The Australian Taxation Office (ATO) has issued a statement urging privately owned and wealthy groups to document their processes for identifying and managing tax issues and risks on 7 February 2025.
ATO’s ongoing engagement with groups in the Top 500 tax performance programme revealed that many do not have documented procedures for identifying and managing tax issues and risks relevant to the group.
Having documented processes and checks-and-balances in place to recognise and manage issues is our second principle of effective tax management.
Following this principle helps Top 500 groups identify and manage issues before they become risks that can impact businesses and lead to exposure to liabilities, penalties, and interest.
All Top 500 groups should have a documented end-to-end process that includes:
- an environmental scan when the governance framework is first implemented, to identify ‘business as usual’ tax issues
- keeping an active register of material and tax sensitive issues, and procedures that ensure the right tax treatment of significant transactions, including quantitative and qualitative factors to determine when external advice should be sought
- a policy that ensures tax is considered when atypical transactions arise, and processes lead to the correct tax treatment
- clear instructions for preparing tax returns, including record keeping, reconciliations and disclosures, as well as procedures where external tax agents are engaged
- a process for checking and signing-off tax returns that is recognised within the group and by tax advisers.
