About the top 100 population
The top 100 population:
- consists of public and multinational businesses and APRA regulated superannuation funds that have substantial economic activity related to Australia
- consists of the largest contributors to corporate income tax, excise, and petroleum resource rent tax (PRRT) collections
- also includes some of the largest remitters of GST.
The top 100 population is a significant contributor to total income tax collections. Based on 2022 income tax returns, top 100 taxpayers paid about $50.2 billion or 39% of all corporate income tax.
We moderate the top 100 population annually having regard to several factors including the size of their Australian operations. We also review top 100 taxpayers annually and our engagement is tailored based on the Action Differentiation Framework (ADF).
Note: In 2024 there were 85 economic groups in the top 100 population. This number varies year-on-year and some groups have more than one taxpayer in the top 100. Accordingly, the annual number of entities reviewed under the justified trust program does not equal 100.
Since the commencement of the justified trust program in 2016, our justified trust ratings have provided an objective mechanism for organisations to test and assess the effectiveness of their own tax governance processes as well as understand the organisation's tax profile. Publishing the findings report helps organisations understand how our assessment of their tax profile compares to peers in the market.
Top 100 taxpayers that have obtained overall high assurance ratings can achieve reduced compliance costs and are less likely to have intensive tax disputes with us. Taxpayers can also rely on our high assurance rating to mean that we will generally not apply compliance resources to those issues over which we have justified trusts.
Owing to their significance in the tax system, we continually monitor top 100 taxpayers. However, we tailor the intensity of our reviews having regard to several factors including the level of assurance attained.
Where top 100 taxpayers achieve high assurance for income tax we continue to monitor their disclosures and tax outcomes with a focus on significant new transactions and business changes. Similarly for GST we generally take a monitoring stance to the GST affairs of top 100 reporters who attained overall high or medium assurance in an initial review, as well as conducting some targeted engagement to address GST issues arising from the initial review for some taxpayers.
However, a justified trust rating cannot be ‘set and forget’. Every 4 years we'll conduct a further comprehensive justified trust review to refresh our confidence in the taxpayer’s tax outcomes. During 2024 we've released new guidance to assist top 100 taxpayers during an income tax and GST refresh review.
To ensure our engagement is tailored and timely we've made some enhancements to our top 100 justified trust programs during 2024.
- Over the next 12 to 15 months (to 31 December 2025) we'll work with top 100 taxpayers to bring our engagement into real time. The timeframe will depend on each taxpayer's willingness and ability to achieve this.
- We continue to encourage top 100 taxpayers to make pre-lodgment disclosures to enable early engagement on significant matters in real time. We have released new guidance about our expectations of taxpayers and how we will engage on these matters.
- We are focused on how we scope and tailor our engagements. Other refinements to the program include the following:
- Applying a third monitoring and maintenance year for high assurance taxpayers for income tax.
- Ceasing with Effective Tax Borne (ETB) calculation for entities who are wholly or substantially domestic in operations and ownership, in our monitoring and maintenance reviews and refresh reviews (unless there's exceptional or changed circumstances).
- Taking a tailored approach to GST data and transaction testing in the GST Refresh reviews.
- Changes to the way we obtain sufficient coverage of an economic group for GST including through a combination of GST assurance reviews and specific reviews for additional reporters.
Justified trust and transparency
Tax compliance is becoming an important part of the increasing focus among boards, investors, customers and consumers, suppliers, community groups and other stakeholders of how organisations contribute to the communities in which they operate, with many seeing this as an important component of Environmental, Social and Governance (ESG) performance indicators.
Societal attitudes and expectations in Australia and globally are increasingly encouraging organisations to make more transparent and sustainable business decisions that can lead to long-term growth benefiting all stakeholders. There continues to be calls for organisations to be more transparent about their operations and tax contributions and to demonstrate that they are participating fairly in the economy.
We have observed that our justified trust ratings are increasingly leveraged by organisations to demonstrate their community and ESG credentials as part of their broader social licence to operate. We expect this trend to continue. The objective principles used in the justified trust initiative also serve to enhance the community’s understanding about large market compliance and their ability to differentiate good corporate tax citizens from others. Although there remains a level of non-compliance by some in this population which we continue to robustly address, the overall level of compliance is very high and possibly much higher than the current broader community understanding. Sharing these ratings can help address this gap for those organisations which have achieved high assurance.
Our results to date demonstrate that most large businesses do and want to do the right thing. We have a high level of willing participation by most large corporate groups. This is shown by 82% of top 100 taxpayers having obtained either a high or medium overall assurance rating. There are also examples of companies that have committed to long-term behavioural change, including restructuring, changing their business practices, and settling long-standing disputes with us.
We continue to see justified trust assurance ratings disclosed together with other contextual information to assist the community’s understanding of the tax contributions of the largest participants in the Australian economy. We encourage the continued adoption of tax transparency practices (including the disclosure of assurance ratings) which builds and maintains community confidence that the largest taxpayers are paying the right amount of tax.
Our approach
In 2016 we introduced the justified trust initiative starting with the income tax affairs of the top 100 population. In 2019 we expanded the initiative to include the GST affairs of the top 100 population.
We apply the justified trust methodology and seek to obtain assurance of 4 focus areas:
- That appropriate tax risk and governance frameworks exist and are applied in practice. This includes the design and operational effectiveness of business systems to create, capture and report transactions correctly for GST purposes.
- That none of the specific income tax or GST risks we have flagged to the market are present.
- That tax outcomes of atypical, new, or large transactions are appropriate.
- That we understand why the accounting and tax results vary. We analyse the various streams of economic activity and how they are treated for taxation purposes. We also analyse the sales, acquisitions, and other data, and compare this to net GST paid.
The justified trust program has reached maturity in relation to the assurance reviews of income tax and more recently GST affairs for top 100 taxpayers. Over the past few years, we've worked closely with the top 100 taxpayers and have detailed in their Tax Assurance Reports (TARs):
- the criticality of a good, lived, tax governance framework and encouraging self-assessment against ATO 'better practices'
- the areas of their economic and tax affairs over which we have a high level of assurance
- areas where we have concerns or where improvements can be made and how a higher level of assurance can be obtained
- how the ETB of the Australian channel is critical to our understanding of their income tax risk profile (in particular, transfer pricing matters)
- our future engagement approach
- where a rating is provisional, how that issue resulting in the provisional rating has been addressed
- how the taxpayer has addressed governance gaps and ATO recommended enhancements, and other client next actions detailed in the TAR
- where the monitoring and maintenance approach is applied, whether we have been able to verify the tax outcomes from significant new transactions or significant changes to the taxpayer’s business activities.
We continue to work towards integrating our reviews, where appropriate, for income tax and GST.
This report outlines our findings for the 4 justified trust focus areas for income tax and GST, as well as our engagement approach once a top 100 taxpayer attains overall high assurance for income tax and for GST once high or medium assurance is obtained.