Annual Compliance Arrangements with Large Corporate Taxpayers
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| Administration of ACAs 7. ACAs were introduced by the ATO in 2008, and as at July 2014, there were 24 ACAs in place. Of these 18 were with large companies, five with state government departments, and one with an Australian government entity. 8. Over time, the ATO has revised the basis for selecting taxpayers to enter into an ACA. Initially these arrangements were to be limited to the 50 largest entities, based solely on turnover. Now, as previously noted, only large entities assessed as key taxpayers are considered potentially suitable for an ACA. The ATO informs large corporate taxpayers of its overall assessment of their relative risk of noncompliance, including if they are rated as potentially suitable for an ACA. It is open to these taxpayers to initiate discussions with the ATO to enter an ACA. 9. Taxpayers can negotiate an ACA fora single tax or for any combination of up to five separate taxes. 10 As at June 2014, 13 ACAs were in place fora single tax and 11 were for two or more taxes. Most ACAs relate to goods and services tax (17 arrangements, with 12 for income tax, eight for fringe benefits tax, two for excise, and one for petroleum resource rent tax. 10. As ACAs cover different taxes, the ATO administers them through its various business and service lines in the Compliance Group. High‐level oversight is provided through the ACA Oversight Committee, which includes senior executive staff from the business and service lines administering ACAs, reporting directly to the respective Deputy Commissioners in the Compliance Group. 9 In recent years, there has also been considerable criticism of these relationships, and the capacity of tax administrations to address the aggressive tax practices of some multinational companies that shift profits between jurisdictions to minimise tax liabilities. ibid, pp. 11–14. 10 Taxpayers will choose to enter into ACAs for particular taxes for various business reasons. For example, many taxpayers enter into ACAs for GST and excise to access concessional treatment for penalties and interest and to receive extended correcting thresholds (relating to value and time) for errors. Taxpayers may enter into ACAs for income tax to increase the level of certainty of their tax positions. ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 14 11. The ATO has adopted the following three‐phase process for entering into and administering ACAs: entry into the ACA—where the taxpayer’s governance arrangements are confirmed and a terms of arrangement document developed that sets out how the ACA will work administration throughout the year—where the taxpayer continuously discloses material tax risks and the ATO reviews these disclosures and closure at the end of the financial year—where the ATO and the taxpayer jointly review the taxpayer’s tax return. The ATO provides sign‐off for low risk tax issues and develops mitigation strategies to address higher risk issues. The renewal of the ACA is also covered during this stage. 12. If the taxpayer voluntarily enters into an ACA, the ATO has agreed not to apply alternative compliance approaches, such as pre‐lodgment compliance reviews—used to identify and assess large corporate taxpayers income tax risks in the pre and post‐lodgment periods reportable tax position schedules—many large corporate taxpayers are required to disclose their more contestable and material income tax positions and key taxpayer reviews—piloted in 2013–14 for the goods and services tax (GST) and excise, and implementation will be considered during the development of the 2014–15 Compliance Plan. Download 1.48 Mb. Share with your friends:
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