Tax Risk Management

"Tax Risk Management" goes far beyond dealing with the Australian Taxation Office ("ATO") when a tax audit or review is underway. Surely, cooperating with the ATO is critical in ensuring an effective outcome, but managing tax risks involves way back to before a transaction is being instigated.

Imagine that the ATO knocks on your door today, how well do you think your books and tax returns will be able to stand up to scrutiny? Even if your tax position is supported by "very strong legal advice", many business transactions fail a tax audit or review for the reason that they did not have one or more of the following:

• An effective tax risk management framework
• A sound assessment of their greatest tax exposures
• Inadequate substantiation and record keeping (eg business log books, depreciation schedules, fixed assets register etc)
• Adopting a technically "grey" tax strategy without taking up a "reasonably arguable position"

It is important to note that the above points apply equally to third party transactions as well as internal/intercompany ones. Often it is the intercompany transactions that are forgotten by the businesses as potentially tax critical.

In the event that the ATO does not agree with your tax position taken (even if simply because you did not keep proper records), and if you do not have a reasonably arguable position, you could be up for General Interest Charge on any income tax shortfall plus administrative penalty of up to 75%.

To help you manage your tax risks, Aspiron Consulting Group can help you get the job done for the following:

• Developing a sound tax risk management framework
• Determining the areas where major tax risks could arise
• Reviewing substantiation and records kept by your business to ensure adequacy
• Preparing a Reasonably Arguably Position paper on unclear tax technical areas.
• Liasing with the ATO in preparation for, and during an ATO review or audit

The accounting Associates of Aspiron Consulting Group Pty Ltd are all Members of the Institute of Chartered Accountants in Australia and Registered Tax Agents with the Australian Government.