How we engage with you
Our engagement approach for the income tax affairs of top 100 taxpayers is primarily through an annual income tax pre-lodgment compliance review (PCR). We apply the justified trust methodology in these reviews. We also apply the justified trust methodology to the GST affairs of top 100 taxpayers through the Top 100 GST assurance program.
Our aim
The aim of applying the justified trust methodology in these reviews is to build and maintain community confidence that taxpayers are paying the right amount of tax. It also allows us to focus our resources in the right areas.
Achieving justified trust means:
- we have attained a sufficient level of assurance that a taxpayer is paying and reporting the right amount of tax
- going forward we can rely on that assurance resulting in more tailored, lower intensity reviews
- if we don't attain sufficient assurance, we can focus our resources on these areas.
These reviews help us build an understanding of your business, including your tax governance. This also allows us to:
- assure the right tax and GST outcomes
- identify and manage material tax risks through early, tailored and transparent engagement.
We encourage engagement
We foster a culture of transparency and willing participation through early engagement. We encourage taxpayers to disclose material, new transactions and business changes in real time. This supports our approach of raising and resolving potential compliance concerns as they arise – that is, prevention before correction.
To understand more about our expectations in relation to pre-lodgment disclosures and how we will action these, see Top 100 Pre-lodgment disclosure framework.
Income tax pre-lodgment compliance review
Each PCR runs for approximately 2 years. This timeframe may be shorter if a top 100 taxpayer has attained overall high assurance and is in the monitoring and maintenance phase.
Timeframes
A PCR typically covers:
- the financial year (12 months)
- the standard period allowed from the conclusion of the final year to the lodgment of the return (7 months)
- a period of time after the lodgment of the return (up to 6 months) to allow for analysis and discussion of outstanding issues where necessary.
What a PCR involves
A PCR typically involves the following.
Initial discussions
A PCR typically involves initial discussions with our case officer to establish the framework in which we will do the PCR.
The PCR framework is a living document that will:
- be updated during the review as required
- include the scope of the review including items that were outlined in the
- Future Assurance Plan in the last Tax Assurance Report (TAR)
- Monitoring and Maintenance Assurance Report (M&M assurance report) if one was issued.
At this discussion you'll have the opportunity to meet the relevant senior executive service officer.
Other discussions
A PCR typically involves:
- additional discussions through the income year where you may make disclosures or the ATO may raise identified issues for discussion, as well as discuss any requests for information
- a pre-lodgment discussion of details to be included in the tax return, and the tax return preparation process
- post-lodgment conversations to discuss issues identified in the tax return preparation process
- provision of information requested by the ATO across the 4 focus areas of justified trust.
For more information, see:
- Top 100 justified trust program
- Top 100 program - Tailored approach to obtaining, maintaining and refreshing assurance
- Top 100 Monitoring and maintenance approach for income tax
- Top 100 Income tax refresh review.
Assurance activities and reports
A PCR typically involves:
- ATO assurance activities across the 4 focus areas of justified trust
- the issue of a TAR or M&M assurance report at the completion of the PCR including a
- summary of assurance attained, maintained or refreshed across the 4 focus areas of justified trust
- future assurance plan which outlines the proposed focus of future PCRs and risk reviews or audits.
We have a pre-lodgment compliance review timeline.
GST assurance review
We complete an initial top 100 GST assurance review (initial review) for each top 100 taxpayer. We continue annual reviews until overall high or medium assurance is attained.
Timeframes
Once a taxpayer has attained an overall medium or high level of assurance in a top 100 GST assurance review, we:
- review them on a periodic basis at least once every 4 years
- take a monitoring stance during the intervening 3 year period
- may do targeted assurance activities during the intervening 3 year period.
An initial or refresh top 100 GST review runs for up to 12 months, and generally starts once the financial statements for the review period are available. The review will focus on a 12 month period.
Making disclosures
We encourage taxpayers to make disclosures about material new transactions and business changes prior these occurring. GST disclosures can also be made as part of any regular discussions and interaction in ongoing income tax PCRs. The ATO may also raise identified issues for discussion.
To understand more about our expectations relating to disclosures and how we will action these, see Top 100 Pre-lodgment disclosure framework.
What a review involves
A top 100 GST assurance initial or refresh review typically involves:
- initial discussions with our case officer to establish the framework in which we will do the review
- The GST assurance review framework is a living document that will be updated during the review as required and will include the scope of the review including items that were outlined in the Future Assurance Plan in the last TAR from the initial review or any subsequent reviews.
- At this discussion you'll have the opportunity to meet the relevant senior executive service officer.
- additional discussions through the review, including to discuss any requests for information
- provision of information requested by the ATO across the 4 focus areas of justified trust – see
- ATO assurance activities across the 4 focus areas of justified trust
- the issue of a GST TAR at the completion of the GST assurance review including a
- summary of assurance obtained or refreshed across the 4 focus areas of justified trust
- future assurance plan that outlines the proposed focus of future reviews, and any ATO or client next actions.
Top 100 taxpayers and other taxes
Depending on their circumstances, top 100 taxpayers may also have regular or periodic, tailored engagement in relation to other taxes. These include:
- petroleum resource rent tax (PRRT)
- fringe benefits tax (FBT)
- excise
- excise equivalent goods (imported)
- fuel tax credits
- luxury car tax
- wine equalisation tax, and
- product stewardship for oil program.
We encourage taxpayers to adopt the same transparency and willing participation through early engagement for these taxes. This includes:
- proactively engaging with regarding potential compliance concerns as they arise
- disclosing material business changes, changes in tax positions taken, and any new or significant transactions.
If possible, in these engagements we will use the information provided as part of the income tax PCR and GST assurance review.