In 2022, the Top 1,000 assurance program expanded the combined assurance review to include assurance for GST.
As part of this expansion, the ATO introduced a compulsory element to assure that the right amount of GST has been paid. This is known as the GST analytical tool or GAT.
The ATO uses the GAT to analyse variances between the business activity statement (BAS) outcomes and the audited financial statement accounting outcomes.
Since the change, the ATO has found that clients are able to substantially complete the revenue side of the GAT with little assistance from the ATO, Assistant Commissioner Megan Croaker explained.
‘Pleasingly, clients are providing near complete GAT templates, with some assistance needed from us on more complex areas such as expense variances, timing difference and provision of objective evidence to support variances’ Ms Croaker said.
The assistance needed may range from working with the taxpayer to obtain evidence to support the information in the GAT, to running workshops to assist the taxpayer understand how to complete the GAT template.
‘It’s important to remember that to achieve a high assurance rating, we require objective evidence to support the GAT figures and adjustments' Ms Croaker continued.
Ms Croaker reiterated that the provision of objective evidence is crucial in explaining and verifying the variances between the BAS and accounting outcomes where these cannot be substantiated in financial statements in the first instance.
‘We encourage tax teams to engage with their finance teams when completing this aspect of the GAT, as their knowledge of these issues will greatly assist with the GAT workings’ Ms Croaker said.
Undertaking the GAT has equipped the ATO to better understand the transactions underpinning the businesses economic activities. Ms Croaker explained.
‘The GAT has streamlined our assurance review process and helped identify where we can work with clients on improving their GST assurance outcomes’, said Ms Croaker.
The ATO has identified that in addition to the above points, assistance is generally needed to resolve:
- identifying GST group reporter amounts within TCG financial statements
- identifying intra-group transactions
- financials reported in different currencies (multiple currencies in TB/P&L)
- capitalised expenses flowing to the P&L.
To prepare for a review, you can make yourself familiar with our GAT FAQs and GAT Top 1,000 example available on the ATO’s legal database.
In 2022 we expanded our combined assurance reviews to include assurance on GST.