High-risk transactions by multinationals in decline, says ATO
A recent ATO report shows a decline in the number of high-risk arrangements and tax avoidance schemes undertaken by large public and multinational businesses.
The ATO’s latest report on its Top 100 and Top 1000 programs has shown a reduction in the number of high-risk transactions being entered into by the largest public and multinational businesses.
Acting assistant commissioner Britta Finnegan said this reflected the efforts of taxpayers and the ATO to address concerns previously raised by the Tax Office.
“Of the Top 100, 83 per cent have obtained either a high or medium overall assurance rating, with those with high assurance for income tax increasing from 6 per cent in 2019 to 52 per cent in 2023,” said Ms Finnigan.
“This year, we can also report that 93 per cent of Top 100 GST reporters reviewed have also attained a high or medium assurance level for their GST affairs.”
The ATO’s focus for the Top 100 program in 2023 has been to build on the assurance they’ve already attained under their income tax program while progressing the remainder of their GST assurance reviews.
“We continue to see tax compliance gaining importance in corporate governance, with organisations using justified trust ratings to demonstrate their commitment to transparency and sustainability,” said Ms Finnigan.
“Ongoing efforts aim to enhance tax transparency and maintain high levels of compliance, benefiting both taxpayers and the community.”
In relation to the ATO’s program for the Top 1000 taxpayers, the proportion of taxpayers with an overall assurance rating increased to 29 per cent for reviews undertaken in 2023.
Assistant commissioner Megan Croaker said the top 1000 taxpayers can have a significant impact on the health of the tax system which is why the ATO engages with them periodically to manage their compliance and assure their tax performance.
“This year there’s been a significant increase in taxpayers obtaining stage 2 ratings (48 per cent) for income tax risk management and governance, following the February 2022 publication of top 1,000 specific guidance – Tax risk management and governance,” said Ms Croaker.
“This shows the benefit of our assurance program and continued engagement with taxpayers in the program.”
The ATO’s reportable tax position (RTP) category C disclosures findings report shows large public and multinational business lodgements and disclosures have increased.
Assistant commissioner Michael Ingersoll said the ATO has continued to see high-risk, or arrangements of concern, including tax avoidance schemes, declining for large public and multinational businesses.
Mr Ingersoll said there had been strong compliance by large businesses with completing the RTP schedule.
“The schedule requires the largest corporates to report any uncertain tax positions. This includes, under Category C, involvement in arrangements we’ve highlighted as being of concern and their self-assessed risk rating against relevant Practical Compliance Guidelines.”
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