Attracting and retaining and the ATO

Taxation in Australia is both complicated and constantly changing. Public interest in the tax system is arguably at an all-time high. Politically, there is a desire to increase tax transparency for larger businesses and high net worth individuals to provide community confidence that ‘the bigger end of town’ is paying their fair share of tax. Ensuring we are attracting the right people to assist our clients with ever increasing Australian Taxation Office (ATO) demands is at the forefront of our minds.

Since 2016, the ATO has been changing its approach to compliance programs and aligning its programs around the concept of justified trust.

Justified trust builds and maintains community confidence that taxpayers are paying the right amount of tax. It also allows the ATO to focus its resources in the right areas. To achieve justified trust, the ATO seeks objective evidence that would lead a reasonable person to conclude a particular client paid the right amount of tax.

When working to achieve justified trust, the ATO focuses on the following four pillars:

1. Tax governance - ensuring tax governance practices are documented, designed effectively, and are operating effectively
2. Significant and new transactions - ensuring such transactions are well understood and correctly treated for tax purposes
3. Compliance with ATO guidance - ensuring that clients have considered and applied ATO guidance that is relevant to them
4. Reconciliation between accounting and tax results - ensuring appropriate documentation is in place to explain the difference between accounting and tax results.

Examples of ATO compliance programs that use a justified trust methodology include the Top 100 and Top 1000 Public Group and International reviews, Top 500 private group and Next 5000 private groups tax performance programs. Over time, it is expected that the justified trust methodology will be cascaded to other taxpayers and more widely used by the ATO in its other compliance activity.

Given the breadth of taxpayers that the ATO must consider, it is impossible to take a one size fits all approach. PKF Tax is well placed to assist our clients meet ATO expectations. Amongst our ranks, we have Boris Kresic and Garry Mathoda who have ATO experience at the Director level. Garry was pivotal in designing ATO expectations for justified trust programs and has experience reviewing hundreds of clients with the justified trust methodology across different ATO compliance programs.

PKF’s experience to date dealing with the ATO highlights that preparation is the key to ensuring a cooperative engagement and to achieve satisfactory outcomes. Our capabilities have been further strengthened by attracting people, and we believe this will help foster good enduring client relationships to build better outcomes in dealing with the ATO.

Please do not hesitate to contact the team if you have any ATO matters that require our assistance.