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  • Top 1,000 GST assurance program

    The top 1,000 GST assurance program seeks greater assurance that large public and multinational companies are reporting the right amount of goods and services tax (GST). This supports and expands on existing compliance approaches, including justified trust reviews for income tax, further enhancing confidence in these taxpayers.

    Under the program, our specialist GST teams engage with each taxpayer using tailored compliance approaches. This is to gain assurance they are reporting the right amount of GST or identify areas of tax risk for further action.

    See also:

    Who is covered by this program

    The program will cover around 320 large public and multinational businesses over four years. Taxpayers within the top 100 population are covered by the top 100 GST assurance program.

    Taxpayers will be selected for review based on a range of risk factors including their significance to the GST system.

    How we tailor our compliance approach

    We gain assurance or identify areas of GST risk by engaging with the taxpayer through a six-month GST assurance review.

    We will notify the taxpayer before we commence a review, and provide time for them to consider making a voluntary disclosure of any tax concerns.

    During a review we apply our justified trust methodology and tailor our compliance activities to the circumstances of the taxpayer, including:

    • the taxpayer’s overall GST performance
    • the type and size of business activities
    • GST risk management and governance
    • our understanding of the taxpayer from prior engagements including income tax streamlined assurance reviews.

    In a GST assurance review we seek to obtain assurance that:

    • appropriate GST risk and governance frameworks exist and are applied in practice
    • none of the GST risks we have flagged to the market are present
    • the GST outcomes of atypical, new or large transactions are appropriate
    • we can understand and explain the various streams of economic activity and how they are treated for GST, which may include applying the GST analytical tool.

    A GST assurance review will focus on the last complete financial year. It will include systems and business activity statements (BAS) walk-throughs. Transaction testing is also undertaken, focusing on three consecutive BAS periods.

    GST analytical tool

    We are currently developing and testing a GST analytical tool (GAT) to help us better understand why accounting and GST results vary. The GAT is one of the tools we use to obtain greater assurance you are paying the right amount of GST. The GAT also helps us identify where we need to ask more questions.

    The GAT is not intended for use by taxpayers with predominantly input taxed supplies. Different analytical approaches are under consideration for those taxpayers.

    The GAT uses a standard method statement applying a 'top-down' approach to identify and understand variances between accounting figures reported in audited financial statements and GST reported on the BAS.

    The method statement starts with the revenue and expenses reported in your profit and loss statement. It works through a series of adjustments to compare this information with your annualised BAS covering your financial reporting year.

    We seek to understand what parts of your accounting reported revenue represent:

    • taxable supplies
    • GST-free supplies
    • input taxed supplies
    • transactions that are not supplies for GST purposes (out-of-scope supplies).

    We also seek to understand what parts of your accounting reported expenses represent:

    • GST-bearing expenses
    • non-GST bearing expenses.

    The four key steps to the GAT are:

    • grouping variances
    • non-GST bearing items (permanent differences)
    • balance sheet and cash flow items (temporary differences)
    • other adjustments (offsetting items / industry specific).

    This helps us to understand variances between your financial statements and your BAS results and whether those variances are supported by appropriate evidence.

    We want to work with you to understand the variances between your accounting figures and GST figures. This helps us better understand your GST profile and the key drivers of your GST outcomes. The GAT is not designed to quantify tax shortfalls or overpayments.

    For a copy of the latest guidance and method statement we use to complete our GAT calculations, email GATSupport@ato.gov.au

    What to expect following a review

    Following a top 1,000 GST assurance review we will share our findings with you, including:

    • discussing the areas where we have assurance you reported the right amount of GST
    • any identified GST risks.

    We may recommend specific actions to gain greater assurance in particular areas, and may follow up on these recommendations.

    If we identify concerns or areas of GST risk, we will work with you to gain greater assurance or address identified concerns or GST risks. There may be circumstances where we will take a different approach, such as an audit.

    See also:

    More information

    To learn more about the top 1,000 GST assurance program, email us at Top1000GSTProgram@ato.gov.au

    We welcome feedback as we continue to integrate our approaches for justified trust across income tax and GST.

    Last modified: 25 Nov 2019QC 60471