In its report,The next lens: Perspectives on emerging legal, regulatory and commercial change, Corrs Chambers Westgarth has found that the ATO’s scrutiny of businesses and multinationals is not slowing down and is instead showing a greater commitment and willingness to litigate if it has a position that warrants it, as seen inBendelandPepsiCo.
The latest figures from the ATO’s 2024–25 Public and multinational business disputes and outcomes findings reportfound that it secured about 64 per cent of the disputed amount it considered payable, signalling a 36 per cent total settlement variance.
The Tax Office’s findings also revealed that it directed 70 per cent of its income tax audits at global profit shifting, with 72 per cent of settlements occurring before or during the audit phase, 17 per cent resolved at the objection phase and 11 per cent proceeding to litigation.
“Tax is no longer a background technical function – it has become a visible proxy foreconomic contribution, commercial substance and risk appetite, with implications that extend well beyond revenue outcomes,” the report reads.
“While the courts have continued to recognise the legitimacy of tax planning within the boundsof the law, the ATO’s approach reflects a materially lower tolerance for structuring perceived to lackcommercial substance.”
“The ATO has shown an increased willingness to deployPart IVAand the Diverted Profits Tax (DPT), complemented by a steady pipeline of Taxpayer Alerts and Practical Compliance Guidelines signalling a sustained uplift in compliance intensity.”
In addition, upcoming obligations such as the OECD Pillar Two regime and country-by-country (CbC) reporting“collectively reflect a move away from tax outcomes being assessed solely through regulatory processes, and towards tax positions being exposed to public and stakeholder scrutiny,” the firm said.
Changes such as the broadening of thenon‐resident CGTregime and tighter interest deductibility underthin capitalisationare also evidence of the ATO’s tightening grip, it noted.
“Over the next 12 to 24 months, organisations should expect sustained and heightened ATO assurance and compliance activity, with particular scrutiny of governance frameworks, data quality, technical positions and the documentation supporting key decisions.”
It also noted that the federal budget revealed sustained and increasingly co-ordinated scrutiny of multinationals and cross-border arrangements.
In a statement provided to Accounting Times, Corrs’ head of tax controversy, Angelina Lagana, said this was “heightening the importance of defensible tax positions, robust governance frameworks and clear alignment between tax outcomes and broader corporate narratives”.
“These measures collectively reflect a move away from tax outcomes being assessed solely through regulatory processes, and towards tax positions being exposed to public and stakeholder scrutiny. This involves looking beyond legal considerations for tax compliance, considering broader impacts like reputation, commercial implications and public profile,” Lagana said.
Deliberate, consistent and defensible external tax narratives are crucial, Lagana said, and these narratives should be co-ordinated with underlying positions, backed by transfer pricing evidence, and embedded in governance frameworks that can withstand regulatory and public scrutiny.
“Equally important is maintaining strong tax governance and escalation frameworks to ensure that tax teams are appropriately resourced and emerging issues are identified and addressed early,” she said.
“Organisations that invest in this capability now will not only mitigate regulatory and dispute risk, but will also be better positioned to respond confidently to future reform and identify legitimate structuring opportunities, as the landscape continues to shift,” the report reads.
“The message is clear: in an era of heightened enforcement, greater transparency and rapid regulatory change, a proactive and well-governed approach to tax risk is no longer optional – it is a strategic necessity,” it reads.
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