In the Budget report, the Government announced plans to establish a statutory requirement for senior accounting officers of major corporates which will hold them personally liable to a penalty if they get tax computations wrong.
It said the measures are designed to ensure that adequate controls are in place and help businesses reduce the opportunity for evasion, avoidance or non-compliance.
Ernst & Young insurance tax partner Matthew Taylor says the new requirement could be a significant burden for insurance companies where there are vast amounts of data from which life tax computations are derived.
He says: “Accounting systems and controls are geared up to levels of materiality relevant to financial reporting. The further level of accuracy required for tax is usually overlaid substantively by the tax department.
“This will create a large compliance burden for life insurance companies – and also for the senior individual who takes on such a role.”