Around the federal budget this year, the ATO announced plans to review Australia’s largest multinational and public companies to ensure income tax compliance.
The tax office originally planned to engage with the majority of these firms over a four-year period. However, Thomson Reuters — which works with affected firms — believes the bulk of the program’s activities will be completed in half that time.
Assessing the first 100 firms, which was primarily large listed companies, made the ATO realise they should chase the entire 1,000 “much quicker than they were planning to,” Thomson Reuters managing director for Australia and New Zealand, Ben Scull, told Accountants Daily.
“What these companies should be expecting is a letter very soon from the tax office letting them know that they're going to come out and do a review. And the ATO will be requesting quite a bit of information before they get there to enable them to have this conversation around what their policies and frameworks are,” Mr Scull said.
Reviews such as these are often met with scepticism from the accounting community — seen more as a publicity push as opposed to actual compliance action. The recent, and very public, crackdown on work-related expenses is one example.
However, in this case, Mr Scull believes the ATO is well resourced and focused on coming down hard on offending firms.
“Sometimes we [as an industry] think it's more of a PR activity than them actually pounding the pavement. But, what we've seen is the ATO has done a really good job at recruiting people who have come out of corporates as well. And they've got some really good commercially-minded people at the tax office who are running these reviews,” Mr Scull said.
So far, although it’s an effort to prove and ensure compliance, some firms are finding the reviews are a useful exercise for their own internal practices.
“As much as it is a review, we're finding that people are having a good commercial conversation about their position as well,” Mr Scull said.
“As much as it's going to take a bit of work, and the tax office is going very hard — a lot of people are being sent letters — it feels like the conversations and the reviews are going well,” he said.
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