Like many other revenue authorities around the world, the Australian Taxation Office (ATO) has advanced it’s ‘e-audit’ capability via technology that tests files stored in a taxpayer’s electronic records to verify if the stored data is accurate and complete.
While not an audit as such, justified trust (originally an OECD concept), is a structured approach that will be applied by the ATO to seek a level of assurance from a taxpayer that the right amount of tax is reported and paid. The level of assurance goes beyond tax technical risk and includes operational risk for all tax compliance obligations – people, processes, data and technology.
To achieve justified trust, under the ATO’s tax risk management and governance review guide (the Guide) at the senior management level, the ATO expects the Board to oversee the implementation and continued operation of an entity’s tax governance framework. Managing day-to-day controls and processes to ensure compliance with tax obligations is not a matter for the Board, but a responsibility of management.
The Guide has been part of the ATO’s decade-long tax risk management focus as depicted in the timeline below
By now, Boards and senior management of ASX Top 100 through to Top 1000 organisations should be familiar with their obligations under the ATO’s justified trust initiative. Furthermore, they should be seeking to proactively prepare (‘self-assess’) their justified trust position in a structured and efficient manner and assess the management and governance of your organisation against the ‘best practice’ outlined in the Guide.
Wolters Kluwer recommends corporates conduct an initial gap analysis that compares and contrasts their tax risk governance framework with the Guide. If you are using tax technology solutions such as CCH Integrator, you have a head start compared to others who may be using manual spreadsheets reporting off multiple data sources with minimal controls. CCH Integrator has the key tools and capabilities for your organisation to be at the forefront of best practice when it comes your tax control framework.
CCH Integrator will act as a single source of truth to embed, manage and monitor the tax controls for your tax governance and control framework. It can also:
- Facilitate a whole of enterprise self-assessment on the tax maturity of your organisation – by collaborating with tax, finance, internal audit, risk/governance, technology teams etc. under one single platform
- Help recognise gaps against the Guide
- Help plan, prioritise and embed solutions to address gaps – and provide remediation plans (justified trust)
- Enable upstream compliance and stakeholder reporting (Board Level Controls)
To find out more about how CCH Integrator can help strengthen your justified trust position or simply how it can help fulfil and improve your tax compliance, contact us.