Top 1,000 combined assurance program

Overview of the program

The Top 1,000 combined (income tax and GST) assurance program is part of the tax avoidance taskforce It replaces the Top 1,000 tax performance program that ended in 2020 and the Top 1,000 GST assurance program that ended in 2022.

Specialist income tax and GST teams engage with each taxpayer using tailored assurance approaches. We seek to increase our assurance that large public and multinational groups are reporting the right amount of income tax and GST or identify areas of tax risk for further action.

The program provides large businesses with an opportunity to gain greater certainty about their tax outcomes and the effectiveness of their tax governance frameworks. It also provides an objective mechanism for large businesses to understand how their tax profile compares to others in the market and their peers.

Our combined assurance reviews (CARs) build on previous assurance engagements enabling us to 'top up' our understanding. Our program focuses on the largest 1,000 taxpayers from the largest economic groups. We differentiate our assurance approach and tailor our engagement based on our understanding from prior engagements and the assurance already attained.

Our reviews provide an opportunity for taxpayers to improve assurance ratings obtained from previous reviews as we review improvements and steps taken to address our concerns.

Timely responses to our information requests help us to undertake our reviews more efficiently and make follow on compliance activity less likely.

Who the program covers

The Top 1,000 program is part of the ATO’s PMB Large Market coverage strategy covering the largest 1,000 public and multinational entities outside the Top 100 Program.

At present, entities with a turnover of over $350 million would generally be included in the Top 1,000. Other factors will be relevant such as taxpayer industry, and whether any significant transactions or risks have come to our attention that are best reviewed in a CAR.

Large Market taxpayers not covered by the Top 100 or Top 1000 programs are still expected to have good tax governance and behaviours and will be monitored and potentially selected for our risk based coverage programs. Refer to Action Differentiation Framework | Australian Taxation Office (ato.gov.au)

Our combined assurance reviews

We apply our justified trust methodology to our reviews. Each review generally covers income tax and GST. Where we have already engaged through an income tax or GST assurance review, we will tailor the review based on the outcomes of those previous engagements.

The review seeks to increase our level of assurance that you are reporting the right amount of income tax and GST or identify areas of income tax or GST risk for further action.

Our reviews typically cover 4 income years for income tax and the last complete financial year for GST.

Where we engaged with you in an earlier review, we leverage our understanding of your business and seek to ‘top up’ our assurance and focus on what has changed since that review. We also check you've addressed any recommendations from your previous review. You will be able to improve your assurance ratings by following these recommendations.

Differentiated approach for Income Tax

Top 1,000 taxpayers have been divided into 2 pools for income tax: significant taxpayers and general taxpayers. Our assurance approach will differ depending on the taxpayer pool and other factors such any previous assurance rating. We will continue to focus on any recommendations made in our earlier assurance reviews and steps taken by taxpayers to address our concerns.

We aim to provide a better experience for taxpayers, with an increased focus on significant or unusual arrangements, continuing to build community confidence that Australia’s largest taxpayers are paying the right amount of income tax and GST.

Significant taxpayers

Significant taxpayers generally have a turnover of over $1 billion and make up around 30% of the largest Top 1,000 entities. Given the economic significance of these taxpayers we will provide assurance for the 4 year income tax review period.

We may consider other factors when determining an entity is a significant taxpayer, to ensure we have an appropriate spread of taxpayers across certain industries in the significant taxpayer group.

Where a significant taxpayer has previously achieved an overall high or medium assurance rating and has achieved at least a Stage 2 governance rating, we tailor our assurance approach to reflect this. This means we will leverage from our previous assurance review by only seeking objective evidence from the last year of the review for most tax risks and issues. We will continue to seek objective evidence for all 4 income years of the review in respect to any significant or new transactions, events or tax risks flagged to market, and follow up on recommendations made in our earlier review.

For significant taxpayers that have not yet obtained a Stage 2 governance rating or previously received an overall low assurance rating, we will continue to request objective evidence across the 4 year income tax review period.

General pool taxpayers

The remaining taxpayers in the Top 1,000 will be part of the general pool.

When reviewing taxpayers that have not previously been assured, we will look to assure economic activity in the last year of the review as well as any significant, atypical or new transactions or tax risks present in the 4 year income tax review period.

We will take the same approach for taxpayers who were previously reviewed and didn't achieve a Stage 2 for governance or had an overall low assurance rating. We will also follow up on recommendations made in our last review.

Where a taxpayer had an earlier review and achieved a governance rating of Stage 2 or Stage 3 and an overall assurance rating of medium or high, we will undertake a lighter touch review. This light touch review will refresh our assurance, provide an assurance rating covering the last year of the review period and address any significant, atypical or new transactions or tax risks in the 4 income years of the review.

Differentiated approach for GST

Where a taxpayer has not yet been assured, previously obtained a low overall assurance rating or received a Stage 1 rating for governance, we obtain assurance by ensuring that:

• appropriate GST risk and governance frameworks exist, are designed effectively and are applied in practice
• none of the 'GST risks flagged to market' are present
• the GST treatment of significant, atypical or new transactions is appropriate
• the GST analytical tool (GAT) is undertaken. (For taxpayers with predominantly input taxed supplies we will undertake data testing. We will not undertake the GAT for these taxpayers.)
• any recommendations made in our earlier assurance reviews have been addressed.

Where a taxpayer has had a previous assurance review and achieved a Stage 2 or Stage 3 governance rating and a medium or high overall assurance rating, we will initially focus on:

• changes to the tax risk management and governance framework
• the alignment between accounting and GST through the use of the GAT. (For taxpayers with predominantly input taxed supplies we will undertake data testing. We won't undertake the GAT for these taxpayers.)
• action taken to address any recommendations made in our earlier assurance review.

From there, we will consider any areas that require further assurance. This will also be informed by the previous assurance ratings the taxpayer attained in relation to these issues.

Notification of your review

We will notify you before we start a CAR and provide you with our request for information giving you time to complete responses. Where applicable, we will advise you at this time whether you are a significant or general pool taxpayer.

You will also be given an opportunity to consider whether to make a voluntary disclosure in respect of any errors or omissions for both income tax and GST.

Our initial request for information will include standard questions considered relevant to your business.

On receipt of your response, we may follow up with additional questions as required.

Importance of timely and complete responses

We consider that the provision of timely and complete responses to our request for information may indicate the presence of strong tax governance frameworks and a willingness to engage with us to obtain better outcomes. Where this occurs, we will seek to tailor your engagement with us through less:

• follow-up questions in subsequent requests of information
• intensive shorter engagements.

If your responses don't meet our expectations, it is likely that you will be asked more detailed questions and experience a longer more intensive review process.

How to prepare and improve review outcomes

We expect you to take steps to ensure you understand our justified trust methodology and assurance approaches to prepare for your review.

The following practical guidance can help you prepare for a review and improve your review outcome:

• Typical questions in a Top 1,000 combined assurance review
• Tax risk management and governance - a practical guide to prepare for a combined assurance review (Income Tax)
• Governance third party data (Superannuation funds, managed funds and insurance companies)This link will download a fileThis link will download a file
• GST Governance, Data Testing and Transaction Testing Guide
• GST analytical tool
• GST what information we need from you.

What to expect following a review

Following a CAR we will share our findings with you in a Combined Assurance Report covering both income tax and GST. The report will specifically cover:

• separate income tax and GST overall assurance ratings
• separate income tax and GST governance ratings
• areas where we have assurance you have reported the right amount of income tax and GST
• any identified risks
• recommended next steps for you to undertake so that we can obtain greater assurance or address specific risks. We may also follow up on these recommendations.
• areas of concern or risk where we will work with you to address identified concerns in a future compliance engagement such as a review or audit.

Findings report

Our findings for the Top 1,000 tax performance program and the Top 1,000 combined assurance program are published annually in the Findings Report Top 1,000 income tax and GST assurance programs.

The report will help you understand how we apply the justified trust methodology to obtain greater assurance that large public and multinational taxpayers are paying the right amount of income tax and GST as well as identifying areas for further action.