Finding reports summary − Public groups

What we've learnt from the public groups findings reports.

Last updated 10 November 2024

About this summary

The suite of public groups findings reports now contain the following reports:

Together, these findings reports provide transparency to taxpayers on large market risks and our programs of work that engage with large public and multinational companies. We have provided some highlights from each report and the highlights and trends across the large market.

Key highlights

Our approach to managing Public and Multinational Businesses (PMB) includes:

comprehensive coverage of the large market
supporting our regular assurance of Australia's largest groups
providing information collected annually under the Reportable tax position schedule.

For more information, see Tax and Corporate Australia and highlights from the analysis of each of the findings report below.

Reportable tax position

The Reportable tax position (RTP) schedule is a schedule to the Company tax return that gathers information on uncertain tax positions from the largest companies. Companies are required to self-assess the requirement against the RTP lodgment criteria and lodge if they earn either:

over $250 million in total revenue
over $25 million in total revenue and are part of an economic group with more than $250 million in total revenue.

RTP disclosures help us understand and assess changes in tax positions and arrangements, including new arrangements taxpayers are entering into. It also allows us to prioritise our assurance activities and flags the level of risk in the market.

The RTP findings report provides insights into prevalence of key corporate tax risks in the large market. The report provides the aggregated disclosures made by large public and multinational companies for the 2019−20 to 2022−23 income years under Category C of the RTP schedule.

Over the past 4 years, the number of RTP disclosures received has more than doubled. The data indicates high-risk disclosures or arrangements of concern are declining among large public and multinational businesses. Additionally, there is a positive trend in low-risk disclosures, with majority of areas of concern showing improvements in the proportion of low-risk arrangements.

The findings signify a positive behavioural shift, indicating a trend towards better voluntary compliance and adherence to responsibilities. Although, there is still room for improvement, this is consistent with our view that most large Public and Multinational Businesses are doing the right thing and paying the right amount of tax.

Top 100 income tax and GST

The Top 100 population includes:

Public and Multinational Businesses and APRA regulated superannuation funds that have substantial economic activity related to Australia
the largest contributors to corporate income tax, excise, and petroleum resource rent tax (PRRT) collections
some of the largest remitters of GST.

Given Australia’s highly concentrated corporate tax base and the significant impact Top 100 taxpayers can have on the health of our tax system, we engage with them on an ongoing basis to manage their compliance and assure their tax performance. We also review and moderate the population annually.

The Top 100 report includes key findings and observations from the Top 100 assurance programs for income tax and goods and services tax (GST) completed by 30 June 2024.

In 2024, we continued to see most large businesses are meeting their income tax obligations, with an increase in taxpayers high assurance ratings of 7% from the previous year with 82% of Top 100 taxpayers maintaining either high or medium overall assurance ratings. The majority of taxpayers have maintained their overall high assurance through ongoing reviews. However, there was a drop in assurance ratings for a small number of taxpayers.

For GST assurance reviews, there was a 7% increase in the number of taxpayers achieving high assurance ratings from the previous year with 93% achieving an overall high or medium rating.

In the 2024 financial year, tax governance frameworks continued to see improvements in assurance ratings. Income tax reviews saw a 15% increase in stage 3 ratings, signifying enhanced tax controls being 'lived in practice'. Similarly, over 50% of GST reporters achieved stage 2 or 3 assurance. Effective governance has been identified as a blocker to achieving high assurance and remains a focus area for taxpayer reviews.

Top 1,000 income tax and GST

The Top 1,000 program is part of our PMB large market coverage strategy covering the largest 1,000 public and multinational entities outside the Top 100 Program. Generally entities with turnover over $350 million would be included in the Top 1,000. In the program, specialist income tax and GST teams engage with these groups to increase our assurance they are reporting the right amount of income tax and GST or identify areas of tax risk for further action.

This report provides observations and insights gathered from reviews completed in the 2023−24 financial year.

Of the combined assurance reviews undertaken for the 2024 financial year, 27% of taxpayers obtained high assurance, 63% obtained medium assurance and 9% obtained low assurance (with 1% not rated). Reviews completed with a GST component saw 45% achieving high assurance. As second-time reviews are being finalised, we continue to observe better results, with 34% of second-time reviews resulting in overall high assurance, compared to 20% of all first-time reviews.

We continue to see well designed tax risk management and governance frameworks operating effectively, with over 50% of taxpayers reaching stage 2 or 3 for both income tax and GST. As our combined assurance reviews are completed, we encourage taxpayers to undertake 'client next actions', to address our concerns and recommendations.

Advice and guidance

The Public Group Advice and guidance program is a specialised service delivering high-quality advice for complex transactions by public and multinational business taxpayers. It helps taxpayers comply with their obligations by providing certainty about tax outcomes and identifying issues early via the early engagement process.

The Advice and guidance findings report contains insights drawn from the work completed in the public and multinational business advice and guidance program over the 2020−21 to 2023−24 financial years. It provides key findings about the nature of advice sought and insights into how taxpayers and their advisers can most effectively engage with us when seeking advice.

In the 2023-24 financial year, the Advice and guidance program received 437 requests and completed 453, relatively consistent with the year prior. The proportion of favourable rulings issued has remained consistent at around 80% over the last 4 years, with the use of early engagement shown to increase the likelihood of a favourable ruling.

There was a notable increase in the number of private ruling requests received in 2023−24 relating to withholding tax exemptions for sovereign immunity and superannuation funds for foreign residents. The shift in these types of requests is often driven by legislative or other anticipated changes in the tax system and the subsequent cycle of clients requesting their rulings be refreshed.

Other key topics on which advice was regularly sought included capital management, CGT and employee share schemes.

Disputes and settlements

As part of ensuring public and multinational businesses meet their Australian tax obligations, the ATO maintains a robust audit program. For 2023–24, we issued income tax assessments to 124 public and multinational businesses raising $2.76 billion in liabilities. Of this, $2.5 billion was raised in respect of 24 different taxpayers following intensive audit and review activities. Separately, total liabilities for GST raised were approximately $363 million.

Global profit shifting risks continue to be a major focus in our audit program. Around 65–70% of current income tax audits involve global profit shifting issues. Nearly 80% of income tax litigation decisions relating to public and multinational businesses handed down in 2023–24 involved issues related to global profit shifting, including transfer mispricing and the application of the general anti-avoidance provisions.

We continue to investigate arrangements where tax avoidance is a concern. The application of general anti-avoidance provisions, including the diverted profits tax, is being considered in approximately 30% of current income tax audits.

Disputes arising from these assessments are resolved through various processes including independent reviews, objections, mutual agreement procedures (MAP), litigation and settlements. This is the second year we're publishing our insights on settlements with public and multinational businesses. This report broadens the scope reported last year (which focused solely on settlements for 2022–23) to include information on disputes and expand on the information included in the ATO annual report. Where appropriate, and consistent with the Commonwealth's model litigant policy, we seek to resolve disputes by way of settlement. Across all client groups, public and multinational businesses accounted for more than 20% of all parties to settlement agreements (67) and around 92% ($1.8 billion) of the tax revenue secured. We have observed increasing levels of tax compliance by public and multinational businesses with an additional $2.2 billion paid voluntarily due to ATO preventative compliance intervention, largely arising from settlements.

Findings reports insights

General observations

Since the commencement of the justified trust program in 2016, our justified trust ratings have provided an objective method for organisations to test and assess the effectiveness of their tax governance processes. It helps organisations understand how our assessment of their tax profile compares to their peers in the market. A program goal is to reduce compliance costs for taxpayers receiving high assurance, allowing us to tailor our approach to engagement across the market.

As of 30 June 2024, we have assured approximately $31.7 billion in income tax for Top 100 and $79.1 billion of Top 1,000 taxpayers for the 2021–22 income year. These results reflect our growing confidence over an increasingly larger portion of the corporate tax base and contribute to the sustainable reduction of the large corporate groups tax gap over time.

Based on 2022 returns, Top 1,000 taxpayers paid about $27.2 billion or 21% of all corporate income tax, while Top 100 taxpayers paid about $50.2 billion or 39% of all corporate income tax.

Through our advice and guidance program we are able to provide certainty to taxpayers about their transactions through a ruling, advice or other guidance. Early engagement with taxpayers identifies issues early and allows us to work closely with taxpayers on their complex transactions.

Requests for early engagement on complex transactions have continued to trend down, coinciding with decreased requests on capital management issues and from Top 100 Action Differentiation Framework (ADF) clients.

We're able to monitor the prevalence of key corporate tax risks through disclosures made under the RTP schedule. Disclosures are used in our compliance and assurance programs to help us:

understand taxpayer arrangements and behaviour
tailor our approach and prioritise our assurance activities.

The observations we have seen under assurance programs, through engagement under the advice and guidance program and in risk provides a comprehensive view of taxpayers, their obligations and their risk arrangements.

Report trends

A cumulative shift towards positive taxpayer behaviours can be observed over multiple reports, as we see increased proportions of low-risk disclosures and increasing high assurance ratings.

In the 2022−23 financial year, the RTP schedule saw more than a 50% increase in number of disclosures received and maintained an upwards trend towards low-risk disclosures from large public and multinational entities. The proportion of high-risk disclosures had also decreased over a majority of areas of concern.

The Top 100 and Top 1,000 findings report equally supported the positive shift in taxpayer behaviour. The Top 1,000 report highlighting improvements in the outcomes of reviews for both income tax and GST, with over 90% of Top 1,000 taxpayers receiving a medium or high assurance rating. We continued to see improvements among tax risk management and governance frameworks, with increasing numbers of taxpayers in the Top 1,000 able to evidence their effective operation.

The Top 100 assurance program for income tax observed an increase in the number of taxpayers achieving high assurance, with 59% of taxpayers attaining overall high assurance compared to 52% in the previous year. Similarly, high assurance within GST reviews also rose, increasing from 23% in 2023 to 30% in 2024. Within the Top 100 population, low assurance ratings remained relatively stable for both income tax and GST for the 2024 financial year.

The increase in low-risk disclosures and high assurance ratings among large public and multinational entities indicates that most large businesses are meeting their tax obligations and supports our view that there has been:

a positive shift towards improved voluntary compliance
a greater willingness to do the right thing.

Good outcomes from increased engagement

Recurring engagement with taxpayers, both directly and indirectly, has produced higher assurance ratings and improved outcomes for the taxpayer.

Where a taxpayer utilised early engagement with Advice and guidance, they were 19% more likely to obtain a favourable ruling than requests that weren't preceded by early engagement.

Since the release of additional guidance for Top 1,000 taxpayers on tax risk management and governance, there was a significant increase in taxpayers achieving higher assurance ratings.

The second reviews conducted by the Top 1,000 assurance programs reported a substantial increase in high assurance, rising from 20% to 36%. Low assurance also had a substantial decrease, dropping from 22% to 5%.

With the income tax monitoring and maintenance approach used on 18 eligible Top 100 taxpayers in 2024, all 18 taxpayers maintained their justified trust rating.

As we continue to engage taxpayers, our data indicates that specific issues identified in previous dealings are being resolved, correlating with a continuing trend towards improved behaviours, better outcomes and higher compliance.

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