ATO Publishes Tax Risk Governance Review Guide

The Australian Taxation Office (ATO) published a tax risk management and governance review guide that sets out principles for board-level and managerial-level responsibilities and provides examples of design and operational effectiveness of control framework for tax risk.

Background

ATO has stressed that the presence and testing of a tax internal control framework are an integral part of the risk-assessment protocols used by tax authorities. "If we need to assess your tax governance processes, having a strong tax control framework within the company gives us confidence that tax risks are well managed," it informed. Accordingly, a good corporate governance model will include a robust risk management framework and procedures to identify, implement and report on the design and operational effectiveness of internal controls in place to mitigate the identified risks.

The Tax Risk Governance Guide

The Guidance was developed primarily for large and complex corporations, tax consolidated groups and foreign multinational corporations conducting business in Australia. The principles outlined can be applied to a corporation of any size if tailored appropriately. The main objective of the guidance is to help organizations to:

  • develop or improve their own tax governance and internal control framework;
  • test the robustness of the design of their framework against ATO's best practice benchmarks;
  • understand how to demonstrate the operational effectiveness of their key internal controls to stakeholders, including the ATO.

Source: ATO

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