The Top 1,000 population
The Top 1,000 population (the population) is made up of the largest 1,000 publicly listed and multinational corporate taxpayers and APRA regulated superannuation funds, excluding those covered by the Top 100 Program.
Taxpayers in the population are diverse in terms of their ownership, business models, industries, and size and have substantial economic activity related to Australia. They are key participants in the tax system across corporate income tax, excise, petroleum resource rent tax and GST.
When the Top 1,000 program commenced in 2016 the program covered the largest public and multinational corporate groups and APRA regulated superannuation funds with a group turnover greater than $250 million that were not covered by the Top 100 program. As an increasing number of economic groups exceeded this threshold, we recalibrated the metrics used to determine whether a taxpayer is in the scope of the Top 1,000 assurance program. This ensures we focus on the largest 1,000 taxpayers from the largest economic groups, as was the original intention of the assurance program.
At present, entities with a turnover exceeding $350 million would generally be in the population. Other factors will be relevant such as taxpayer industry, and whether any significant transactions or risks have come to our attention that are best reviewed through the assurance program.
Given the diversity of the taxpayers in the population, in March 2024 we announced that we were differentiating our approach with Top 1000 taxpayers based on various factors, including the size of the entity.
Taxpayers in the population are categorised for income tax purposes into either:
- the Significant pool, which broadly includes taxpayers that have a turnover of over $1 billion and make up approximately one third of the population, or
- the General pool, which includes all other taxpayers in the population.
For superannuation funds, we've tailored our approach further. We'll categorise taxpayers into the Significant pool based on economic group turnover of $5 billion or greater. As announced at the Tax Institute's 2024 National Superannuation Conference, the increased threshold is due to the higher turnover of superannuation funds, with the majority in the population exceeding $1 billion.
For GST purposes, taxpayers are selected at the time of combined assurance review commencement, when the most appropriate GST taxpayer is determined. This is generally the GST taxpayer within the income tax taxpayers' economic group with the most substantial GST throughout.
Based on 2023 tax returns, taxpayers in the population paid about $25.7 billion or 18% of all corporate income tax, with:
- significant taxpayers paying $16.2 billion or 11% of all corporate income tax
- general taxpayers paying $9.5 billion or 7% of all corporate income tax.
A further $7.1 billion of income tax was paid by superannuation funds comprising:
- significant superannuation taxpayers paying $5.1 billion
- general superannuation taxpayers paying $2 billion.
Additionally, in 2023 taxpayers in the population reported and paid about $24.8 billion of net GST or 32% of total net GST collections.
We regularly review the taxpayers that make up the population to ensure we continue to focus on the largest 1,000 taxpayers outside of the Top 100 population. We expect the largest 1,000 taxpayers to be reasonably stable, however economic conditions and events may affect which taxpayers are covered by the assurance program.
Taxpayers that had previously met the criteria for the population and are now outside the largest 1,000 taxpayers will continue to be considered by our risk treatment approaches and may be selected for a specific review of identified tax issues and risks.
Justified trust and transparency
Tax compliance is becoming an important part of the increasing focus among boards, investors, customers or consumers, suppliers, community groups and other stakeholders of how organisations contribute to the communities in which they operate, with many seeing this as an important component of Environmental, Social and Governance (ESG) performance indicators.
Societal attitudes and expectations in Australia and globally, are increasingly encouraging organisations to make more transparent and sustainable business decisions that can lead to long-term growth benefiting all stakeholders. There continues to be calls for organisations to be more transparent about their operations and tax contributions, and to demonstrate that they are participating fairly in the economy.
We have observed that our justified trust ratings are increasingly leveraged by organisations to support their community and ESG credentials as part of their broader social licence to operate. We expect this trend to continue. The objective principles used in the justified trust initiative also serve to enhance the community’s understanding about large market compliance, and their ability to differentiate good corporate tax citizens from others. Although there remains a level of non-compliance by some in this population, which we continue to robustly address, the overall level of compliance is very high, and probably much higher than the current broader community understanding. Sharing these ratings can help address this gap for those organisations which have achieved high assurance.
We have seen a small number of Top 1,000 taxpayers sign up to the voluntary tax transparency code. We encourage the continued adoption of tax transparency practices (including the disclosure of assurance ratings), which builds and maintains community confidence that Australia’s largest taxpayers are paying the right amount of tax.
Our approach
Justified trust is a concept from the Organisation for Economic Cooperation and Development (OECD).
We introduced the justified trust concept in 2016 and commenced the Top 1,000 income tax performance program as part of the Tax Avoidance Taskforce.
We apply the justified trust methodology and seek to obtain assurance of 4 focus areas.
- That appropriate tax risk management and governance frameworks exist and are applied in practice. This includes the design of business systems to create, capture and report transactions correctly for GST purposes.
- That none of the specific income tax or GST risks we have flagged to the market are present.
- That tax outcomes of atypical, new, or significant transactions are appropriate.
- That we understand why the accounting and tax results vary. We analyse the various streams of economic activity and how they are treated for taxation purposes. We also analyse the sales, acquisitions, and other data, and compare this to net GST paid.
We commenced the combined assurance program in 2020, with income tax assurance provided alongside a GST risk review. Where there were GST concerns identified, a standalone GST assurance review was undertaken to further explore the GST profile of the taxpayer. From April 2022, we expanded the combined assurance review product such that both income tax and GST began to be assured at the same time.
In March 2024 we introduced a differentiated approach to assuring taxpayers, based on factors such as their size and the levels of assurance already attained.
Under this approach, we assure the income tax reported and paid for all 4 years of the review period for the significant taxpayers. Where a significant taxpayer has achieved an overall high or medium assurance rating and has a stage 2 or 3 tax risk management and governance rating, we will tailor our assurance approach. We will primarily seek objective evidence from the last year of the review period, as well as objective evidence in respect of any significant transactions, events or risks flagged to market in the other years of the review period.
When reviewing general taxpayers, we will have a differentiated approach going forward. When reviewing these taxpayers for income tax, we will look to assure the economic activity in the last year of the review period, as well as any significant transactions, events or risks flagged to market in the other years of the review period. We will also consider any recommendations that were made in previous reviews.
For those general taxpayers that have achieved a stage 2 or 3 tax risk management and governance rating, and the overall assurance rating was medium or high, we'll adopt a lighter touch approach where we will provide an assurance rating covering the last year of the review period, plus any new or significant transactions, events or risks flagged to market in the intervening years.
We also apply a differentiated approach to assuring GST for taxpayers where we already have some assurance as to their reporting for GST through an earlier review, using the responses to the Supplementary annual GST annual report to tailor our engagement.
We have introduced the Supplementary annual GST return for large businesses that have had a GST assurance review. The return covers:
- how you've actioned recommendations, areas of low assurance or red flags outlined by us in your most recent GST assurance review (including subsequent interactions with us)
- whether you've maintained or increased your level of GST governance and if you've had any material business or systems changes that impact your GST control framework since your last GST assurance review
- the reconciliation between your audited financial statements and your annualised business activity statements
- whether you've taken any material uncertain GST positions in the period
- whether you've identified any material GST errors in the period and how these have been rectified, and whether you claimed any material amounts of credits in the period that were referable to earlier periods.
We will assess the information provided in the returns to undertake more targeted and less resource intensive reviews for many taxpayers, including determining that a GST assurance review is not required. This may occur in situations such as:
- a taxpayer has obtained an overall medium or high assurance rating for GST, with a stage 2 or 3 GST governance rating
- where any recommendations or next actions outlined in the previous assurance review have been appropriately addressed
- the information provided enables us to maintain confidence that the investment in GST governance is maintained and GST is correctly reported.
We will continue to provide recommendations to taxpayers on how to improve and what actions the taxpayers should take at the end of the review. Matters may also be escalated for further ATO investigation as part of our next actions program where the identified concern is assessed as requiring ATO intervention to resolve (through review or audit).