How the ATO is creating closer engagement with stakeholders

ATO creating closer engagement with stakeholders

Jenny Wong outlines the ATO's efforts to create closer engagement with stakeholders for better tax law and administration outcomes.

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Director, Tax

KPMG Australia

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People in a meeting

I attended an industry event, ‘Connect with Us’, attended by senior Australian Taxation Office (ATO) officials and professional and industry associations last week in Canberra. The aim of the event was to create closer engagement with stakeholders for better tax law and administrative outcomes. The ATO showcased what they had consulted on, how they consulted, who they consulted with and what outcomes are of consultation. These areas include:

Risk management and strategy

  • External Compliance Assurance Process (ECAP): This pilot sought to test the effectiveness of a taxpayer using existing registered company auditors to check factual matters identified by the ATO. Through consultation it was identified that existing auditing standards had the potential to deliver on the ECAP objectives.
  • Effective Tax Borne Methodology: This is a risk and compliance tool to help the ATO identify an economic group’s worldwide profit from Australian-linked business activities and the Australian and offshore tax paid on that profit. The ATO’s pilot found this was an effective risk and compliance tool to achieve these outcomes.
  • Tax Risk Management & Governance Review Guide: The ATO’s Tax Risk Management and Governance Review Guide was developed primarily for large business. A robust tax control framework gives the ATO confidence the tax risks are well managed.
  • Early Engagement with Public Advice & Guidance Team: Taxpayers and advisers can opt to engage with the ATO informally prior to lodging a formal request for private advice or guidance. This helps provide certainty of outcomes for taxpayers, reducing compliance costs and improving risk management for the ATO.

New measures

The ATO has recently consulted on these new measures with stakeholders to ensure certainty is provided to taxpayers to enable compliance.

  • Foreign Resident Capital Gains Withholding Tax: This measure imposes a 10 percent withholding obligation on purchase of Australian assets including property sales over $2 million.
  • General Purpose Financial Statements: Significant global entities whose annual global annual income exceeds $1 billion need to lodge general purpose financial statements if they don’t already lodge one with ASIC under new law.
  • Corporate Transparency Project: On 29 June 2013, the tax law was amended to require the Commissioner to publish certain information about the tax affairs of large corporate taxpayers from the 2013-2014 income year onwards.

International

  • Common Reporting Standard: This is a global standard that requires financial institutions to report information to the ATO about accounts held by foreign tax residents. The ATO has consulted with industry to provide guidance on streamlined reporting.
  • Country By Country (CbC) Reporting: This project implements new transfer pricing documentation standards and provides a mechanism for the exchange of CbC reports between participating jurisdictions. Consultation has enabled the ATO to meet its commitments under OECD Action 13 and likely to ensure voluntary compliance with CbC.
  • Advanced Pricing Agreement (APA) Program: This is a program in which agreements are reached between taxpayers and the ATO on the future application of the arm’s length principle. The ATO is seeking to provide ongoing and real time improvements of the external experience with the APA program.

 

KPMG continues to consult and make a contribution on significant tax measures, including the above measures, through our various connections we have in the ATO as well as our contribution through the professional and industry associations.

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