ATO's Streamlined Assurance Reviews - latest developments and 'next actions'

The ATO has now completed 600 Streamlined Assurance Review (SAR) reports with just under 300 reviews in progress (including taxpayers who have been notified of reviews but that have not yet commenced).

Another 100 taxpayers will soon be notified and reviews commenced with the SAR program now scheduled for completion by December 2020, slightly later than the original target completion date of 30 June 2020. The rationale for the later scheduled completion date is to allow ATO review teams additional time to complete the reviews which, it is hoped, will allow taxpayers to achieve higher levels of assurance.

The ATO has now also commenced GST SAR reviews and will complete 320 by the end of 2023 with an expectation ATO review teams will complete about 80 per year over this period.

‘Next Actions’ Program

The ‘Next Actions’ program is now underway with the ATO initially focused on taxpayers who received the following ratings in their SAR report:

• Overall ‘Low Assurance’ rating; or
• Overall ‘Medium Assurance’ (with at least one 'red flag')

The ATO’s ‘next actions’ program is starting with those taxpayers who were reviewed during the early stages of the SAR Program (i.e. from July 2016). Therefore, those taxpayers who received an overall low assurance or overall medium assurance (with at least one red flag) can expect to be contacted shortly (if they haven’t already). A 'red flag' is reflective of genuine concerns and should be treated seriously. The ‘next actions’ team is separate from the ‘Top 1000’ team and will be resourced out of the ATO’s operational sites (broadly, the traditional review and audit teams).

The ATO will develop its strategy for overall medium assurance taxpayers over the coming months.

ATO engagement strategy

The ‘next action’ engagement strategy can be broadly described as follows: 

1. initial contact through an informal approach seeking more information on those areas of lower assurance;
2. upon obtaining that information, the ‘next steps’ team will review and determine their approach which may include concluding that a higher level of assurance is supported; and
3. where concerns remain it can be expected that the ATO will move towards a more formal review, an approach which may include an audit.

What to do now?

If you have received an overall low assurance rating or a 'red flag' in a Streamlined Assurance Review Report, it is highly recommended that you develop a strategy for engagement with the ATO 'next actions' team.

Early steps you might wish to take is to commence compiling supporting evidence to assist the ATO next action team reassess your rating. It may also be appropriate to consider penalty mitigation strategies prior to the ATO commencing the 'next action' review.

Paul McCartin

Partner, PwC

Tax Controversy & Dispute Resolution