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What the ATO’s proposed GST compliance measures mean for Corporate Australia

Accounting, Accounting Firms, Accounting, Audit & Payroll, Audit, Blog, Business Tax, Corporations, Indirect Tax, International Reporting & Compliance, Organisations, Payroll, State, Territory & Local Tax, Tax, Technology May 10, 2018

The ATO will take on indirect tax in the next phase of building its whole-of-tax compliance framework. The proposed GST Large Business Program is aimed at Top 100 businesses in Australia. Neha Mahindru, our Indirect Tax solutions specialist, looks the implications for large corporations and their tax management systems.

Tax transparency for corporate Australia remains a prominent theme in 2018.

In the pursuit of a whole-of-tax compliance approach to tax governance, the ATO has been making plans to add another element to shore-up Australia’s existing tax compliance framework: The GST Large Business Program.

Aimed initially at the Top 100 businesses in Australia, the Program would require these taxpayers to participate in Pre-Lodgement Compliance Reviews (PCRs) for GST.  The ATO, using a Justified Trust methodology – employed most recently in the Streamlined Assurance Reviews – would work with each of these taxpayers to build a holistic understanding of their business and tax risk position, and then work with them to mitigate these risks.

The move signals tighter scrutiny of the taxing of cross-border transactions but also the ATO’s commitment to working with top businesses to reduce the risk of non-compliance and produce a comprehensive best tax practice guide.  The ATO has stated its intention through the Program is to reduce time and cost for both itself and taxpayers in the future and provide confidence to the community that these taxpayers are paying their fair share of tax.

However, there is also an expectation that many companies will have much work to do, in order to produce the sample data required for the assessment. Whilst the Program isn’t in yet in effect, getting a head start on the management of indirect tax as part of a business’ tax management system to stand up to an ATO audit, is critical.

This is where having an automated GST system will greatly benefit companies in this position. Indirect tax values can vary greatly from country to country, with many in a state of daily flux – Brazil for example. So rather than manually managing GST compliance, which can be both time-consuming and inaccurate, an automated system that correctly calculates indirect tax in the background, such as our ONESOURCE Indirect Tax Solution, removes these complexities and provides the business with confidence in the integrity of their monthly GST data.

In addition to having a robust compliance recording and reporting system in place, the added benefit of using tax automation is the prevention of tax leakage and loss of revenue, or penalties for non-compliance and interest on late payments – which can amount to significant amounts given the scale of transactions for large businesses.

The Government’s determination to tighten the loopholes in our tax system means that it will continue to devise measures such as the proposed Pre-lodgement Compliance Reviews, and in all likelihood, will extend these to a wider range of taxpayers.

Find out more about how our ONESOURCE Indirect Tax Compliance and Determination software solutions can improve your business by visiting our website.