Louis Carney - 00:00 - 00:47

Thank you for joining us as we continue our discussion aimed at demystifying what tax governance means for your business. My name is Louis Carney. I'm an indirect tax specialist here at RSM in Brisbane. I'm joined by Michael Kielenniva, a specialist from our corporate tax division. Throughout our first four episodes, we have discussed tax governance from a more holistic perspective, covering justified trust, the ATO's review programs, what the ratings mean to your business, and the relevant guidance published by the ATO. Over the next few episodes, we will cover the seven principles of effective tax governance in more detail, with this segment focusing on principle one, accountable management and oversight. Mike, do you want to give us a brief overview of this principle? 

Michael Kielenniva - 00:47 - 01:47

So as covered in our previous episodes, for the top 500 and top 5,000 programs, the ATO assess taxpayers' governance frameworks against seven principles of effective tax governance. The first principle relates to accountable management and oversight. So broadly, the ATO are seeking to confirm that the taxpayer has roles and responsibilities that are clearly defined and understood in terms of accountability for tax administration and decision-making. These roles and responsibilities aren't limited just to the income tax return and BAS preparation procedures. They also relate to superannuation obligations, tax registrations, reporting requirements, record keeping and payment obligations. We found that many of our clients rely quite heavily on advisors to ensure that most of the obligations I just mentioned are met. Where this is the case, businesses need to demonstrate that they clearly understand their own roles as well as those that are expected by their advisors. Can you give us some examples of what documentation businesses can incorporate into their business to assist them in satisfying this principle? 

Louis Carney - 01:47 - 03:05

No problem Mike. Organisations can incorporate a variety of documentation into their business to help ensure it has effective management and oversight of its tax obligations. By clearly defining employee roles in a documented tax policy, maintaining an organisational chart that maps the responsibility of tax obligations to specific management and employees, formulating a review and sign-off procedure to be used by key personnel and management for specific taxes, maintaining lodgement and payment calendar to track deadlines. As mentioned earlier, many businesses rely quite heavily on external advisors where that is the case it is important to ensure that the role of an advisor is clearly documented and understood, the group entities that are included in the scope of work are clearly identified, and you understand what information is subject to review by your advisors and what information they will accept without review. Of course, just having this documentation in itself is not sufficient. Businesses will also need to objectively demonstrate to the ATO that they are operating effectively within the business. Mike, did you want to elaborate on this point? 

Michael Kielenniva - 03:05 - 03:45

As people who have been following this series would know, businesses need to demonstrate to the ATO that they've actually incorporated these policies and procedures and documentation requirements into their business. So this can be achieved by demonstrating that payments and lodgements recorded in the tax portal affect those in an internal allotment calendar that you might be using. Steps outlined in the internal tax preparation procedure have been taken. So this can be done via a procedure checklist or email chains. You need to demonstrate that escalation review and sign-off procedures have been carried out in accordance with any policies or procedures. You can do this by meeting minutes, email correspondence, file notes, or anything that actually documents it. So we found that a beginning-to-end walkthrough for each tax obligation that includes a checklist and sign-off for each task is an effective way of ensuring objective evidence is maintained throughout the tax preparation process. 

Louis Carney - 03:45 - 03:56

Thanks, Mike, and in the next episode, we will consider principle two, recognize tax issues and risks in more detail.