Top 500 private groups are encouraged to develop effective tax governance to ensure they get the basics right and avoid errors that can lead to the ATO raising additional liabilities, including penalties and interest. Detailed criteria, guidance and examples are available to assist the Top 500.
Roles and responsibilities
The first principle of effective tax governance highlights the need to ensure you understand your group’s tax and super obligations and that roles for managing tax issues – covering internal staff and external advisers – are clearly defined.
It’s important that you document these roles, outlining responsibilities. You should maintain a distinction between the controllers of the group and those who are responsible for managing its tax function. We recommend using organisational charts and simple but detailed role descriptions so that everyone knows the scope of their work and their accountability.
When you hire external advisers, use clearly drafted engagement letters with clear and detailed scopes-of-work so everyone knows the parameters of their accountability. The engagement letter should also prescribe periodic catch ups to ensure the external advisors stay on top of any changes to the group.
Setting up a lodgment calendar
The first principle also reveals the value of a calendar to manage on-time lodgment and payment of your BAS, income tax and fringe benefits tax returns. In our engagements, we still see Top 500 private groups who don’t have lodgment calendars and it can end up costing them late payment penalties and general interest charges.
We have an example of a lodgment calendar you can adapt for use, no matter how complex your business is. Once you’ve set up your calendar, review it in consultation with your registered agent every 12 months to keep it fit for purpose.
Last but not least, make sure to document all of this in your tax governance framework, including relevant escalation, review and sign-off points.
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