Navigating the latest in ATO compliance and capital management: Insights from PwC’s November Tax Briefing
PwC Australia provided a comprehensive update on critical tax and compliance issues, tailored for tax and finance professionals – the monthly Tax Briefing hosted by Clementine Thompson, Transfer Pricing Partner at PwC and Patricia Muscat, Tax Director at PwC.
Patricia Muscat delivered an overview of recent tax developments, including an update on the State of key tax Bills before Federal Parliament, including the Bills to implement Pillar Two in Australia, public country-by-country reporting, and Build to Rent tax concessions. She highlighted the ATO’s 2022-23 Corporate Tax Transparency Report, which now covers nearly 4,000 entities with a combined tax payable of almost $100bn, reflecting a significant increase due to a lower threshold that now applies for Australian private entities. Patricia also discussed the ATO’s findings on public and multinational business disputes, underscoring the ongoing focus on global profit shifting risks, and the status of key tax cases dealing with royalties.
The event featured a panel discussion on ATO compliance updates with experts from PwC’s Melbourne office. Matt Strauch, Anita Luke, and Hang Vo addressed key compliance issues for 2024 tax returns and year-end financial reporting, and the ATO findings from recent Combined Assurance Reviews. Matt emphasised the importance of robust tax governance frameworks, highlighting the ATO’s expectations for documented and tested controls. He provided specific recommendations for updating these frameworks and addressing common shortfalls.
The panel also explored GST compliance, with Matt identifying key risk areas such as inadvertent errors, financial services, GST classification, property, and recipient-created tax invoices. He stressed the need for objective evidence to support GST positions and the importance of consistent documentary evidence.
Anita and Hang highlighted a range of income tax issues that taxpayers should be focusing on when preparing their 2024 income tax returns or for year-end, including:
- the new thin capitalisation and new debt deduction creation rules, noting significant new disclosures in the 2024 International Dealings Schedule and the change to the transfer pricing rules that require cross border related party debt to be an arm’s length quantum
- a resurgence in interest in the hybrid mismatch rules following the ATO finalising Tax Determination TD 2024/4
- how to approach the ongoing uncertainty regarding the definition of royalty for tax purposes, and
- for 31 December taxpayers, the work required to get comfortable on the impact of Pillar Two for financial reporting purposes.
In the final segment, Paul Abbey and Kira Ip discussed capital management strategies, focusing on recent legislative changes, case law updates and market developments. They emphasised the need for effective communication and collaboration between tax and finance teams to navigate these changes successfully and recommended engagement with the ATO where appropriate for advance rulings.
This briefing underscored the importance of staying informed and proactive in managing tax and compliance obligations, providing valuable insights and practical advice for tax and finance professionals.
You can watch this virtual event on demand now.
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James O'Reilly
Partner, Brisbane Tax Leader & Global Energy, Utilities and Mining Tax Leader, PwC Australia
