Tax Compliance in the Victorian Public Sector

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Tax Compliance in the Victorian Public Sector

• 7 August 2001

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Tax Compliance in the VPSProgram

• Launch of Tax Compliance Framework
• Tax Compliance Framework requirements
• ATOs Cooperative Compliance methodology and
  Compliance Activities
• Break
• Preparing for Reviews

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Tax Compliance Framework -Overview

• Jeff Rosewarne, Acting Deputy Secretary
• Budget and Financial Management

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(No Transcript)
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Tax Compliance Framework

• Mario Abela, Director Financial Policy and
  Compliance

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Introduction

• Tax Compliance is a major priority for the VPS
  since it became the taxpayer of a major
  transactions tax (GST) for the first time
• The Framework has been developed to address tax
  compliance risks
• It is an assurance mechanism that sets the
  standard for tax compliance across Victorian
  Public Sector entities - general government,
  public trading enterprises and public financial
  institutions

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Key Feature

• Primary accountability of taxation compliance
  vested in individual VPS entities
• Departments perform portfolio level assurance
  role
• DTF perform whole-of-government monitoring role

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Approach to Accountabilities, Responsibilities
and Roles
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Accountability Framework
reporting/relationship lines
TCF monitoring/quality assurance
scope
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Contents

• Ministerial Directions (10.14)
• high level standards issued pursuant to the
  Financial Management Act 1994
• Directions
• compliance with Federal taxation requirements
• strategic ruling requests and issues, and
  non-compliance and major ATO/ACCC interests - DTF
  notified via departments
• compliance with the Framework
• compliance with requirements for annual
  certification of compliance
• annual review of taxation compliance

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Contents (2)

• Rules and Monitoring Arrangements
• lower level detailed concepts to promote best
  practice taxation compliance
• many rules are simply good financial management
  practice
• binding on general government sector entities
• recommended for Public Trading Enterprises and
  Public Financial Institutions (must have
  practices that are at least equivalent to the
  Rules)

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Contents (3)

• Administrative Guidelines
• illustrates practical operation of the framework
  - describes accountabilities, roles, processes

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Contents (4)

• Tax Compliance Review Checklist
• assist VPS entities to meet their tax compliance
  obligations and to perform a monitoring and
  assurance function
• designed as an independent review of controls
  and risk management mechanisms
• used for annual taxation compliance reviews by
  individual entity

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Processes

• Certification and Reporting
• annual certification of compliance and reporting
  by entities to portfolio ministers (via
  departments)
• portfolio summary certification and reporting by
  department to Minister for Finance (via DTF)
• certification of compliance with Framework ie
  with Directions, Rules and annual tax compliance
  review
• to include instances of non-compliance and/or
  major ATO/ACCC interest

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Processes (2)

• Monitoring
• departments to determine exact form of monitoring
• minimum - portfolio summary certification
  including issues of non-compliance or significant
  ATO/ACCC interest

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Processes (3)

• Reviews
• annual taxation compliance review (by entity)
• assurance reviews including working together
  with the Australian Taxation Office (by
  portfolio)
• annual review of portfolio taxation compliance
  assurance activities (by DTF)

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Processes (4)

• Issues Management
• simple and entity specific issues - entity
• portfolio issues - departments
• strategic and Systemic issues - DTF
• Knowledge Management
• at entity level
• at portfolio level
• at whole of government levels

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Implementation

• Implementation in 2001-02. First certificate of
  compliance for year ending 30 June 2002
• Reporting to DTF will be in line with other
  annual financial reporting time lines
• Interim report (Jan 2002) - progress of
  implementation by departments (portfolio role)
  and reporting of any major risks identified

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Conclusion

• Working co-operatively
• Three tiered structure
• Framework is not a substitute for primary
  accountability for taxation compliance

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Thank You