year earlier, with an additional 50 per cent achieving a medium rating. There is still more to do with some taxpayers in the Top 100, with 20 per cent currently on a low rating.
The Top 100 are large businesses and superfunds with “substantial economic activity” related to Australia. They are the largest contributors to corporate income tax and collections of Goods and Services Tax (GST), excise, and Petroleum Resource Rent Tax (PRRT), and reported $30.9 billion, or 42 per cent, of all corporate income tax for the 2016-17 income tax year.
Delays from the impact of Covid-19 mean fewer-than-expected Top 100 taxpayers achieved a high assurance rating during 2020, although the ATO expects this to increase to 50-60 per cent by the end of 2020-21.
More than 700 people participated in the Wolters Kluwer webinar “Justified Trust – The ATO presents 2020 in review” on 22 October.
The webinar included advice on how to prepare for an assurance review, what attracts the ATO’s attention and common reasons why taxpayers don’t obtain the highest level of assurance, as well as some commentary on the impact of Covid-19.
“We did not start any new cases during Covid-19, except for a few Top 100 cases where we got the taxpayers’ approval to do so,” said Belinda Darling, the ATO’s Assistant Commissioner for the Top 100 Tax Performance program, during her presentation.
The ATO had given “careful consideration” to recommencing the assurance programs “while fully acknowledging the impact of the unprecedented crisis on the community,” she added. However, the impact of the pandemic on many organisations was not yet fully known or quantified and would differ between businesses and industries.