Annual Compliance Arrangements with Large Corporate Taxpayers
Annual assessment of the effectiveness of the taxpayer’s
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| Annual assessment of the effectiveness of the taxpayer’s operational controls and tax risk management 4.30 Having sound tax risk management processes in place is one of two concepts around which the ACA is built. 109 While tax risk management is assessed before entering into an ACA, the expectation is that the ATO and taxpayers will verify tax risk management on an annual basis. 4.31 In relation to the 19 ACAs assessed by the ANAO, 13 stated in their ToAs that the taxpayer is required to provide the ATO with a letter confirming 108 For five ACAs, the ATO’s case management system indicated that the review for year one was still in progress. 109 ATO, Annual Compliance Arrangements what you need to know, available from < https://www.ato.gov.au/Business/Large-business/In-detail/Compliance-and-governance/Annual- Compliance-Arrangements/> [accessed 11 June 2014]. ANAO Report No 2014–15 Annual Compliance Arrangements with Large Corporate Taxpayers 82 that they have sound governance and tax risk management on an annual basis. A further five taxpayers are not required to provide the governance letter, instead having governance assessed as part of the annual review. As discussed in paragraph 4.13, the remaining taxpayer was only required to provide the letter at the beginning of the arrangement. There was also no documentation on the ATO’s case management system in relation to the annual assessment of this taxpayer’s governance and tax risk management. 4.32 For the 13 taxpayers required to provide an annual governance letter, in two cases there was no evidence on the ATO’s case management system that this had been provided. Fora further three cases there was only evidence that this letter had been provided for some of the years two years of the five years reviewed for the first taxpayer one year of six years reviewed for the second taxpayer and one year of five years reviewed for the third taxpayer. There was also no documentation to indicate that the matter had been followed up by the ATO. 4.33 For those five taxpayers (all GST ACA holders) where governance is assessed on an annual basis, this process involved updating the ATO on significant changes to the risk management framework, policies and standards and providing the ATO with copies of relevant documentation about these changes. Taxpayers are also required to provide information on major system changes, upgrades and the integration of systems which will impact on the integrity of tax data. There was evidence on the ATO’s electronic case management system that the five taxpayers had their governance and tax risk management practices assessed as part of the annual review process. 4.34 Given the variation across taxpayers as to how operational controls and tax risk management is assessed on an annual basis, there would be benefit in the ATO clarifying the rationale for some taxpayers having more onerous annual assessments than others, especially given the feedback from taxpayers that the ACA process is considered to be costly. Download 1.48 Mb. Share with your friends:
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