Engaging with Top 500 groups

How we engage with Top 500 groups and apply the justified trust methodology.

Published 27 November 2025

Justified trust and assurance framework

We use an assurance-based approach to determine whether a Top 500 group is paying the correct amount of tax by applying the justified trust methodology. The process of assurance requires that we have a thorough understanding of a Top 500 group’s income producing and wealth extraction activities.

When engaging with a Top 500 group, we apply a principled approach to assurance and review the 4 key areas that underpin the justified trust methodology. These are summarised below.

Tax assurance and fully tax assured group

In the Top 500 program, assurance is determined through an objective evidence-based assessment of whether a taxpayer has paid the right amount of tax. This process involves verifying specific income tax return labels through reviewing source documents, examining working papers, applying relevant legislation and determining an assurance rating (high, medium, or low).

High ratings reflect our assurance of the tax issue, having obtained evidence that the issue is being managed and disclosed correctly. Medium and low ratings indicate that information or investigation of an issue is required before we can provide a high assurance rating or escalate to a risk review.

Assurance is provided at the taxpayer level, meaning all material tax issues relevant to a taxpayer must achieve a high rating for the entity to achieve assurance.

Full tax assurance is achieved when all taxpayers within a Top 500 group have achieved assurance, ensuring we have a high degree of confidence that the group as a whole has paid the right amount of tax. To support this, we apply a sampling approach when evaluating assurance across multiple taxpayers within a group.

For many large and complex Top 500 groups, achieving high ratings for all tax issues and full tax assurance of entities in a Top 500 group can take several years.

Effective tax governance

Tax governance means having clear processes and procedures in place within a corporate governance framework to support decision-making, and to ensure that the group is meeting its taxation and superannuation obligations.

Tax governance is effective when the Top 500 group can demonstrate that the framework, processes and procedures that they have in place will result in ongoing compliance with their lodgment, reporting and payment obligations.

Tax risks flagged to market

We flag compliance risks to the market through communications, including:

public rulings
taxpayer alerts
practical compliance guidelines.

As part of our Top 500 engagements, we need to:

be satisfied that these risks are not present within the group
ensure that the likelihood of them arising in the future is appropriately mitigated through a group's tax governance framework.

Ongoing and atypical transactions

To provide tax assurance, we must have a high degree of confidence that the tax treatment of ongoing income producing activities and any atypical transactions (for example, capital gains tax consequences of asset disposals, restructures, acquisitions) of a Top 500 group is correct.

Differences in accounting and tax results

We must understand the adjustments that are included in the Top 500 group's tax reconciliations. We need to be satisfied that the material book-to-tax adjustments are complete and correct in the context of the activities that are being carried on.

Assurance over book-to-tax requires transparency so we can verify that the adjustments to the group’s accounting treatments appropriately reflect the correct tax principles.

See more information on our approach to justified trust and the 4 key areas at Top 500 groups tax performance program.

Private groups in justified trust and provisional justified trust

On 30 June 2025, 36 private groups were in justified trust and 5 private groups were in provisional justified trust. Provisional justified trust provides groups that are fully tax assured with a break in assurance so they can focus on developing and implementing a tax governance framework to achieve justified trust within 12 months.

The industries that private groups in justified trust operate in include entertainment, food retailing, fuel retailing, hospitality, labour hire, mining services, motor vehicle retailing, passive investments, property and construction, retirement and aged care, and trade products retailing or wholesaling.

Of the remaining groups:

322 are engaged and making progress towards justified trust, of which 12 groups are fully tax assured and will have the option to enter into provisional trust after the April 2025 program changes.
32 groups are engaged but unwilling to progress towards justified trust. While some of these groups are eligible to exit when they meet the exit requirements after the April 2025 program changes, the remaining groups that are unwilling to work towards justified trust will be subject to intensive assurance engagements to ensure they are paying the right amount of tax.
30 groups that are still being assessed to determine their justified trust status.

Significant transactions

We continue to observe that most Top 500 groups proactively engage with us in real time, raising awareness of significant transactions before they occur or shortly after.

We encourage early engagement, which allows us to work collaboratively with groups to resolve tax issues through a tailored and transparent process to provide certainty. For the minority of groups that do not engage with us in real time, we identify and address their significant transactions through our pre-lodgment commercial deals engagements or our Top 500 assurance engagements.

Through these engagements, we are able to maintain a high level of confidence in the tax outcomes of all significant transactions within the Top 500 population.

Commercial deals

Commercial deals are significant, atypical transactions such as a sale of a business or property. In most cases when a commercial deal is identified, we will engage with the Top 500 group before lodgment to confirm the correct tax treatment.

During the 2024–25 financial year, we finalised 17 commercial deal engagements with Top 500 groups that collectively had a value of $3.71 billion. We also commenced a further 11 commercial deal engagements worth an estimated $16.76 billion.

The finalised engagements provided tax certainty for transactions representing $2.36 billion in correctly reported economic activity. This was based on assurance of income tax return labels including income, capital gains, and the utilisation of available losses.

Approximately 87% of finalised commercial deal engagements with Top 500 groups resulted in agreed positions and correct lodgments, demonstrating the effectiveness of our engagement approach and reducing the likelihood of future audits or disputes. Where our commercial deal engagements have not resulted in an agreed position, we continue to engage with the groups through reviews and audits until the matter is resolved.

Developing and implementing effective tax governance

Tax governance means the procedures and processes a group has put in place to support them meeting their tax and superannuation obligations, including paying and lodging on time. We review the existence, design effectiveness and operational effectiveness of a Top 500 group's tax governance framework with a focus on the 7 principles of effective governance, with an emphasis on the first 4 principles.

In the 2024–25 financial year, our data showed that 79% of the errors made by Top 500 groups could have been avoided with effective tax governance.

To avoid costly errors and provide confidence that the correct amount of tax is being paid, it is important that tax governance is documented, operationally effective and regularly reviewed.

Over one-third of Top 500 groups have some level of documented tax governance in place, and the number of groups with tax governance across trading, non-trading and wealth extraction activities has increased when compared to last year.

During the 2024–25 financial year:

The number of groups with documented tax governance over their trading activities has grown by 26%, with approximately 42% of these groups having achieved a high or very high effectiveness rating.
The number of groups with documented tax governance over their non-trading activities (that is, passive income sources) has increased by 24% with over 45% having achieved a high or very high effectiveness rating.
The number of groups with documented tax governance over wealth extraction activities has increased by 17%, with almost 47% of these groups achieving a high or very high effectiveness rating.

Our priorities in 2025–26 include reviewing and updating our guidance on effective tax governance to support groups in developing and implementing the policies and procedures needed to ensure they get things right and avoid basic errors. Making our guidance clearer and easier to understand, together with our expansion of the provisional justified trust approach, which is now available to all Top 500 groups, will give Top 500 groups greater opportunity to achieve justified trust in the future.

Goods and services tax governance

During our GST-integrated assurance engagements undertaken in the 2024–25 financial year, we observed and highlighted the following areas for improvement in respect of GST governance:

Documenting business activity statement (BAS) procedures
Including regular processes to verify the GST registration of suppliers following initial setup
Periodic testing of internal controls and data
Reconciliation of data between the BAS, income tax return and financial statements.

Guidance on effective tax governance

To help Top 500 groups understand and implement effective tax governance, we have published the following guidance:

QC105903