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Key insights from large and multinational business programs

Last updated 27 September 2023

The ATO continues to provide transparency with the latest release of findings reports. These reports contain insights and observations from public and multinational business assurance programs and information provided by these taxpayers.

The reports support the integrity of the tax system by providing transparency to the community on how the ATO assures large and multinational businesses pay the right amount of tax.

Working closely with these businesses allows the ATO to resolve concerns and informs the ATO on advice and guidance products to support these taxpayers.

The reports are findings for: the Top 100 program; the Top 1,000 program; the Reportable tax position schedule Category C disclosures; and the Public and multinational business advice and guidance program.

Acting Assistant Commissioner Britta Finnigan, explains how the findings report for the top 100 program shows the ATO continues to see a reduction in high-risk transactions being entered into, reflecting the efforts of taxpayers and the ATO to address these concerns.

'Of the Top 100, 83% have obtained either a high or medium overall assurance rating, with those with high assurance for income tax increasing from 6% in 2019 to 52% in 2023. This year, we can also report that 93% of Top 100 GST reporters reviewed have also attained a high or medium assurance level for their GST affairs,' Ms Finnigan said.

The ATO's focus for the Top 100 program in 2023 has been to build on the assurance they've already attained under their income tax program while progressing the remainder of their GST assurance reviews.

Ms Finnigan says, 'We continue to see tax compliance gaining importance in corporate governance, with organisations using justified trust ratings to demonstrate their commitment to transparency and sustainability. Ongoing efforts aim to enhance tax transparency and maintain high levels of compliance, benefiting both taxpayers and the community.'

This is the fifth year the ATO will publish findings from their Top 1,000 combined assurance program and the third year it will include information on their GST assurance program.

The report will be published in October. However, Assistant Commissioner Megan Croaker provides her highlights from the anticipated report.

'We've observed an increase in Top 1,000 taxpayers with an overall high assurance rating, with 29% of taxpayers obtaining an overall high assurance rating in reviews undertaken in 2023'.

As Top 1,000 taxpayers can have a significant impact on the health of the tax system, the ATO engages with them periodically to manage their compliance and assure their tax performance.

'This year there's been a significant increase in taxpayers obtaining stage 2 ratings (48%) for income tax risk management and governance, following the February 2022 publication of top 1,000 specific guidance – Tax risk management and governance. 'This shows the benefit of our assurance program and continued engagement with taxpayers in the program,' explained Ms Croaker.

The reportable tax position (RTP) category C disclosures findings report shows large public and multinational business lodgments and disclosures have increased.

Assistant Commissioner Michael Ingersoll says, 'We've continued to see low-risk arrangements are increasing and high-risk, or arrangements of concern, including tax avoidance schemes, are declining for large public and multinational businesses'.

The ATO has seen coverage over the high-risk arrangements through their compliance and assurance programs.

Mr Ingersoll acknowledges the strong compliance by large business with completing the RTP schedule.

‘The schedule requires the largest corporates to report any uncertain tax positions. This includes, under Category C, involvement in arrangements we've highlighted as being of concern and their self-assessed risk rating against relevant Practical Compliance Guidelines.'

This information supports the ATO's approach to assuring the tax performance of large business. For 4 years now, the ATO has published insights from Category C disclosures, including information that enables large business to assess their position within the population.

This is the second time the ATO has published insights from the public and multinational business advice and guidance program. The report reveals the program continues to play a key role in providing tax certainty across the public and multinational business market. It illustrates that the nature and amounts of advice requested reflects market activity as well as changes to the law.

Assistant Commissioner Sarah Hassen explains, 'public and multinational business taxpayers use the program for a mix of tax certainty, for both the entities that invest in them as well as their own tax affairs.'

The report shows most applications to the program are made by tax advisers representing taxpayers. This reflects the transactional nature of many of the arrangements where advice is requested, and the likelihood of advisers being engaged by taxpayers as part of managing those transactions.

'We encourage taxpayers to engage with us early and seek advice for complex transactions. As the report demonstrates, early engagement leads to higher positive outcomes for taxpayers,' Ms Hassen said.