Overview
The Top 1000 combined assurance program applies the justified trust methodology to increase our assurance that large public and multinational groups are reporting the right amount of income tax and GST.
In our combined assurance reviews (CARs), most taxpayers will also be asked to complete the GST analytical tool (GAT). However, for taxpayers that predominantly make input taxed supplies we will undertake data and transaction testing.
You should review your GST systems and records to check you have not made any mistakes before the CAR and let us know if you wish to make any voluntary disclosures.
GST analytical tool
We have developed the GAT to help us better understand why accounting and GST results vary. The GAT is one of the tools we use to obtain greater assurance that you are paying the right amount of GST. The GAT also helps us identify where we need to ask more questions.
The GAT is not intended for use by taxpayers who predominantly make input taxed supplies. For taxpayers who predominantly make input taxed supplies we will undertake data and transaction testing.
The GAT uses a standard method statement applying a 'top-down' approach to identify and understand variances between accounting figures reported in audited financial statements and GST reported on the BAS.
The method statement starts with the revenue and expenses reported in your profit and loss statement. It works through a series of adjustments to compare this information with your annualised BAS covering your financial reporting year.
We seek to understand what parts of your accounting reported revenue represent:
- taxable supplies
- GST-free supplies
- input taxed supplies
- transactions that are not supplies for GST purposes (out-of-scope supplies).
We also seek to understand what parts of your accounting reported expenses represent:
- GST-bearing expenses
- non-GST bearing expenses.
The 4 key steps to the GAT are:
- grouping variances
- non-GST bearing items (permanent differences)
- balance sheet and cash flow items (temporary differences)
- other adjustments (offsetting items / industry specific).
This helps us to understand variances between your financial statements and your BAS results and whether those variances are supported by appropriate objective evidence.
We will work with you to understand the variances between your accounting figures and GST figures. This helps us better understand your GST profile and the key drivers of your GST outcomes. The GAT is not designed to quantify tax shortfalls or overpayments.
Refer to the GST Analytical Tool (GAT) FAQ and Top 1,000 GAT example to assist you to complete GAT.
Data and transaction testing
Where a taxpayer makes predominately input taxed supplies, we will undertake data testing in our CARs.
Our GST Governance, Data Testing and Transaction Testing Guide shows how the justified trust methodology is applied to help conduct a self-review of your tax control framework for GST purposes. This guidance also explains how to undertake data and transaction testing to ensure your business systems are creating, capturing and correctly reporting GST.
The Guide to Independent Data Testing by Third Party Advisors is also available to help taxpayers that are considering engaging the services of a third-party adviser to undertake independent data testing for a Top 1,000 CAR.
The Guide provides practical guidance on the ATO's expectations and the conditions that must be met for a taxpayer's third-party adviser to undertake the independent data testing, so that it can be relied upon in a combined assurance review.