Answer to Question #78961 in Finance for Liam Johnston

Question

Why is it necessary to establish an accounting system to manage the taxation lodgement process?

Answer 1

Effective tax governance helps your business comply with tax administration obligations. Operating without required tax registrations or failing to lodge returns on time will attract our attention and potentially expose your business to interest and penalties.
It's important that you understand your obligations, including any registration and reporting requirements, both for tax and other regulators. Regulatory and tax obligations vary according to the type of entity structure (trust, company, partnership or super fund) you choose.
Your business should have procedures to capture all tax administration obligations, and review them annually for any changes that impact your business. For tax registrations, effective tax governance processes include:
• annual review of all tax and corporate registrations to identify gaps or lapsed registrations
• comprehensive payroll and superannuation procedures for registering new and departing staff
• defined accountabilities for ensuring registrations are complete
• assistance from a tax adviser for new, complex or unfamiliar registrations.