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  • Top 500 private groups tax performance program

    The Top 500 private groups tax performance program is an expansion of our Top 320 program and is a key element of the Tax Avoidance Taskforce.

    The program seeks to give the community confidence that Australia’s largest private groups and high wealth individuals are paying the right amount of tax. The program aims to increase willing participation, focusing on prevention rather than correction. It involves one-to-one engagements with the Top 500 private groups on an ongoing basis.

    Where a Top 500 private group does not wish to engage with us in an open and transparent manner, we will seek to assure that the correct amount of tax has been paid with traditional review and audit action.

    By working directly with you we can understand your business better. This increased transparency means we can identify and resolve issues early, before lodgment. Our aim is to provide assurance based on justified trust that your tax outcomes are correct. This gives you greater certainty and makes it easier for you to maintain ongoing compliance.

    On this page:

    Who is covered by this program

    The Top 500 private groups program includes private groups:

    • with over $350 million in turnover, regardless of asset value
    • with over $500 million in net assets, regardless of turnover
    • with over $100 million in turnover and over $250 million in net assets
    • that involve a company with total business income of over $250 million and are included in the large company tax gap population
    • that are market leaders or groups of specific interest.

    We use sophisticated data matching and analytic models to identify wealthy individuals and link them to associated entities. We then look at the group of entities as a whole. This private group approach helps us to understand the business better and provide a more tailored experience.

    For more information see Tax performance programs for privately owned and wealthy groups.

    How we tailor our approach

    With each of the Top 500 private groups, we have regular one-to-one engagements based on our justified trust strategy. This is a tailored compliance approach designed to provide assurance that the Top 500 private groups are paying the right amount of tax.

    By engaging directly, we build a better understanding of the group's business, drivers and risk position. Ongoing engagement means we can track compliance from year to year. We can work together to prevent the same issues recurring. This forward-looking engagement approach helps the group to maintain good compliance into future years.

    Our one-to-one engagements will focus on:

    • assuring that the correct amount of tax is paid
    • the overall tax performance of the group
    • resolving issues prior to lodgment.

    Based on our interactions, groups will be placed in one of the following engagement experiences:

    • partner – we partner with the group to maintain good compliance
    • encourage – we encourage the group to address identified concerns
    • influence – we take action to improve the group's compliance.

    When a Top 500 private group is in the 'partner' category it can reach a position of justified trust. This means we have a high level of assurance that they have paid the right amount of tax. A Top 500 group that has obtained justified trust will benefit from a maximum of three years of monitoring and maintenance. During this three-year period we will only seek to verify significant new transactions that may have occurred and discuss any other material changes to the group.

    Groups in the 'encourage' and 'influence' categories can expect a higher level of interaction. This may include comprehensive reviews and audits where tax risks remain unresolved. If we find private groups undertaking aggressive tax planning, we will take firmer action, including tax adjustments and penalties.

    The engagement process

    The engagement process generally includes the following steps.

    A printable version is also available – Top 500 Program Client Experience Roadmap (PDF, 505KB)This link will download a file.

    Step

    Description

    ATO issues notification letter

    ATO calls client and/or their representative to arrange a meeting

    Meeting (face-to-face, video conference, or phone)

    ATO issues a letter explaining our approach to engagements with the Top 500 and states the agreed principles that will guide the engagement

    One-to-one engagement interactions commence

    ATO initiates the assurance process with a request for information (RFI) which is tailored in collaboration with the Top 500 client

    Client sends RFI response to ATO

    Analysis of the four key areas of justified trust:

    • tax governance
    • tax risks flagged to the market
    • verify treatments of ongoing and atypical transactions
    • alignment between accounting and tax
     

    Ongoing discussion or further RFI (if required)

    ATO issues an assurance letter providing details of assurance outcomes for entities within the group for the relevant year(s) and next actions are detailed (where applicable)

    Subsequent yearly engagement will be tailored based on level of assurance

    How justified trust applies to your engagement

    Our aim is to reach a position of justified trust with each of the Top 500 private groups, to provide assurance that the correct amount of tax is paid.

    To establish justified trust, we review four key areas:

    • the effectiveness of tax governance
    • tax risks flagged to the market
    • significant and new transactions
    • why the accounting and tax results vary.

    Effective tax governance is a key element of justified trust. When tax governance is effective it means tax and superannuation risks are being identified and dealt with well. This gives us confidence that tax outcomes are correct and will continue to be in future years.

    Reaching justified trust will generate a tangible change in a Top 500 private group’s experience. They will have a consequential scale-down in engagement interactions, as we move into a three-year monitoring and maintenance period.

    What you can expect during an engagement

    As one of the Top 500 private groups, you can expect our engagements with you to cover all tax and superannuation obligations, including income tax, GST and excise.

    We undertake an initial engagement to confirm our understanding of your business and industry. This engagement will be prior to lodgment where possible.

    By engaging before you-lodge, we can deal with tax issues as they arise, rather than correct them later. Our aim is to give you more certainty around present and future tax outcomes. This may involve correcting some things in past years.

    The engagement will typically involve:

    • building an understanding of your business
    • an assessment of your tax governance arrangements
    • reviewing evidence to establish justified trust.

    At the end of engagement for a year, we'll:

    • outline the events and transactions where we agree with the tax treatment adopted and have tax assured
    • give specific feedback based on what we have observed during the engagement. This feedback may highlight areas for improvement and provide guidance on what you can do to mitigate risks in the future
    • outline the risks we are not satisfied with and the next steps we intend to take.

    See also:

    Last modified: 09 Jun 2021QC 53710