To identify taxpayers at risk of underpaying GST, the ATO continuously reviews data from a variety of sources that are both publicly available and also contained in returns submitted to it such as Business Activity Statements (BAS) and income tax returns. Based on this review, the ATO may:
- issue a letter recommending that a 'GST health check' be carried out on GST systems and processes; or
- commence formal compliance activity, which can include, in order of severity, an Assurance Review (which generally requires completion of a questionnaire), Risk Review (of perceived specific risk areas) or a comprehensive Audit.
Depending on the perceived level of non-compliance, we have recently observed an increased use by the ATO of Computer Assisted Verification testing of GST sales and purchase data to identify GST underpayments.
Taxpayers can reduce their risk of ATO compliance activity commencing or escalating by undertaking a self-review of their GST systems and processes to identify and remedy gaps and realise opportunities. Where the ATO has already commenced activity, a proactive and cooperative approach will help mitigate its length and severity.
If you would like to learn more, please contact me or your local KPMG indirect tax adviser.