Australian Taxation Office considers outsourcing tax assurance for large businesses

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Australian Taxation Office considers outsourcing tax assurance for large businesses

ato100x90.png

The Australian Taxation Office is setting up a pilot programme which could result in auditors of large businesses with turnover of between A$100 million ($95 million) and A$5 billion conducting assurance on behalf of the tax authorities.

The external compliance assurance process (ECAP) pilot will look at the effectiveness and viability of using existing registered company auditors to conduct assurance on factual matters.

“If effective, this approach will reduce compliance costs and red tape for business taxpayers and ensure that the right amount of tax is being paid in Australia,” an ATO statement said.

The ATO wants to be able to offer businesses the choice of using their own auditors to do the work or leaving it to the tax authorities.

The ECAP project began in November 2013 as a broad consultation with taxpayers and other stakeholders, with the work being split between three working groups: role and fit of tax advice; auditor independence and materiality and assurance.

The role and fit of tax advice group highlighted concerns such as threats to independence, cost and timing and when a matter in the ECAP process became contestable.

The members of the auditor independence group raised issues such as when the auditor’s firm has also provided the tax advice in a matter that is part of the ECAP process and the provision of an opinion over tax advice.

“This could open a discussion over whose view is correct and could require us to set up a review-the-reviewer process, which we seek to avoid,” the ATO said.

The materiality and assurance group were concerned about the risk of the ATO’s thresholds and risk metrics being disclosed in an ECAP process, and differences between materiality standards.

The pilot is expected to be in two phases under an agreed-upon process engagement. The first will be a small group that will test the design of an ECAP programme and work through any flaws, and will involve an ATO control group. The proposal is to limit the first phase to about 32 clients (16 ATO cases and 16 ECAP cases) with the clients spread being across the Big 4 and four tier 2 firms to start with.

“Depending on the results of the first phase, the second phase would involve a much broader pilot or integration into our ongoing compliance work,” the ATO said.

more across site & shared bottom lb ros

More from across our site

Imposing the tax on virtual assets is a measure that appears to have no legal, economic or statistical basis, one expert told ITR
The EU has seemingly capitulated to the US’s ‘side-by-side’ demands. This may be a win for the US, but the uncertainty has only just begun for pillar two
The £7.4m buyout marks MHA’s latest acquisition since listing on the London Stock Exchange earlier this year
ITR’s most prolific stories of the year charted public pillar two spats, the continued fallout from the PwC Australia tax leaks scandal, and a headline tax fraud trial
The climbdowns pave the way for a side-by-side deal to be concluded this week, as per the US Treasury secretary’s expectation; in other news, Taft added a 10-partner tax team
A vote to be held in 2026 could create Hogan Lovells Cadwalader, a $3.6bn giant with 3,100 lawyers across the Americas, EMEA and Asia Pacific
Foreign companies operating in Libya face source-based taxation even without a local presence. Multinationals must understand compliance obligations, withholding risks, and treaty relief to avoid costly surprises
Hotel La Tour had argued that VAT should be recoverable as a result of proceeds being used for a taxable business activity
Tax professionals are still going to be needed, but AI will make it easier than starting from zero, EY’s global tax disputes leader Luis Coronado tells ITR
AI and assisting clients with navigating global tax reform contributed to the uptick in turnover, the firm said
Gift this article