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  • How we assess tax governance for Top 500 privately owned groups

    Tax governance is an important focus for the Top 500 tax performance program as it is an area that must be satisfied in achieving justified trust.

    Demonstrating that your group has effective tax governance in place contributes to giving both you and us confidence that your group is paying the right amount of tax and will continue to do so. This leads to greater certainty for you and more tailored and streamlined engagements with us.

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    How we assess your tax governance

    When looking at your group's tax governance, our focus is on the framework, processes and procedures your group uses to govern your tax and super obligations. These may include the existence and design of documented procedures or written guidance available to key decision makers and employees. We also recognise that every business and private group is different, so there is no 'one size fits all' approach.

    To demonstrate effective tax governance, it is important you have a framework, process and procedures in place for your whole group, including for trading and non-trading entities; and for those entities that may be utilised to extract wealth. Generally, the scope of tax governance may need to be more robust for entities that are carrying on a business due to the complexity that often arises with the conduct of commercial activities.

    Effective tax governance in the private wealth market means there are processes and procedures in place to ensure that tax risk is mitigated for both the wealth creation and wealth extraction activities that occur within your group.

    Seven principles of effective tax governance

    For Top 500 private groups, we consider how the seven principles of effective tax governance have been applied in the context of your group.

    We consider all of the seven principles, with an increased emphasis on the first four.

    We want to help you ensure that the tax governance processes and procedures that you have in place are designed effectively and that they are fit for purpose. This means they are appropriate for the group's structure, size, complexity and the industry in which your group operates. We then want to assure whether those processes and procedures are operating effectively in practice.

    Where we identify areas for improvement in your tax governance, we will seek to work with you and make suggestions about what your group can do to help ensure it is getting things right.

    Your tax governance rating

    We will provide you with our view of the effectiveness of your tax governance.

    Based on our discussions with you, your responses and the evidence you supply, you will be provided with an overall rating for your tax governance.

    Ratings

    Rating

    Definition

    Very high

    You provided evidence to demonstrate that a tax governance framework:

    • exists
    • has been designed effectively
    • is operating effectively in practice.
     

    High

    You provided evidence to demonstrate that a tax governance framework:

    • exists
    • has been designed effectively
    • is operating effectively in practice, with a small number of areas requiring improvement.
     

    Medium

    You provided evidence to demonstrate that a tax governance framework:

    • exists
    • has been designed effectively, with one of more areas of improvement in both design and operational effectiveness.
     

    Low

    You provided evidence to demonstrate that a tax governance framework exists, with a significant number of areas requiring improvement both in terms of design and operational effectiveness.

    Very low

    You have not provided sufficient evidence to demonstrate a tax governance framework exists or we have significant concerns with your tax risk management and guidance.

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    Last modified: 15 Oct 2021QC 59345