- Ian Renwood to lead Technology Advisory Consulting team in Sydney
- ‘Preparation now’ was the message for Melbourne’s Disability Services sector ahead of the Royal Commission
- Brisbane Disability Service providers gain insight into retaining good culture through the Royal Commission
- Sydney Disability Service providers prepare for Royal Commission at Grant Thornton roundtable
- Perth Disability sector armed with strategies to tackle challenges of Royal Commission
- Grant Thornton welcomes nine new Partners and Principals
- Japanese investment in Australia’s energy and mining industries remains strong
- Grant Thornton responds to ASIC inspection findings
- Bronze Employer Status in the Australian Workplace Equality Index
- A boost to mid-size business is a boost for the Australian economy
- Thomson Reuters and Grant Thornton face complex Australian tax environment together
- Grant Thornton welcomes Steve Paterson to lead on Australian State Taxes
- Australia welcomes its first digital bank, Volt Bank
- New Board appointments improve gender diversity for better business outcomes
- Grant Thornton welcomes three new partners
- Rising fear over disproportionate cost of banking regulation
- Katie O’Keeffe to spearhead Human Capital offering in Melbourne
- Grant Thornton appoints new National Head of Business Risk Services
- Tianne Nagy-Jones recognised with ARITA President’s Award
- The UK’s Tech Rocketship Awards take off in Australia and New Zealand
- Robert Powell recognised with Family Business Australia’s inaugural Accredited Advisor Award
- “Western Australia is superbly situated to thrive and prosper”
- Proportionate regulation can help protect banking customers
- Grant Thornton appoints new Human Capital partner
- Darren Scammell joins Grant Thornton
- Life Sciences sector booming and more buoyant than ever
- Grant Thornton welcomes new leaders
- Victoria backs TPP and benefits of Free Trade
- Aged care boardroom briefing with Federal Minister highlights opportunities and challenges for the sector
- volt bank receives Australia’s first restricted ADI licence
- Grant Thornton advises Jupiter Mines on one of the largest IPOs in the metal and mining industry
- Grant Thornton acts for Turi Foods on merger with global food supplier
- Grant Thornton appoints new Partner as part of its ongoing investment in Financial Services
- Grant Thornton Australia continues to bolster its consulting capabilities with the appointment of new technology Partner
- Grant Thornton announces new offering to help retailers navigate complex financial services environment
- Australia lags global average for 5th consecutive year on gender diversity
- Grant Thornton appoints lateral partner hire, Daniel Mastroianni to lead its new debt advisory service offering
- New Partners continue to strengthen Grant Thornton’s leadership team
- Diversity of thought - the missing ingredient for many family businesses
- Philip Campbell-Wilson joins the Grant Thornton restructuring team
- Continuing our commitment to retail, through our merger with GNC Group Consulting
- Mr Ian McCall Appointed as Partner of Growth Advisory Team
- Proudly supporting Windlab’s industry-leading renewable energy project
- Health and aged care the future for lending growth
- Grant Thornton appoints Anthony Beven to Partner, furthering its commitment to serving Australia’s Indigenous business community
- The ATO is coming no matter your size – are you ready?
- Canary indicates life in the tunnel for junior miners
- Cyber risk is indiscriminate: Census cyber-attack, a lesson for mid-size business
- Grant Thornton Australia congratulates Allegro Funds
- Lagging digital competitiveness creates bumpy economic transition
- Strong valuation multiples & private equity interest create better conditions ahead
- Investor demand for gold climbs further but will Brexit upset the early signs of uptick for junior miners?
- Brexit export opportunities & setbacks - agribusiness comes out on top as Australia becomes gate way to Asia
- Brexit signals opportunity for Australian Fintech’s and trouble for Britain’s Fintech community
- 11 new partners boost Grant Thornton’s leadership
- Brad Savage joins Grant Thornton, marking 8th lateral partner hire this financial year
- Changes uncork competitiveness in the wine industry
- Level playing field for local retailers as Government announced low value import threshold to be abolished
- "Public Sector Productivity” – no longer an oxymoron
- Mid-size businesses recognised and supported in 2016-17 Federal Budget
- Innovators more confident to undertake research as R&D incentives in question, finally remain untouched
- Junior miners and explorers not forgotten in the 2016 federal budget
- Manufacturers match made in heaven with invigorated workforce
- Agribusiness receives critical infrastructure investment which lays foundation for continued growth in Asia
- Flex-appeal goes a long way towards workplace happiness: Grant Thornton breaks the mould
- $300bn in cyber breaches: Mid-size business welcomes Cyber Security Strategy
- Statement re: Arrium Voluntary Administration
- Arrium Limited appoints Grant Thornton as Voluntary Administrators
- Highest economic contribution; yet mid-size business goes cap in hand on budget incentives
- What women really want in the boardroom
- Biggest contributors of technology innovation go cap in hand
- Netflix tax paves way for more to come
- Digesting the prospects of GST on fresh food
- Strategic Development Fund & Minister for Mid-Size Business set to fill Government’s revenue gap
- Proposed changes to insolvency laws allow reorganising for success and welcomed news for Australian mid-sized business
- ChAFTA provides platform for mid-size business to deliver jobs and revenue
- Outlook brightest for gold juniors
- TPP creates growth beyond limitations of local market margin squeeze for professional services
- Move on from equal representation and embrace independence
- Australia slips from top spot; ranking third on global dynamism index
- Real estate investment driven by gut feeling rather than data
- Speak now or forever hold your peace on innovation
- Burgeoning Queensland market creates 7 senior appointments
- Revision of board governance vital for growth
- Grant Thornton further invests in leadership and strengthens its capabilities
- Record low investment rates ≠ record high investment
- Grant Thornton named one of the 50 'World’s Most Attractive Global Employers'
- Automation is the way of the future
- Incentives to invest in innovation hang in the balance
- Mid-size food producers looking for fair share of the federal budget exports pie
- Grant Thornton bolsters its digital advisory offering through acquisition of the Consult Point Group
- Crack down on entertainment salary packaging following changes to FBT
- Federal Budget overlooks Australia's Life Sciences sector
- R&D in the firing line again
- Changes to the GST base marks the beginning of much more to come
- A friendly outcome for Financial Services
- Budget mixes messages for the tech sector
- Encouraging support for innovation
- Horse has bolted on innovation, now is the time for industry support
- Action needed to ensure ongoing retail growth
- Whistling the profitability tune in manufacturing
- Don’t tamper with tax on super
- New CEO appointed for Grant Thornton effective 1 July 2015
- Little known ways to avoid reliance on supermarkets & combat margin squeeze
- Capital conundrum in Australian Agriculture
- Property developers hit by disincentives to foreign investors
- Madeleine Mattera boosts Grant Thornton’s Financial Services offering
- Mid-size businesses welcome Senate support of innovation incentives
- Australia fails to measure up to Eastern European women in business
- Parliament set to provide explorers much needed investment incentive today
- FTA fast tracks Australia’s mid-size sector
- Property developers substantiate claims to abolish stamp duty
- Are our food & agri producers best positioned to take advantage of the FTA with China?
- Manufacturers to increase relevance in China’s supply chain
- Everyone’s a winner as coal tariffs set to be removed
- Mid-size businesses pay the price on profit shifting
- Growth sectors driving confidence in Australia's deals market
- Australia outranks global peers in sustainable practices
- Aussie business gains helping hand to compete & grow
- To succeed in China we must understand Chinese business better
- Grant Thornton expands national footprint to North Queensland
- What’s next for Australian retailers?
- Are we poised to maximize growth opportunities from the free trade agreements?
- Educational performance stagnates as funding dominates debate
- Clarity in sight for the automotive industry
- Property sector’s significant revenue burden could decrease
- Talk of a budget emergency won’t boost consumer confidence
- R&D Rate Reduction will hurt vital product development in F&B
- Manufacturers suffer structural imbalances inhibiting long-term growth
- – Industries of the future given the slip as Federal budget overlooks the ICT sector
- Affordable Housing backbenched
- GST reform left out in the cold on budget night
- The Sweet and Sour for the Life Sciences Industry
- Government announces $11.6bn infrastructure investment to build our nation
- Changes to the R&D tax offset do not encourage growth
- Save now, benefit in the future
- Fine line in downsizing achieving public sector productivity gains
- Food & beverage sector relishes ripe acquisition opportunities
- Pioneer charities reap rewards of social media governance
- Private equity firms shopping for Australian retail growth
- Australian innovators seek even playing field in attempt to reverse the brain drain
- Professional practices face new risk assessment on profits
- First glimmers of hope emerge from dire conditions for junior miners
- Business optimistic for further growth
- Lenders warn conditions will remain tight over the next 12 months
- Fraud and corruption pose threat to global growth in the construction industry
- Grant Thornton Australia wins Thomson Reuters “Advisory Firm of the Year”
- Private equity firms adapt to a “new road map” for fundraising
- Social enterprises ring warning bells for Not for Profit sector
- Collaboration needed to keep Not for Profit sector healthy
- Power of mega-retailers a global challenge for food and beverage sector
- Australian Construction fraud costs estimate at $5 billion per year
- Business advisory leader Grant Thornton teams up with MYOB for practice solutions
- Australia rated best for growing business
- Grant Thornton named one of the Top 50 Global Business Employers
- Grant Thornton Australia announces the appointment of Jason Sorby, Partner – Operational Advisory Lead for Queensland
- ATO on the warpath – 2013-14 Compliance program released
- A major blow for business as FBT administration on cars set to skyrocket
- Business resolutions for a new financial year – lessons from eCommerce
- Ford announcement not the Death-Knell for the Local Industry
- Infrastructure spend to keep pace with population growth in major cities
- Measures to encourage exploration critical, yet absent
- MBS indexation freeze set to transfer costs to patients
- Not for Profit: Status quo for now, but for how long?
- Federal Budget does little to encourage investment in Australia’s digital economy
- Budget shuns retail sector
- Education funding alone will not improve school performance
- Funding costs to rise for overseas investments
- Thin capitalization changes to stifle business investment
- Fair Work Commission to address bullying complaints
- CGT 10 % Non-Final withholding tax – Another disincentive for foreign investors
- Research and development: The give and the take
- Continued uncertainty for Australian businesses going offshore
- Has the Budget killed Australia’s Competitiveness in the Asian Century
- Government fails to commit to real reform for future Australians
- Government fails to address SME’s basic wish list
- Public sector hit hard by Budget shortfall
- How might the Federal Budget impact the Not–for–Profit sector?
- ‘Out of favour’ sectors should be reconsidered
- Work/life balance – everyone should strive for it!
- What women want
- Tax reform story not over for biotech industry
- Superannuation reforms – More about winning an election than long term reform
- Routes to the top – the best and worst places for women to get top job
- R&D Incentive update: A plan for Australian jobs
- Junior miners not on Government agenda
- International Women’s Day 2013
- Innovative companies will move offshore if tax rate not reviewed
- Grant Thornton named International Accounting Bulletin’s Network of the Year
When the ATO released its updated Tax Risk Management and Governance Review Guide, it set the benchmark in terms of the accountability for tax it expects from the directors of all Australian businesses – whether large or small.
[This article was first published in Accountants Daily in October 2017.]
This is on top of the myriad of changes over recent years, aimed at widening the transparency around tax information and the level of income tax paid by organisations.
We have both worked with clients for some 50 years between us – Mark in helping clients determine their risk appetite and to implement robust risk management policies and frameworks; Vince working with clients on their complex tax governance requirements, with a large focus on the ATO’s audit activities. We both rarely recall ‘tax’ featuring in the risk registers of many businesses – especially capturing such a wide range of businesses.
This is because the era of conﬁdentiality in tax affairs is well and truly over. Businesses should expect greater demands on them in terms of justifying their tax performance, and managing these ever-increasing expectations by revenue authorities. The ATO will want greater clarity around how businesses look at tax and how they consider and manage their have robust tax risk and governance. It will also expect to see tax being discussed at the board level, as well as greater interaction between management, the board and advisors on tax risk management.
It also provided a further indication of the way in which the ATO now administers tax and underpins the ATO’s notion of ‘Justiﬁed Trust’ – its attempt at reinstating the public’s trust in the corporate tax system through demonstrable governance and transparency.
While certain ATO programs are targeted at the larger organisations – this focus is now more than just the big end of town. While the expectation on tax risk management is not as strong on smaller organisations, the ATO will not exclude them from reviews and audits.
No longer is it acceptable for businesses to fully rely on their accountant or tax advisor to manage their tax risks – it is now considered to be a directors’ duty. Management and boards must work hand-in-hand to ensure that their organisations have robust tax risk and governance processes prepared, documented and applied.
So, what exactly are the changes? Well, there have been ﬁve major changes in recent times:
- The latest: the ATO will be undertaking a risk review of the top 1,000 companies in the country. These risk reviews are scheduled to take around four months each, primarily focused at what tax governance processes the businesses have in place, so the ATO can undertake a risk rating, as a guide to selecting companies for a more detailed review or tax audit. More on that later in this article.
- The ATO’s release of information around tax paid (or in some cases, not paid) by public companies and internationals with turnovers of over $100 million, and over $200 million by private companies.
- A new requirement for companies with turnover of more than $250 million to lodge a particular schedule with future income tax returns, detailing tax positions taken by the company which may have some form of tax risk (assumed to be taken with the approval of board and management).
- The push by the ATO and the Board of Taxation to encourage companies to adopt a voluntary tax transparency code is to, again, make companies’ tax affairs more visible.
- The introduction of further rules around disclosure of global and local ﬁnancial and tax information of multinational companies. The life of a SGE (a Signiﬁcant Global Entity – companies where the global group has over a $1 billion turnover in size) has become increasingly more complex with the introduction of Country-by-Country reporting rules, Multinational Anti Avoidance Rules, Deferred Proﬁts Tax regulations, and a frightening massive increase in penalties for the late lodgement of any tax document (potentially reaching an eye-watering amount of over $500,000). Even more challenging, these requirements will capture all local subsidiaries, regardless of their size.
Back to the latest change and the focus on tax risk. The Guide firmly demonstrates ATO’s expectation that boards are accountable for tax overall, and moves the burden of proof from the ATO identifying risks, to taxpayers being able to demonstrate, through a formal, operational and well-evidenced tax control framework, that tax risks are identified and managed proactively across the business, regardless of a taxpayer’s risk rating or fact pattern.
More specifically, the Guide sets the following expectations:
- It splits practices specifically into board and management considerations.
- The board is explicitly responsible for setting a tax risk appetite and a testing framework.
- The tax risk appetite is to be articulated from both a strategic and operational perspective.
- The framework covers all taxes, including transaction taxes such as GST with operational and interpretive risks, together with those dealt with by state revenue authorities.
- A focus on data, IT controls and information flows between entities, systems, and reports.
- Preparation of a board-endorsed tax transparency report is recommended.
What are companies being asked by the ATO to evidence? Here is just a snapshot:
- The company’s strategic and operational tax governance processes and framework.
- The company’s tax risk management policy, including its corporate and/or tax risk registers and/or documents evidencing how the company manages tax risk.
- The company’s decision-making committees, including a discussion of their role in the approval of transactions and where they fit within the overall corporate governance process and details of those that are responsible for tax governance.
It is likely that the ATO will be sending directors a letter seeking this evidence and providing limited timeframes to respond. The remainder of Australia’s Top 1000 companies are currently subject to a review by the ATO at some point over the next four years.
With tax laws undergoing unprecedented changes and expansion into areas previously uncovered, will your business be able to demonstrate a robust tax risk management and governance framework? If not, the ATO will be visiting for a four-month period and to asking ‘why not?’.
Those businesses who are able to demonstrate a robust tax risk management framework will be able to readily respond to the ATO requests and be looked upon favourably from a tax risk perspective.