Annual Compliance Arrangements with Large Corporate Taxpayers
Annual compliance arrangements
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- Table 1.1: Potential benefits of entering into an ACA Taxpayer ATO
- Source: ATO. 1.7
| Annual compliance arrangements 1.6 ACAs are voluntary arrangements that the ATO negotiates with large corporate taxpayers to define and govern the compliance relationship. Initially established for three years, ACAs can be extended by agreement between the parties. The potential benefits to the taxpayer and to the ATO of entering into an ACA are shown in Table 1.1. Table 1.1: Potential benefits of entering into an ACA Taxpayer ATO speedier resolution of technical issues (in real time administrative solutions to resolve compliance irritants centralised points of contact and ongoing dialogue on technical matters closure of prior periods, including legacy issues concessional treatments of penalties and interest development of a plan outlining agreed processes and timelines possibility of extension of thresholds for correcting GST mistakes and not being subject to other compliance activities (as outlined in paragraph 1.12). real-time risk assessment of transactions at a time when it would not otherwise see them, that is before the tax return is lodged improved capability through looking at current issues, new products and issues a more facilitative rather than reactionary approach and reduction in staffing once the ACA is bedded down, for example, a compliance team can operate with 70 percent of the previous staffing levels. Source: ATO. 1.7 The criteria for selecting large corporate taxpayers to enter into an ACA have changed since they were established in 2008. Initially, the option of entering into an ACA was limited to the 50 largest entities, based on the value of their annual turnover. Taxpayers that had an FCA in place were given the option of rolling the arrangement into an ACA when the FCA expired. ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 30 Commencing in 2011–12, only those large entities assessed through the Risk Differentiation Framework 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. 1.8 ACAs are built around the ATO’s assessment that particular taxpayers have sound governance processes to support meeting their tax obligations, and a commitment to ongoing disclosure of tax matters as they arise. While not overriding the application of tax laws and policies, ACAs provide greater practical certainty for taxpayers in relation to their tax positions as the ATO will consider tax risks in real time. In this way, ACAs are intended to offer a no surprises approach, with potential benefits to both the ATO and the taxpayer. 1.9 Five types of taxes maybe covered by an ACA: income tax, GST, excise, petroleum resource rent tax (PRRT), and fringe benefits tax (FBT). 32 A taxpayer may negotiate an ACA fora single tax or for any combination of these taxes. An ACA for multiple taxes will include a separate schedule for each tax, which is negotiated and managed individually. 1.10 As at July 2014, the ATO had ACAs with 24 entities 18 large companies, five state government departments, and one Australian Government entity. Of the ACAs established since 2008, all but one is ongoing. 34 The total number of large corporate taxpayers with an ACA from 2008–09 to 2013–14 is shown in Table 1.2. The total number of taxpayers with an ACA in any year reflects only a small proportion of those that are assessed by the ATO as potentially suitable for an ACA. Table 1.2 also shows the number of taxpayers assessed as potentially suitable for an ACA following the introduction of the Risk Differentiation Framework. 32 ACAs for minerals resource rent tax are not being further developed as the tax has been abolished. 33 Two of the ACAs relate to one taxpayer group, which has one ACA for its Multiple Entry Consolidated group and another for its Permanent Establishment in Australia. 34 One taxpayer’s ACA was not renewed when it expired in 2011. ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 30 Commencing in 2011–12, only those large entities assessed through the Risk Differentiation Framework 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. 1.8 ACAs are built around the ATO’s assessment that particular taxpayers have sound governance processes to support meeting their tax obligations, and a commitment to ongoing disclosure of tax matters as they arise. While not overriding the application of tax laws and policies, ACAs provide greater practical certainty for taxpayers in relation to their tax positions as the ATO will consider tax risks in real time. In this way, ACAs are intended to offer a no surprises approach, with potential benefits to both the ATO and the taxpayer. 1.9 Five types of taxes maybe covered by an ACA: income tax, GST, excise, petroleum resource rent tax (PRRT), and fringe benefits tax (FBT). 32 A taxpayer may negotiate an ACA fora single tax or for any combination of these taxes. An ACA for multiple taxes will include a separate schedule for each tax, which is negotiated and managed individually. 1.10 As at July 2014, the ATO had ACAs with 24 entities 18 large companies, five state government departments, and one Australian Government entity. Of the ACAs established since 2008, all but one is ongoing. 34 The total number of large corporate taxpayers with an ACA from 2008–09 to 2013–14 is shown in Table 1.2. The total number of taxpayers with an ACA in any year reflects only a small proportion of those that are assessed by the ATO as potentially suitable for an ACA. Table 1.2 also shows the number of taxpayers assessed as potentially suitable for an ACA following the introduction of the Risk Differentiation Framework. 32 ACAs for minerals resource rent tax are not being further developed as the tax has been abolished. 33 Two of the ACAs relate to one taxpayer group, which has one ACA for its Multiple Entry Consolidated group and another for its Permanent Establishment in Australia. 34 One taxpayer’s ACA was not renewed when it expired in 2011. Background and Context ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 31 Download 1.48 Mb. Share with your friends:
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