As the ATO undertakes GST Assurance Reviews, are your controls, systems and data up to scratch?

Katerina Siamatas

As part of the various Goods and Services Tax (GST) Assurance Reviews (or Combined Assurance Reviews) being undertaken by the Australian Taxation Office (ATO), entities need to provide objective evidence that their GST control framework is appropriately designed and is operating effectively.

However, based on recent assignments that Crowe has been involved in, we have identified many key errors being made by clients.

ATO GST Assurance Reviews

Through the GST Assurance Review program, the ATO is seeking to obtain assurance that:

  • An appropriate GST risk and governance framework exists and is applied in practice.
  • None of the GST risks flagged to the market are present.
  • The GST outcomes of atypical, new or large transactions are appropriate.
  • The various streams of economic activity and how they are treated for GST purposes can be understood and explained (which includes applying the GST analytical tool that has been especially developed for this purpose).

Further, when reviewing an entity’s tax control framework for GST purposes, the ATO will consider three fundamental GST controls, as the design of these controls directly influences the likelihood that the correct amount of GST is remitted or refunded. These three fundamental controls are:

  1. The periodic tax controls testing program.
  2. Data controls.
  3. The documented GST control framework.

The ATO’s GST Assurance Reviews focus on the last complete financial year and include systems, as well as Business Activity Statement (BAS) walk-throughs. Data and transaction testing are also undertaken, usually focusing on three consecutive BAS periods, to determine whether GST outcomes are appropriate.

Next steps

The ATO has previously released a GST governance data testing and transaction testing guide, which provides very detailed information on how the justified trust methodology should be applied to help conduct a self-review of an entity’s tax control framework for GST purposes. It also explains how to undertake data and transaction testing to ensure business systems are creating, capturing and correctly reporting GST.

A self-review should also include a review of GST systems and records to ensure any errors are identified before the ATO commences any GST Assurance Review or another type of review. Should any errors be identified, these can be included in a written voluntary disclosure to the ATO (ideally prior to the commencement of the ATO’s review).

If you require assistance with undertaking an objective assessment of your GST control framework to ensure its design is appropriate and that it is operating effectively or you require a review of your current systems from a GST perspective, please speak to your adviser or contact the Crowe Tax Advisory team.