Summary of entity response

ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers
22 It is noted that the ANAO acknowledges that an approach through Annual Compliance Arrangements or their equivalent is consistent with international practices of building cooperative relationships with larger corporate taxpayers. It is pleasing that the report recognises that ACAs are well placed to beat the forefront of such a strategy as a complementary part of the ATO reinvention program. Annual Compliance Arrangements were introduced in 2008 and there have been ongoing adjustments and evolution to ensure it is fit for purpose. There has been regular feedback from large corporates as to the utility of these arrangements, which we have sought to respond to appropriately. However, we also acknowledge that it is time to refresh our approach to ACAs and, as identified in your report, we are in the final stages of an internal review of the
ACA strategy. While we are yet to finalise our taxpayer consultation on the outcomes of this review, we envisage a renewed Annual Compliance Arrangement offer. As part of this Annual Compliance Arrangement redesign work, the ATO will be further considering the broader compliance framework for large entities across all taxes to ensure a consistent and graduated compliance response to the tax risks profiles of all large business taxpayers. This should maximise taxpayers ability to voluntarily address tax risks as they are identified, as well as provide an appropriate and proportionate enforcement response, if voluntary compliance cannot be achieved. In following through on this design work, the ATO will ensure that the new and revised approaches are appropriately supported with staff training and internal and external guidance materials where required. We will also ensure that, for reporting and record keeping purposes, success factors, outputs and outcomes are clearly articulated to our staff to allow much more effective measurement and evaluation in the future We acknowledge that the report identifies that there has been a low number of Annual Compliance Arrangements relative to the number of large corporates that maybe suitable for such arrangements. However, the ATO believes that the number of ACAs currently being managed reflects the voluntary nature of the ACA arrangements and large corporates can choose to enter or not enter into such arrangements. As indicated in the report from interviews conducted by the ANAO, large corporates make their own assessment of the benefits and costs that they see in entering into such an arrangement. While noting the need fora clearer expression as to the level of desirable take‐
up in the total number of Annual Compliance Arrangements, we believe the total number of taxpayers likely to meet our criteria is far less than the 158 key taxpayers. A realistic figure may well be in the range of 35‐50 of these key

ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers
22 It is noted that the ANAO acknowledges that an approach through Annual Compliance Arrangements or their equivalent is consistent with international practices of building cooperative relationships with larger corporate taxpayers. It is pleasing that the report recognises that ACAs are well placed to beat the forefront of such a strategy as a complementary part of the ATO reinvention program. Annual Compliance Arrangements were introduced in 2008 and there have been ongoing adjustments and evolution to ensure it is fit for purpose. There has been regular feedback from large corporates as to the utility of these arrangements, which we have sought to respond to appropriately. However, we also acknowledge that it is time to refresh our approach to ACAs and, as identified in your report, we are in the final stages of an internal review of the
ACA strategy. While we are yet to finalise our taxpayer consultation on the outcomes of this review, we envisage a renewed Annual Compliance Arrangement offer. As part of this Annual Compliance Arrangement redesign work, the ATO will be further considering the broader compliance framework for large entities across all taxes to ensure a consistent and graduated compliance response to the tax risks profiles of all large business taxpayers. This should maximise taxpayers ability to voluntarily address tax risks as they are identified, as well as provide an appropriate and proportionate enforcement response, if voluntary compliance cannot be achieved. In following through on this design work, the ATO will ensure that the new and revised approaches are appropriately supported with staff training and internal and external guidance materials where required. We will also ensure that, for reporting and record keeping purposes, success factors, outputs and outcomes are clearly articulated to our staff to allow much more effective measurement and evaluation in the future We acknowledge that the report identifies that there has been a low number of Annual Compliance Arrangements relative to the number of large corporates that maybe suitable for such arrangements. However, the ATO believes that the number of ACAs currently being managed reflects the voluntary nature of the ACA arrangements and large corporates can choose to enter or not enter into such arrangements. As indicated in the report from interviews conducted by the ANAO, large corporates make their own assessment of the benefits and costs that they see in entering into such an arrangement. While noting the need fora clearer expression as to the level of desirable take‐
up in the total number of Annual Compliance Arrangements, we believe the total number of taxpayers likely to meet our criteria is far less than the 158 key taxpayers. A realistic figure may well be in the range of 35‐50 of these key Summary
ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers
23 taxpayers but we will further consider this approach as we implement the recommendations of the report. We have benefited enormously from taxpayers participation in the ACA program. We have applied some of the experiences from the ACA program to other large business compliance approaches – for example pre‐lodgment compliance reviews, risk workshops and key taxpayer reviews. It has also helped us improve our understanding of large business governance and tax risk management approaches. This understanding is helping us now to develop our work on compliance self‐assurance models and pilots such as the external compliance assurance process. With respect to resourcing of the ACAs, because of the size and influence of the large corporates who are in ACAs, there will always be costs associated with our compliance approaches, regardless of whether or not they are participating in the ACA program. We will work on improving how we identify the net costs or benefits of an ACA as part of our future program, inline with comments made in this report.

ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers
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