CA ANZ seeks further improvements to redesigned tax transparency code

The Board of Taxation’s modernisation of the Voluntary Tax Transparency Code (VTTC) has been welcomed by CA ANZ, yet it believes further refinements are needed.

The VTTC was modernised by the Board of Taxation to align it with the global tax transparency standard, GRI 20: Tax 2019 and Australia’s new public country-by-country reporting (CBC) regime.

According to the professional accounting body, the VTTC needed more as it was crucial that it remained “practical, proportionate, and appropriately harmonised” with the tax transparency landscape, which continued to rapidly change.

In a submission to the Board of Taxation, Susan Franks, CA ANZ tax, superannuation and financial services leader, said CA ANZ supported the intent of the draft VTTC to promote transparency, comparability and public confidence in the tax affairs of large businesses.

“We particularly welcome the alignment with global standards such as GRI 207: Tax 2019 and the flexibility afforded to businesses in tailoring disclosures…However, we believe further refinements are necessary,” Franks said.

In the submission, CA ANZ’s proposed recommendations included:

· The encouragement of medium entities to adopt the VTTC, as the board may want to consider reducing the disclosures required for these entities.

· Including the Australian Accounting Standards Board guidance in the Draft Appendix of the Tax Transparency Code, as it was an important element of the VTTC to ensure consistency and comparability of information.

· The reconciliation to ATO corporate tax transparency disclosure should be reclassified as an optional element, rather than a minimum standard, to allow for practicality and flexibility based on timing and relevance.

· The disclosure of subsidiaries in a consolidated group should be streamlined in the case where a non-public CBC reporter prepared a consolidated entity disclosure statement, and the reporter should be able to provide a link to the CEDS instead of providing a list of all the material subsidiaries in the group.

· The ATO should enhance its VTTC webpages with more compelling messages on the benefits of tax transparency to boost participation.

According to Franks, CA ANZ also believed entities captured in the public CBC reporting regime should not be included in the ATO corporate tax transparency disclosures.

“In light of the Board’s work towards aligning the VTTC with other mandatory tax transparency requirements, CA ANZ is of the view that entities included in the public CBC reporting regime should be excluded from the ATO corporate tax transparency disclosures to reduce the red tape burden,” she said.

“Given the quality of the information provided under the public CBC reporting regime, the purpose for publishing the ATO corporate tax transparency data in respect of those entities is redundant and the differences in numbers provided only causes confusion for users.”

It was noted that the professional body did not support the idea of linking VTTC participation to the award of Commonwealth government contracts, as many smaller private businesses did not need, or want to participate in the VTTC.

This was attributed to the fact that it would unfairly penalise those businesses for not participating in a regime that was supposed to be voluntary.

Franks said that once the final redesign of the VTTC was available, CA ANZ requested that the board share its feedback with the government when it reported on the final design.