Is your business ready for increased ATO GST compliance activities?

Katerina Siamatas
10 May 2023
3 min read

10 May 2023

As outlined in the Federal Budget 2023, The Australian Taxation Office (ATO) will be given an additional $588.8 million over 4 years from 1 July 2023 to continue to undertake activities that promote GST compliance.

Specifically, the aim of the increased ATO activities is to ensure that businesses meet their GST compliance obligations, including accurately accounting for and remitting GST, and correctly claiming GST refunds. It is understood that part of the funding to be provided will also be used by the ATO to develop more sophisticated analytical tools to deal with emerging risks to the GST system.

The Federal Government estimates that over the 5 years from 2022–23 to 2026-27, ATO activities will lead to an increase in GST receipts by $3.8 billion, and other tax receipts by an additional $3.8 billion.

What is your GST risk?

Businesses should prepare for increased ATO GST compliance activities by:

  • Undertaking a gap analysis to assess the GST governance framework that exists against the GST governance framework that should be in place.

  • Developing or improving the GST governance framework to overcome any deficiencies identified as part of the gap analysis.

  • Documenting or updating GST policies and procedures, as well as key controls.

  • Testing the GST risk management and governance framework, the outcomes of which should be documented in appropriate reports or management self-assessments.

  • Contemporaneously collecting evidence which demonstrates that a GST control framework exists, has been appropriately designed and is operating effectively in practice.

  • Undertaking a GST Analytical Tool (GAT) analysis to explain any differences between audited financial statements and the GST reported on Business Activity Statements (BAS).

  • Assessing the level of risk associated with the GST treatment applied to sales and purchases transactions.

  • Obtaining GST advice and/or a private ruling on material and/or irregular transactions.

  • Ensuring key stakeholders have had adequate GST training.

Relevantly, the ATO has previously released detailed guidance on how to conduct a review of an entity’s GST control framework. This guidance also explains how to undertake data and transaction testing to ensure business systems are creating, capturing, and correctly reporting GST.

Should any GST reporting error and/or GST shortfall be identified as part of the preparation undertaken for any ATO GST compliance activity, it is recommended that this be included in a written voluntary disclosure to the ATO (ideally prior to the commencement of any ATO GST compliance activity). Any voluntary disclosure should also disclose any action taken to prevent or avoid further errors from arising in the future.

Check out the full coverage from the Federal Budget 2023 here.

The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex Group Limited.

Author: Katerina Siamatas | Associate Partner

Katerina has over 20 years’ experience in providing domestic and international indirect tax consulting services to government entities, multinational companies, large private businesses and not for profit entities. In her role as a specialist tax adviser, Katerina has advised on complex indirect tax matters, including: providing specific transactional advice; undertaking prudential reviews; undertaking impact studies; preparing voluntary disclosures, as well as private ruling and refund requests and liaising with the relevant revenue authorities in relation to these; assisting clients with Australian Taxation Office and other revenue authority reviews and audits, and negotiating on their behalf; advising in relation to mergers and acquisitions (including due diligence reviews); conducting training sessions; and assisting clients with indirect tax governance and risk management, including documenting and improving their policies and procedures. She is well known for working collaboratively with her clients and for providing commercial solutions.