Engaging early with you

How we engage with you

We engage with top 100 taxpayers for income tax primarily through an annual income tax pre-lodgment compliance review (PCR), and for goods and services tax (GST) through the Top 100 GST assurance program.

We apply the justified trust methodology in our PCRs and GST reviews.

Applying justified trust methodology

Applying the justified trust methodology in our reviews aims to build and maintain community confidence that taxpayers are paying the right amount of tax. It also allows us to focus our resources in the right areas.

Achieving justified trust means:

we have attained a sufficient level of assurance that a taxpayer is paying and reporting the right amount of tax
going forward we can rely on that assurance resulting in more tailored, lower intensity reviews
if we don't attain sufficient assurance, we can focus our resources on these areas.

These reviews help us build an understanding of your business, including your tax governance. They also allow us to:

assure the right tax and GST outcomes
identify and manage material tax risks through early, tailored and transparent engagement.

We encourage engagement

We foster a culture of transparency and willing participation through early engagement. We encourage taxpayers to disclose material, new transactions and business changes in real time. This supports our approach of raising and resolving potential compliance concerns as they arise – that is, prevention before correction.

To understand more about our expectations for pre-lodgment disclosures and how we will action these, refer to our Top 100 Pre-lodgment disclosure framework.

Income tax pre-lodgment compliance review

We complete an annual income tax PCR for each top 100 taxpayer, tailoring the review to the circumstances of the taxpayer.

PCR timeframes

A PCR typically covers:

the financial year (12 months)
the standard period allowed from the conclusion of the financial year to the lodgment of the return (7 months)
a period of time after the lodgment of the return (up to 6 months) to allow for analysis and discussion of outstanding issues where necessary.

For more information, see Pre-lodgment compliance review timeline.

What a PCR involves

PCR framework

A PCR typically involves initial discussions with a tax officer to establish the framework in which we will conduct the PCR.

The PCR framework is a living document that will:

be updated during the review as required
include the scope of the review including items that were outlined in the
- 'Future assurance plan' in the last Tax assurance report (TAR)
- Monitoring and maintenance assurance report (M&M assurance report) if one was issued.

For more information, see Monitoring and maintenance approach.

Ongoing discussions and disclosures

A PCR typically involves:

ongoing discussions through the income year, where you may make disclosures or we may raise issues for discussion as well as discuss any requests for information
a pre-lodgment discussion of details to be included in the tax return, and the tax return preparation process
post-lodgment conversations to discuss issues identified in the tax return preparation process.

To understand more about our expectations on disclosures and how we will action them, refer to our Top 100 Pre-lodgment disclosure framework.

Assurance activities and reports

A PCR typically involves:

ATO assurance activities across the 4 focus areas of justified trust
the issue of a TAR or M&M assurance report at the completion of the PCR, including a
- summary of assurance attained, maintained or refreshed across the 4 focus areas of justified trust
- future assurance plan which outlines the proposed focus of future PCRs and risk reviews or audits.

For more information on top 100 income tax activities, see:

GST assurance review

The Top 100 GST assurance program seeks to provide assurance that the top 100 population is reporting and paying the right amount of GST in Australia.

Under the program we gain assurance, or identify areas of GST risk, by engaging with top 100 GST reporters (reporters) through a GST assurance review (initial review), and subsequent tailored engagements.

We encourage you to make disclosures about material new transactions and business changes as they occur, regardless of the stage of your GST assurance review. You can disclose during any regular discussions and interactions you have with us as part of your ongoing income tax PCRs. To understand more about our expectations for disclosures and how we will action these, see our Top 100 Pre-lodgment disclosure framework.

For detailed information about our Top 100 GST assurance program, see:

Top 100 taxpayers and other taxes

Depending on their circumstances, top 100 taxpayers may also have regular or periodic, tailored engagement in relation to other taxes. These may include:

excise
excise equivalent goods (imported)
fringe benefits tax (FBT)
fuel tax credits
luxury car tax
petroleum resource rent tax (PRRT)
product stewardship for oil program
wine equalisation tax.

We encourage taxpayers to adopt the same transparency and willing participation through early engagement for these taxes, including:

proactively engaging with regarding potential compliance concerns as they arise
disclosing material business changes, changes in tax positions taken, and any new or significant transactions.

If possible, we will use the information provided as part of the income tax PCR and GST assurance review while engaging with you.

Pre-lodgment compliance review timeline

Guidance on information requests and taxpayer discussions.