With tax functions expected to do more with less, it can be daunting to undertake GST data testing, let alone testing that covers the capture, collation and reporting of GST to the ATO, comprehensively.
Luckily in a recent guide titled “Guide to Independent Data Testing by Third Party Advisors” (the Guide), the ATO provides some useful guidance on engaging independent third parties to undertake the GST data testing often covered in the ATO’s Top 100 and 1,000 GST assurance reviews.
Among other things, the main take-aways from this Guide are as follows:
- The ATO expects taxpayers to undertake regular data and transaction testing, to ensure their GST is being reported accurately on a periodic basis. In obtaining assurance to this end, the ATO may undertake the data and transaction testing itself (under CAR), or review the data testing undertaken by an independent third party.
- Should a taxpayer engage a third-party advisor to undertake independent data testing, the ATO expects the testing to be aligned to their GST Governance, Data Testing and Transaction Testing Guide.
…the ATO may undertake the data and transaction testing itself (under CAR), or review the data testing undertaken by an independent third party.
3. The ATO outlines the conditions that need to be satisfied before data testing can be undertaken successfully by a third party. These include:
- The taxpayer must request that the data testing be conducted by the independent third party.
- The third party must have the capabilities, experience and technology to undertake the data testing. They must also be able to complete the testing within the timeframe agreed with the ATO.
- The third party must be independent. To this end, the ATO outlines scenarios that may/may not impact a third party’s independence in the event they undertake the data testing. These scenarios can be found in the section marked “Independence of third-party advisor”.
- The scope, methodology and testing plan, must be agreed to with the ATO before commencement.
- The taxpayer prefers to engage a third party, and deems the additional compliance cost in doing so, manageable and appropriate.
- The taxpayer and third party must collaborate with the ATO as part of this process, and share findings from the review.
- Whilst the process will vary depending on a taxpayer’s individual circumstances, the ATO provides guidance on how that process will typically operate.
- The report of findings must provide enough information for the ATO to gauge the level of testing, findings and actions arising from the data testing engagement.
Overall, the Guide provides useful information for both taxpayers and independent advisors engaged to undertake GST data testing.
And if you’re looking for an independent advisor to undertake in-depth GST data testing, BTG has the expertise, staff and technology. Our staff come from diverse backgrounds including tax advisory, accounting, audit and compliance. Combined, these skillsets serve to identify, quantify and deliver GST risk insights to taxpayers preparing or undergoing a GST assurance review.
1The ATO expects taxpayers to undertake regular data testing , to ensure their GST is being reported accurately on a periodic basis.
2 Should a taxpayer engage a third-party advisor to undertake independent data testing, the ATO expects the testing to be aligned to published guidelines.
3 The ATO’s guide titled ‘Guide to Independent Data Testing by Third Party Advisors’ provides useful guidance on engaging independent third parties and the conditions that need to be satisfied.
