About the program
We engage with taxpayers outside our justified trust programs where we identify higher risk or emerging issues that may be present to:
- support these taxpayers in meeting their tax obligations
- resolve our concerns or identify areas that may need closer examination.
The expansion of the Tax Avoidance Taskforce announced in the October 2022 Federal Budget has meant a broadening of our risk focus to ensure the larger business populations are also not engaging in tax avoidance.
We operate alongside our justified trust programs to build community confidence that all public and multinational businesses are paying the right amount of income tax.
We have learned from our work across the different industries and risks over the past few years. We're well-positioned and capable to respond to existing and emerging risks and issues with effective strategies and tailored activity.
Who is covered by this program
The program focuses on:
- taxpayers who are part of an economic group controlled by a public or multinational entity with a combined Australian turnover of less than $250 million.
- high priority or emerging tax risks identified in taxpayers who are part of an economic group controlled by a public or multinational entity with a combined turnover of more than $250 million and outside our justified trust programs.
Our focus areas
The program's engagements address income tax compliance risks in public and multinational businesses, including:
- inappropriate access to tax incentives and concessions including the research and development tax incentive and concessions
- related party transactions where we observe:
- non-arm's length pricing in cross-border financing and inbound distribution arrangements
- mischaracterisation of payments between Australian residents and related entities in other jurisdictions
- non-payment or incorrect payment of interest, dividend and royalty withholding tax
- structuring and business events resulting in profit shifting and avoiding the taxation of capital gains including
- payments that give rise to hybrid mismatch outcomes
- inappropriate access to tax treaty benefits.
Keep informed of the program's upcoming focus areas by subscribing to the ATO business bulletin.
You can find out more about focus areas for public and multinational businesses at key compliance risks for large corporate groups and the focus areas of the tax avoidance taskforce at compliance programs.
How we tailor our approach to you
We're using intelligence and analytical models to improve our understanding of your business and the environment you operate in.
With our increased understanding, we tailor our approach to engagement based on:
- size and complexity of the risks we identify in your affairs
- behavioural drivers
- impact at a whole of system level.
While considering the effect tax compliance has on your business, we'll support you to meet your tax obligations by:
- encouraging voluntary compliance by informing you of the issues that attract our attention and directing you to our guidance material
- contacting you when we identify possible errors to encourage you to resolve the issue
- engaging with you directly where we need more information to assess a potential risk that we have identified
- where appropriate, conducting risk reviews to assess and treat identified tax risks.
What to expect if we contact you
We use cooperative compliance approaches to assess risks as they arise. If you're selected for an engagement, we'll write to you explaining:
- why we're contacting you
- what the next steps are
- how to contact us.
We'll work with you to resolve our concerns or issues that arise from our risk modelling and analysis of data from:
- income tax returns, schedules, and country by country reporting
- third party data sources.
Help and education
We may proactively contact you to provide further information about law changes or new guidance to assist you to meet your tax obligations.
Letters to correct errors
When we identify possible errors in your tax disclosures, we'll write to you advising you of the possible error.
We'll request you to review your tax disclosures and encourage you to make an amendment to correct errors.
Targeted letters
When we identify possible risks from the information available to us, we'll engage with you directly seeking more information to either resolve our concerns or identify areas that need closer examination.
We'll assess the information you provide and will inform you of the next steps. The next steps may include:
- working with you to progress to an amendment to your tax return – this could be through a voluntary disclosure
- actively monitoring your future tax performance – this may include issuing a notice for you to lodge a reportable tax position schedule in future years.
- escalation to a risk review or audit where a closer examination is needed.
Reviews
We may decide to commence a specific risk review, a comprehensive risk review or an audit if we identify areas of concern that need an in-depth investigation.
You can find more information on our approach at Risk review and audit processes.
How to prepare
To reduce the risk of us selecting you for an engagement:
- follow our advice and guidance available through the legal database, including our taxpayer alerts, public rulings and practical compliance guides
- have your reporting, lodgment, and payment obligations accurate and up to date. This includes
- lodgment of your tax return and all relevant schedules
- lodgment of your annual report if you have a withholding tax obligation due to payments of investment income and royalties to foreign residents
- complying with the lodgment obligations if you are a country-by-country reporting entity
- keep informed of the program's upcoming focus areas by subscribing to the ATO business bulletin and proactively review your tax affairs
- have good record keeping and tax control framework.
When we engage with you as part of the program, we don't consider or review your tax governance processes. However, taxpayers who have good tax governance generally have a more streamlined and efficient review than those who don't.