Top 1,000 engagement

The Top 1,000 population

The Top 1,000 population is made up of:

• Australia’s large public and multinational corporate groups and APRA regulated superannuation funds with a group turnover greater than $250 million
• taxpayers that are not covered by the Top 100 Program.

These taxpayers are diverse in terms of their ownership, business models, industries, and size and have substantial economic activity related to Australia. They are key participants in the tax system across corporate income tax, excise, petroleum resource rent tax and GST.

Based on 2022 tax returns:

• Top 1,000 taxpayers paid about $27.2 billion or 21% of all corporate income tax.
• The 10 largest groups in the Top 1,000 population paid $4.9 billion or 18% of the Top 1,000 corporate income tax.
• The 100 largest groups in the Top 1,000 population paid $15.4 billion or 57% of the Top 1,000 corporate income tax.
• Top 1,000 taxpayers reported $28.5 billion of net GST or 37% of total net GST collections.

As an increasing number of economic groups have exceeded the $250 million threshold, which was set when the Top 1,000 assurance program started in 2016, we have recalibrated the metrics used to determine whether a taxpayer is in scope of the Top 1,000 assurance program. This ensures we focus on the largest 1,000 taxpayers from the largest economic groups, as was the original intention of the assurance program.

From March 2024 onwards, we have identified the largest 1,000 entities from the largest publicly listed and multinational groups. Currently these largest 1,000 are from approximately 850 economic groups and have turnover greater than approximately $350 million. We will now focus on these taxpayers for the Top 1,000 combined assurance review program.

We will regularly review these entities to ensure we continue to focus on the largest 1,000 taxpayers outside of the Top 100 entities. We expect the largest 1,000 taxpayers to be reasonably stable, however economic conditions and events may affect which entities are covered by the assurance program.

Entities that had previously met the criteria for the population and are now outside the largest 1,000 entities will continue to be considered by our risk treatment approaches and may be selected for a specific review of identified tax issues and risks.

For GST, we generally review the largest GST reporter connected with the income tax taxpayer that is the subject of the assurance review.

Justified trust and transparency

Tax compliance is becoming an important part of the increasing focus among boards, investors, customers or 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 support 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 probably much higher than the current broader community understanding. Sharing these ratings can help address this gap for those organisations which have achieved high assurance.

We have seen a small number of Top 1,000 taxpayers sign up to the voluntary tax transparency code. We encourage the continued adoption of tax transparency practices (including the disclosure of assurance ratings), which builds and maintains community confidence that Australia’s largest taxpayers are paying the right amount of tax.

Our approach

Justified trust is a concept from the Organisation for Economic Cooperation and Development (OECD).

We introduced the justified trust concept in 2016 and commenced the Top 1,000 income tax performance program as part of the Tax Avoidance Taskforce.

We apply the justified trust methodology and seek to obtain assurance of 4 focus areas:

1. That appropriate tax risk management and governance frameworks exist and are applied in practice. This includes the design of business systems to create, capture and report transactions correctly for GST purposes.
2. That none of the specific income tax or GST risks we have flagged to the market are present.
3. That tax outcomes of atypical, new, or significant transactions are appropriate.
4. 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.

We commenced the combined assurance program in 2020, with income tax assurance provided alongside a GST risk review. Where there were GST concerns identified, a standalone GST assurance review was undertaken to further explore the GST profile of the taxpayer. From April 2022, we expanded the combined assurance review product such that both income tax and GST are now assured at the same time.

In March 2024 we introduced a differentiated approach to assuring taxpayers, based on factors such as their size and the levels of assurance already attained.

Around 300 of the taxpayers identified as the largest 1,000 have turnover exceeding $1 billion and are known as 'significant taxpayers'. We will continue to assure the income tax reported and paid for all 4 years of the review period for these taxpayers. Where a significant taxpayer has achieved an overall high or medium assurance rating and has a stage 2 or 3 tax risk management and governance rating, we will tailor our assurance approach. We will primarily seek objective evidence from the last year of the review period, as well as objective evidence in respect of any significant transactions, events or risks flagged to market in the other years of the review period.

The remaining taxpayers, known as 'general taxpayers', will have a differentiated approach going forward. When reviewing these taxpayers for income tax, we will look to assure the economic activity in the last year of the review period, as well as any significant transactions, events or risks flagged to market in the other years of the review period. We will also consider any recommendations that were made in previous reviews.

For those general taxpayers that have achieved a stage 2 or 3 tax risk management and governance rating, and the overall assurance rating was medium or high, we'll adopt a lighter touch to refresh our assurance, continuing to provide an assurance rating covering the last year of the review period, plus any new or significant transactions, events or risks flagged to market in the intervening years.

We will apply a differentiated approach to assuring GST for taxpayers where we already have some assurance as to their reporting for GST through an earlier review. For taxpayers that have attained a stage 2 or 3 GST governance rating, and have a medium or high overall assurance rating, our subsequent reviews will initially focus on:

• any GST governance improvements made by the taxpayer since our earlier review
• understanding variances between accounting and GST reporting through the use of the GST Analytical Tool (GAT) or similar process (other than for taxpayers making predominantly input taxed supplies, where we will continue to use our e-audit approach), and
• what the taxpayer has done to address the concerns that were raised in the earlier review.

From there we will consider any areas that require further analysis and the objective evidence required to be assured in the combined assurance review.

We will continue to provide recommendations to taxpayers on how to improve and what actions the taxpayers should take at the end of the review. Matters may also be escalated for further ATO investigation as part of our next actions program where the identified concern is assessed as requiring ATO intervention to resolve (through review or audit).