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 12 4. While continuing its program of retrospective risk reviews, audits and other compliance activities, the ATO has increased efforts in recent years to build cooperative relationships with large corporate taxpayers, particularly those rated as key. These relationships aim to support full and open disclosure of contestable tax positions, and the identification and mitigation of tax risks in real time. This approach reflects the ATO view that most large corporate taxpayers are willing to comply, but that ongoing monitoring will assist it to clarify contestable positions in real time. It also aligns with the ATO’s 2020 vision. 6 5. To support cooperative relationships, the ATO has developed a number of compliance initiatives that aim to build enhanced positive relationships and compliance outcomes with large corporate taxpayers. The ATO considers Annual Compliance Arrangements (ACAs) to be the centrepiece of these efforts. 7 ACAs are directed at key large corporate taxpayers, and offer potential benefits, such as greater practical certainty about their tax positions, concessional treatment for penalties and interest, and higher levels of accessibility to the ATO. In return, these taxpayers are required to have good governance arrangements and disclose tax risks in real time. In this way, ACAs, which are voluntary, are intended to offer a no surprises approach, with potential benefits for both the ATO and the taxpayer. 6. Cooperative compliance approaches have been adopted by many countries. In July 2013, the Organisation for Economic Cooperation and Development (OECD) reported on its assessment of 24 countries, including Australia, and noted the collaborative relationships being developed between large corporate taxpayers and revenue agencies. 8 The OECD considers that cooperative compliance arrangements can assist revenue agencies to improve compliance by large corporate taxpayers. In this regard, it highlights the importance of transparency, disclosure and good governance systems on the part of both parties to reduce uncertainties over entities tax positions. The 5 The ATO scans the tax returns of all large corporate taxpayers through a variety of risk filters, and conducts formal risk reviews of around 30 percent of these taxpayers, with 18 percent of this group subject to an audit. ATO, Large business and tax compliance, p. 4. The ATO’s 2020 vision refers to the strategies and principles underpinning the ATO’s administration of the tax and superannuation systems in moving towards the year 2020 and a lighter or no touch experience for taxpayers. 7 Speech by the then Commissioner of Taxation Anew dimension, delivered at the Corporate Tax Association Convention, Sydney, 12 May 2008. 8 OECD, Co-operative Compliance A Framework From Enhanced Relationship to Cooperative Compliance, 2013, p. 87. Summary ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 13 OECD also considers that cooperative compliance can help to restore trust and confidence in the relationship between business and tax administrations. 9 While recognising concerns about the compatibility of this approach with equality before the law, the OECD concluded that cooperative compliance is entirely consistent with modern compliance risk management principles. Download 1.48 Mb. Share with your friends:
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