As we predicted in our August 2020 Tax Insight (Release of ATO’s new “GST Governance, Data Testing and Transaction Testing Guide), we have recently seen an increase in the ATO’s audit activity of taxpayers’ GST affairs and are expecting this to be further ramped up in 2021. The ATO is seeking objective evidence that businesses have an appropriate tax governance framework in place and are paying the right amount of tax.
The ATO’s guidance on the Justified Trust methodology has been comprehensive. Some of the publications, focusing on GST, such as Tax Risk Management and Governance Review Guide (87 pages) and GST Governance, Data Testing and Transaction Testing Guide (60 pages) are often found to be overwhelming with taxpayers asking “where do I fit in amongst the various Justified Trust audit programs” and “what is expected of me?”
Whether your business is in the Top 1000, Top 500, or Next 5000 program, the key elements comprising Justified Trust and a fit-for-purpose tax governance framework remain the same.
What are the key elements to being ATO “review ready”?
- Evidence of a well-designed GST governance and controls framework
- Evidence that the GST governance and controls framework operate effectively in practice
- Perform a comparison of accounting and GST figures and are able to explain any reconciling differences
- Perform analytical testing of source data and can explain the root cause of any anomalies through verification of transaction testing
- Perform a GAP analysis to compare your tax risk management framework to the best practice guidelines
HOW CAN RSM HELP?
if you have any questions regarding tax, contact your local RSM expert.