The IGT recommends that the ATO update its LB&I RDF categorisation template along with internal and external communications to be consistent with the following principles:
- higher consequence taxpayers will always be subject to a form of direct ATO engagement regardless of likelihood factors and the nature, extent and timing of this engagement is influenced by likelihood factors;
- likelihood factors consist of inherent and behavioural factors and should be addressed separately;
- inherent factors require the testing of particular hypotheses;
- behavioural factors require the testing of the taxpayer’s tax risk management and governance processes; and
- the intensity and formality of the review depends on the taxpayer approach to provision of information as well as inherent and behavioural factors.
We agreed and this recommendation and implementation was completed on 26 November 2014.
Internal procedures for risk differentiation framework categorisation have been updated according to the principles outlined in this recommendation.
Large business and tax compliance has been updated to state ‘higher consequence taxpayers will always be subject to a form of direct ATO engagement’ and ‘likelihood factors consist of inherent and behavioural factors and should be addressed separately’.