Public and international groups have told us they appreciate early engagement to focus on getting things right.
We’re working with businesses to prevent issues arising and identify risks earlier.
The pre-lodgment compliance review (PCR) is used mainly for higher consequence taxpayers (but is not for those with an income tax annual compliance arrangement). A PCR may also be applied to a lower consequence taxpayer when timely compliance assurance is considered necessary.
The aim of the PCR is to assure the right tax outcomes, and identify and manage material tax risks through early, tailored and transparent engagement.
PCRs support our approach of raising and resolving potential compliance concerns as they arise – that is, prevention before correction.
PCRs foster a culture of transparency and willing participation through early engagement. They help us build an understanding of your business, including your tax governance and preparation processes and your decision-making framework, policies, processes and systems.
Each PCR runs for approximately two years, depending on the timing of disclosures made and the resolution of issues. A PCR typically covers the financial year (12 months), the standard period allowed from the conclusion of the final year to the lodgment of the return (seven months) and a period of time after the lodgment of the return (up to five months) to allow for analysis and discussion of outstanding issues where necessary.
A PCR typically involves:
- initial discussions with our case officer to establish the framework in which we will conduct the PCR (you'll have the opportunity to meet the relevant senior executive service officer)
- additional discussions through the income year where you may make disclosures or the ATO may raise identified issues for discussion
- providing required information to the ATO, to support disclosures or assist risk identification
- analysis by the ATO, provision of findings and recommendations, and discussions to resolve outstanding issues (or determine a plan to resolve the issues)
- a pre-lodgment discussion of details to be included in the tax return, and the tax preparation process
- post-lodgment conversations to discuss issues identified in the tax return and seek resolution – in some case resolution may involve planning for post-lodgment activities outside of the PCR – alternative dispute resolution principles are also available in the pre-lodgment period
- a letter to you at the completion of the PCR setting out issues and planned next steps if the issues are unresolved – the PCR is not a one size fits all process – the intensity of these activities will vary according to your RDF categorisation and diminish over time as our level of assurance and understanding of your business grows.
During the PCR we encourage you to inform us and provide basic information when you are seriously contemplating a material arrangement. We also expect you to update us when basic information about the transaction or arrangement changes. For example, when the parties involved in that transaction or arrangement may have changed.
We will seek further information from you of the transaction or arrangement when it has been finalised.
If we are unable to engage with you before lodgment, more intensive efforts will be required after lodgment.
A PCR does not provide the same level of certainty as an annual compliance arrangement, in which a taxpayer can obtain both certainty and sign off. However, certainty can be provided through other mechanisms, such as by requesting a ruling as part of a PCR.
Our publication, Pre-lodgment Compliance Review – Guidance on information requests and taxpayer discussions sets out key points in the pre-lodgment compliance review process.
Download a PDF of the Pre-lodgment compliance review timeline (PDF, 143KB)This link will download a file
Assurance and indirect taxes
For GST and excise obligations we increasingly focus on early intervention and prevention. One way we do this is by running assurance workshops with large businesses categorised as key taxpayers or lower risk taxpayers in the risk-differentiation framework.
We will co-design the workshop agenda with you. ATO participants may include specialists from a range of tax areas, not just indirect taxes.
There are two types of assurance workshops available:
- Governance workshops are intended to help you identify and address weaknesses in your governance and tax risk management processes. They may also help us improve and tailor our interactions with your business.
- Risk workshops enable us to work with you to understand and resolve specific GST or excise issues. They allow us to jointly address issues as they arise, especially if complex or unusual transactions are about to take place (such as mergers or acquisitions) or if transactions that commonly result in errors have already taken place.