Big business tax compliance is improving, but challenges remain: RSM

Last Thursday (18 September), the ATO released income tax and GST performance metrics for Australia’s Top 100 and Top 1000 organisations.

The data revealed that assurance ratings had improved year on year as higher ATO scrutiny and resourcing delivered corporate compliance shifts.

“It’s been almost a decade since the ATO established the Tax Avoidance Taskforce in 2016, putting Australia’s largest public companies under more intense scrutiny with measures like regular assurance reviews,” Sam Mohammad, RSM Australia national head of tax services, said.

“These latest findings from across the Top 100 and Top 1000 income tax and GST assurance programs reveal that while improvements have been made across these groups, there are still some areas of concern.”

The data revealed that high ratings for GST assurance were achieved by 38 per cent of the Top 100 firms, and 41 per cent of the Top 1000 firms at their latest reviews.

Over two-thirds (64 per cent) of Top 100 firms achieved a high assurance rating in 2025, up from 59 per cent in 2024. For Top 1000 groups, only 26 per cent achieved a high assurance rating for income tax, while 63 per cent achieved the ‘medium’ rating.

Mohammed said that the comparatively high compliance rates observed in the Top 100 group were the result of sustained ATO engagement.

“While both groups saw stability in levels of assurance for income tax, the top-tier businesses continue to do better, which makes sense considering the resources available to Top 100 businesses, the significant efforts by the ATO to engage with them and the ATO’s long-standing efforts to lift the performance of Top 100 businesses in regards to their tax-related systems, people, processes and technologies,” Mohammad said.

“As these higher expectations continue to yield improvement, the focus is likely to extend more intensely to the next ranks of high-earning businesses and those that may form part of those groups in the future.”

Within the Top 100 groups, the financial services sector had high overall assurance ratings while manufacturing, construction and agriculture companies lagged.

Mohammed said that the expansion of funding for the ATO’s Tax Avoidance Taskforce in the 2025–26 budget was indicative of authorities’ continued focus on bolstering tax compliance.

“Looking forward, I would suggest that the areas of continued focus will move away from an initial emphasis on documentation of tax policies towards ensuring businesses have both controls and regular testing for those controls to minimise errors and risks across income tax and GST,” he said.

“For any business, but especially those high-growth businesses likely to come under additional scrutiny, making sure you are designing and testing controls is critical.”

Transfer pricing rules were also an evolving area of compliance as Australian authorities pitched in to global efforts against corporate profit shifting and base erosion. Mohammed urged large multinational firms to get up to speed with the new rules to ensure they weren’t caught out.

“It’s imperative that any business that currently has exposure to international tax systems and offshore activities, or plans to in the future, understands their reporting obligations or risk falling foul of the ATO.”

“In terms of international tax and transfer pricing, this means being aware of changes in international tax law and the latest developments to address the continued Base Erosion and Profit Shifting (BEPS) initiatives, including the Pillar 2 “global minimum tax” framework and Public Country by Country Reporting.

“The ‘debt deduction creation rules‘, which can deny interest deductions relating to certain related party debt, are also an area of uncertainty, particularly regarding the extent to which taxpayers have to trace the original purpose of their debt financing, even where it has been on foot for some time.”