Active engagement promotes willing participation

For larger public businesses and multinationals facing more complex tax issues, our early engagement approach helps reduce the time and effort required to get to the heart of issues, resolve disputes and agree on a way forward. Both taxpayers and staff recognise the benefits of picking up the phone and having a conversation to understand and resolve the issues early.

This service includes providing public and private advice, such as taxpayer alerts, to support informed decision making by taxpayers. Increasingly, we are providing practical compliance support – for example, guidelines on tax issues associated with privatisation of infrastructure assets.

As part of our strategy to facilitate participation in the tax system and improve the taxpayer experience, we released a Tax risk management and governance review guide for large businesses in 2015–16. In publishing the guide, we have been transparent about our views of better practices, and are making it easier for businesses to get it right. The guide is primarily for large and complex corporations, tax consolidated groups and foreign multinational corporations operating in Australia. It enables them to evaluate their strategic and operational tax risk identification and governance framework.

The guide allows corporations to better manage their tax and reputational risks. Some companies have undertaken a self-assessment or internal audit to test their tax conformance. Other finance directors or boards have sought external advice.

The ATO is also piloting its own assurance program with larger corporations. This program will test the tax governance framework, compare tax and accounting profits, and consider major transactions, restructures and other market announcements. Our effective tax-borne analysis will provide assurance that the tax and economic impact of multinationals is suitably aligned.

Other channels for engagement include Large business focus, which is presented quarterly to our Large Business Stewardship Group. It sets out our strategies for addressing large-market tax risks, the issues we are concerned about and what we plan to do about them.

Business bulletins is our primary communication channel for medium and large businesses. It is a news channel on ato.gov.au that also has a monthly subscriber email issued to over 5,000 businesses. Articles are published as they arise to keep businesses informed about their tax and superannuation obligations.

Where the ATO issues significant private or public advice, including taxpayer alerts, we will follow up to ensure arrangements are effectively implemented. This work is sometimes described as active prevention, and can lead to audits or investigations where the client's factual circumstances significantly diverge from our advice and guidance.

For advance pricing arrangements, an improved application process has been implemented in consultation with accounting and law firms. The new process makes it easier for large businesses to apply for an arrangement by ensuring all issues are identified upfront.

As at 30 June 2016, there were 131 advance pricing arrangements in place, with another 107 applications in progress of which 38 were in the early engagement stage and 41 cases were finalised.