The Australian Taxation Office (ATO) has announced that key taxpayer engagement (KTE) approach is coming soon. According to the ATO KTE is currently being piloted with a small number of clients and will rollout to approximately 130 public groups, currently described as higher consequence for income tax, GST or excise. The rollout will be gradual and take place as other engagement activities, such as pre-lodgment compliance reviews, are completed.

The KTE is a tailored engagement approach where services and assurance checks are based upon the risk profile of the client. Improved compliance behaviour and greater co-operation will result in enhanced services and a streamlined approach to assurance. Less compliant behaviour and less cooperation will lead to reduced services and greater assurance checks.

According to the ATO, KTE is currently being piloted, and will roll out to approximately 130 higher consequence identified clients, with most to be put in place in the 2016-17 year. Rollout will be gradual and subject to discussion with public businesses. AT furthermore states that it plans for the rollout to take place as other engagement activities (for example, current pre-lodgment compliance reviews) finish and that the commencement of the income tax accounting period is an indicative starting point for KTE.

How will the KTE approach be different?

ATO staff from different tax areas will work together to ensure:

·   information obtained from the taxpayer by one area is shared and aggregated to give all staff a more complete picture of the business

·   engagements for each tax are coordinated to minimise the impact on the taxpayer

·   joint engagement occurs where it makes sense, so we only ask once for certain information.

Engagement will be continuous and won’t be ATO product driven. For example, rather than sending the taxpayer a letter to inform them that ATO is going to undertake a review of a specific issue, then conducting the review to meet ATO’s timeframes and outcomes, the KTE team will raise the issue with the taxpayer and plan how it can be best addressed in a way that minimises the impact on the taxpayer’s business.

ATO concludes by stating that it is aware of concerns from existing Annual compliance arrangement (ACA) taxpayers that KTE might be replacing the ACA product, resulting in a loss of benefits and services with respect to the agreements in place. Reflecting this feedback, ACAs will be retained within the KTE overarching framework.

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