ATO Engagement and Business Clients

ATO Engagement and Business Clients

Late last year, the ATO released their Action Differentiation Framework (ADF), providing insight into their strategic approach to engaging with businesses.

Under the ADF, ATO engagement with taxpayers will vary based on their total business income.

While the Top 100 and 1000 companies will receive either ongoing or periodic one-to-one tailored engagement; the ATO has expanded their engagement to include taxpayers that fall under the medium or emerging categories, those below $10 million to $250 million, who can expect periodic contact with the ATO.

It is expected that the level of contact by the ATO would depend upon a number of factors specific to the taxpayer businesses; with taxpayers most likely to be contacted if there were anomalies detected by the ATO data-matching or by ATO benchmarking analysis.

The ATO has very many resources directed at data collection, and can access Austrac, and employee related data matching such as superannuation guarantee and salary information.

For all those businesses that do the right thing, so that there is no missed income reported on their BAS0; there are no discrepancies around employee entitlement; and they fall within the expected parameters within industry benchmarks, it is unlikely that the tax office will need to be in contact.  

However, to prepare for added scrutiny by the ATO, businesses should be able to demonstrate that they are “good tax citizens”.

According to BDO partner Gary Poon, the ATO is moving towards the OECD concept of “justified trust”, to allow it to focus its resources on the right areas.

“For example where a taxpayer can demonstrate they are good tax citizen and has a documented tax governance framework in place (as appropriate for the size and complexity of their organisation) a taxpayer is more likely to be categorised into the ‘partner’ engagement experience the ATO,” said Mr Poon.

“Under the ‘partner’ experience the ATO indicates that they will adopt a ‘lighter touch’ in their compliance interactions with the taxpayer.”

Dereen Wallace, Partner