Top end of town more compliant than ever, ATO reports
The Tax Office has seen a “positive behavioural shift” among public companies and multinationals as assurance ratings rise and high-risk disclosures decline.
Most of the country’s big businesses are meeting their tax obligations and are more willing than ever “to do the right thing”, the Tax Office said, reporting improved assurance ratings and disclosures.
The ATO said there had been a “positive behavioural shift” in recently released reports on public and multinational businesses.
“A cumulative shift towards positive taxpayer behaviours can be observed over multiple reports, as we see increased proportions of low-risk disclosures and increasing high assurance ratings,” it said.
“Most large businesses are meeting their tax obligations and supports our view that there has been a positive shift towards improved voluntary compliance and a greater willingness to do the right thing.”
The ATO monitors the income tax and GST assurance (justified trust) programs of the country’s top 100 and 1,000 taxpayers and their reportable tax position disclosures (RTPs).
The top 100 includes corporations with “substantial economic activity” related to Australia, including the largest remitters of GST and contributors to company tax and PRRT.
The ATO said most of the group met their income tax obligations, with 82 per cent achieving high or medium assurance ratings, up 7 per cent from last year.
The proportion of high or medium assurance GST reviews also increased by 7 per cent to 93 per cent.
Meanwhile, the group’s tax controls were also becoming “lived in practice”, with over one-third receiving the highest stage 3 ratings for their governance frameworks, up 15 per cent.
To achieve a stage 3 rating, a business must demonstrate its tax control framework has been designed effectively and is operating as intended, according to the ATO’s guidelines.
For the top 1,000 group, which includes public companies and multinationals outside the top 100 with a turnover exceeding $350 million, 90 per cent received a medium or high assurance rating for income tax and GST.
“We continued to see improvements among tax risk management and governance frameworks, with increasing numbers of taxpayers in the top 1,000 able to evidence their effective operation,” the ATO said.
The ATO also found that RTP disclosures, which provide insights into the tax positions of large companies, have more than doubled over the past four years.
It said high-risk disclosures were declining while low-risk disclosures were rising, suggesting a positive shift in corporate tax behaviour.
“Although there is still room for improvement, this is consistent with our view that most large public and multinational businesses are doing the right thing and paying the right amount of tax,” it said.
As of June 2024, the ATO has assured approximately $31.7 billion in income tax for the top 100 and $79.1 billion for the top 1,000 taxpayers for the 2021–22 income year.
“These results reflect our growing confidence over an increasingly larger portion of the corporate tax base and contribute to the sustainable reduction of the large corporate groups' tax gap over time.”
The improved assurance ratings and outcomes were attributed to “recurring engagement with taxpayers, both directly and indirectly”.
In July, the ATO announced a new approach to its top 100 program, including undertaking simultaneous reviews across multiple years to bring reviews into real time.
“Over the next 12 to 18 months, we’ll be working with you to bring your reviews into real time … To achieve this, we’ll do simultaneous, tailored reviews across multiple ‘back years’, if needed, and tailor our engagement based on your situation,” it said.
Taxpayers with low assurance ratings could also expect increased scrutiny of their tax affairs while those with high ratings would receive reduced engagement with a third monitoring and maintenance year.
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