Tax & AccountingAugust 31, 2022

ATO GST assurance reviews: What businesses need to know

The Australian Taxation Office (ATO) Goods and Services Tax (GST) assurance review commenced in April 2018. This is in an effort to seek assurance from entities to provide objective evidence that their GST control framework is appropriately designed and is operating effectively, and their businesses are complying with their GST obligations.

If you are one of the businesses selected for review, it is important to understand what this means for you and your business. In this blog post, we will provide an overview of the GST assurance reviews conducted by the ATO and what businesses need to know about them.

What are GST assurance reviews by the ATO and what do they involve?

The Australian Taxation Office (ATO) conducts GST assurance reviews to ensure that businesses are correctly reporting and paying their GST. The review involves a series of information requests and analysis by the ATO. This can be quite a data intensive exercise for entities who are not prepared for a review. Typically, the first request will involve providing information and evidence of your overall approach to managing GST risk and governance, followed by onsite or virtual workshops to walk through your processes. It is also not uncommon for the ATO to also contact third parties, such as suppliers or customers, to verify information.

The review process is designed to undertake an analytical test of your transactions to test for errors and inaccuracies in your GST reporting processes. Businesses that are found to have made mistakes will be required to pay back shortfalls and potentially subject interest, and penalties. However, the ATO also uses the review process to educate businesses about their GST obligations and to help them ensure that they are correctly complying with the law. As such, the GST assurance review is an important part of the ATO’s overall compliance strategy.

What is the process for a GST assurance review by the ATO?

The process for a GST assurance review by the ATO involves four steps: submission of information, initial assessment, fieldwork, and analytical testing of transactional data and finalisation. The first step is to submit information about your business, including your GST return and any relevant supporting documentation to inform the ATO of how you effectively govern your GST controls and risks. This is typically assessed against your industry.

This information will be used to assess your compliance risk. Next, the ATO will conduct a fieldwork review, during which they will interview you and your staff and examine your BAS preparation and review process, accounts payable and receivable processes, and systems controls. Transactional data provided will also be independently analysed by the ATO through their GST Analytic Tool (GAT).

Finally, the ATO will finalise their review and provide you with a report outlining their findings. If any discrepancies are found, you will be required any shortfall, and expected to improve your GST processes and controls to mitigate the issues identified by the ATO. However, if everything is in order, you will have the peace of mind of knowing that the ATO is confident with the management of your GST obligations.

How can you prepare for a GST assurance review by the ATO

When it comes to GST, the ATO expects businesses to have proper systems and processes in place to ensure compliance. If your business is selected for a GST assurance review, it’s important to be prepared. Here are some tips on how to get ready:

First, make sure you have your documentation in order. The ATO will request records such as invoices, receipts, bank statements, and tax returns. Having these documents organized and easily accessible will make the review process go more smoothly.

Next, take a close look at your GST procedures and make sure everything is up to par. Are your reporting and record-keeping practices in line with ATO requirements? Do you have a system in place to ensure accuracy and compliance? Can you run the same time of analytical test the ATO will perform with its GST Analytical Tool? If not, now is the time to make changes.

Finally, remember that cooperation is key. The ATO’s goal is to help businesses comply with the law, not punish them. If you work cooperatively with the ATO during the review process, you’re more likely to come out of it with a positive result.

What are some of the benefits of having a GST assurance review by the ATO?

The ATO offers a GST assurance review to ensure that businesses are correctly reporting and paying their GST. This process can be beneficial for businesses in a number of ways. First, it can help to ensure compliance with GST laws and avoid penalties for errors. Second, it can help businesses to improve their internal processes and procedures, making it easier to correctly report GST in the future. Finally, the ATO may provide helpful guidance and advice during the review process, which can further improve compliance. Overall, a GST assurance review by the ATO can be a valuable tool for businesses of all sizes.

The consequences of not complying with a request for a GST assurance review?

If ATO requests a company to provide information or documents as part of a GST assurance review, and the company does not comply with the request, ATO may take enforcement action. This could include issuing a formal notice requiring the company to provide the requested information or documents, or ATO taking legal action to compel the company to comply with the request. ATO may also impose administrative penalties on companies or individuals who fail to comply with a formal notice. In serious cases, ATO may refer the matter for criminal prosecution. Therefore, it is important for companies to take ATO requests for information or documents relating to GST assurance reviews seriously and to comply with the requests in a timely manner.

How can Wolters Kluwer help with your GST assurance reviews?

Technology plays a vital role that may impact your assessment. It is a key consideration within organisational governance frameworks and a significant element in managing quantitative risk. Technology is also key in assessing current and prior period results and provides a medium for finding and storing supporting documentation and audit trails. ATO-approved, CCH Integrator by Wolters Kluwer is Australia’s leading GST compliance software. It provides a streamlined ATO lodgement process and delivers powerful ATO compliance tools to help you meet your GST obligations with confidence. CCH Integrator also offers ATO-certified e-invoicing, which allows you to electronically exchange invoices with the ATO in order to streamline your GST reporting. With CCH Integrator, you can be confident that your company is compliant with GST requirements and that your tax obligations are being met.

Disclaimer: This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your tax, legal, and accounting advisors before engaging in any transaction.

Andy Hung
Director - Service Firms & Strategic Alliances
A self-described “tax geek” with qualifications in taxation, law & international studies, & a background in corporate advice & financial services, Hung has a depth of experience in transforming tax reporting functions. At Wolters Kluwer, he brings his insight into best practice technology transformations that facilitate end-to-end connectivity between corporations, advisers & regulators through the CCH Integrator platform.
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