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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.

    By working directly with you we can understand your business better. This increased transparency means we can identify and resolve issues early, prior to 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.

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    Who is covered by this program

    The Top 500 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.

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    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 and 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 group is in the 'Partner' category and we reach a position of justified trust, it means we have a high level of assurance that they have paid the right amount of tax. This allows us to tailor our future approaches with the group. Based on justified trust, we can streamline future engagements to focus only on issues where we haven't obtained assurance or where the group's circumstances have changed.

    Groups in the 'encourage' and 'influence' categories can expect a higher level of interaction. This includes comprehensive reviews and audits where tax risks remain unresolved.

    If we find groups undertaking aggressive tax planning we will take firmer action, including tax adjustments and penalties.

    Justified trust

    Our aim is to reach a position of justified trust with each of the Top 500 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.

    What you can expect

    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 pre-lodgment, 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.

    During an engagement for each year, we will provide you with an income tax profile. Through the profile, we share the information we know about you.

    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.

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    Last modified: 30 Oct 2019QC 53710