Tax Compliance Verification Skill

Systematic verification capability for all tax calculations, rates, thresholds, and legislative references produced by the Australian Tax Optimizer platform.

When to Use

Activate this skill when:

• Reviewing or modifying any tax calculation in lib/analysis/*.ts

• Verifying AI prompt outputs in lib/ai/*.ts

• Validating API responses from app/api/audit/*.ts

• Before presenting any tax recommendation to users

• After modifying tax rates, thresholds, or formulas

• During system integrity audits

Verification Checklist

1. Rate Accuracy

Verify every tax rate against ATO publications:

Check Source Action

Rate matches ATO.gov.au ato.gov.au/rates Compare exact value

Correct FY applied Legislation commencement dates Check effective dates

Fallback rate documented Code comments Verify fallback is current FY

Rate sourced dynamically getCurrentTaxRates()

Prefer dynamic over hardcoded

2. Legislative Reference Accuracy

Verify every citation is correct:

Check Standard Example

Act name correct Full name with year ITAA 1997, not "Income Tax Act"

Division correct Division number Division 355, not "R&D Division"

Section correct Section number with subsection s 355-25(1)(a)

Ruling current Not withdrawn or superseded TR 2019/1 (check ATO legal database)

3. Calculation Formula Verification

For every mathematical formula:

Check Process

Formula matches legislation Trace formula to specific section

Rounding rules correct ATO rounding guidelines (generally to nearest cent)

Order of operations Verify parentheses match legislative intent

Edge cases handled Zero, negative, null, very large values

Entity type considered Company (25%/30%), trust (marginal), individual

4. Financial Year Handling

Verify FY logic is correct:

Check Expected

FY format FY2024-25 (not FY2025 or 2024-25 )

FY boundaries 1 July to 30 June (not calendar year)

FY calculation month >= 7 ? currentYear : currentYear - 1

Rate-to-FY mapping Rate applied to correct FY

Amendment period 2 years (simple) or 4 years (company/trust)

5. Entity Type Handling

Verify entity-specific logic:

Entity Tax Rate Loss Rules Write-Off

Company (base rate) 25% COT/SBT (Div 165) s 328-180 ($20K)

Company (standard) 30% COT/SBT (Div 165) s 328-180 ($20K)

Trust Beneficiary marginal rates SBT only s 328-180 ($20K)

Individual 0-45% + Medicare 2% N/A N/A

Partnership Partner marginal rates N/A s 328-180 ($20K)

Rate Verification Table (FY2024-25)

Income Tax Rates

Rate Value Legislation ATO Source

Company (base rate entity) 25% ITAA 1997, s 23AA ato.gov.au/rates/company-tax

Company (standard) 30% ITAA 1997, s 23 ato.gov.au/rates/company-tax

Base rate entity threshold < $50M turnover ITAA 1997, s 23AA ato.gov.au/business

R&D Tax Incentive

Rate Value Legislation ATO Source

Refundable offset (< $20M) 43.5% (25% + 18.5%) ITAA 1997, s 355-100 ato.gov.au/rnd

Non-refundable offset (>= $20M) 33.5% (25% + 8.5%) ITAA 1997, s 355-100 ato.gov.au/rnd

Minimum expenditure $20,000 ITAA 1997, s 355-25(1) ato.gov.au/rnd

Registration deadline 10 months post-FY Industry Research Act business.gov.au/ausindustry

Expenditure cap (clinical) $150M ITAA 1997, s 355-100 ato.gov.au/rnd

Division 7A

Rate Value Legislation ATO Source

Benchmark interest FY2024-25 8.77% ITAA 1936, s 109N ato.gov.au/div7a

Benchmark interest FY2023-24 8.33% ITAA 1936, s 109N ato.gov.au/div7a

Benchmark interest FY2022-23 4.52% ITAA 1936, s 109N ato.gov.au/div7a

Unsecured loan max term 7 years ITAA 1936, s 109N ato.gov.au/div7a

Secured loan max term 25 years ITAA 1936, s 109N ato.gov.au/div7a

Small Business Concessions

Rate Value Legislation ATO Source

Instant write-off threshold $20,000 ITAA 1997, s 328-180 ato.gov.au/depreciation

Simplified depreciation pool 15% first year, 30% subsequent ITAA 1997, s 328-185 ato.gov.au/depreciation

SB turnover threshold < $10M ITAA 1997, s 328-110 ato.gov.au/small-business

Deduction Rates

Rate Value Legislation ATO Source

Home office (fixed rate) 67c/hour PCG 2023/1 ato.gov.au/home-office

Vehicle (cents per km) 85c/km TD 2024/3 ato.gov.au/vehicle

Vehicle max km 5,000 km ITAA 1997, s 28-25 ato.gov.au/vehicle

FBT rate 47% FBTAA 1986, s 5B ato.gov.au/fbt

SG rate 11.5% SGA 1992, s 19 ato.gov.au/super

Process

Step 1: Extract

Identify all tax calculations, rates, and thresholds in the target code:

• Hardcoded numeric values

• Rate variables and constants

• Formula expressions

• Conditional logic based on thresholds

• Legislative references in comments or strings

Step 2: Cross-Reference

For each extracted value:

• Look up current ATO publication

• Verify value matches for applicable FY

• Check if rate is dynamic or hardcoded

• Verify fallback values are current

Step 3: Validate

For each calculation:

• Trace formula to legislative source

• Test with known good inputs/outputs

• Test edge cases (zero, null, boundary values)

• Verify entity type handling

• Check rounding behaviour

Step 4: Flag

Categorise findings:

• PASS: Calculation verified correct

• WARN: Calculation works but has edge case risks

• FAIL: Calculation produces incorrect results

• MISSING: Required calculation not implemented

Step 5: Certify

Generate verification report:

• List all checks performed

• Document pass/fail status for each

• Provide specific remediation for failures

• Sign off on overall engine status

Output Template

<compliance_verification> <target>Engine or file being verified</target> <date>YYYY-MM-DD</date> <financial_year>FY2024-25</financial_year>

<checks> <check name="R&D offset rate"> <status>pass|warn|fail|missing</status> <expected>0.435</expected> <actual>Value found in code</actual> <legislation>ITAA 1997, s 355-100</legislation> <source>ato.gov.au/rnd</source> <notes>Additional context</notes> </check> </checks>

<summary> <total_checks>N</total_checks> <passed>N</passed> <warnings>N</warnings> <failed>N</failed> <missing>N</missing> </summary>

<certification> <status>certified|remediation_required</status> <confidence>0-100</confidence> </certification> </compliance_verification>

Best Practices

• Always verify against primary sources - ATO.gov.au, not secondary commentary

• Check effective dates - Rates change annually, verify FY applicability

• Test boundary conditions - $19,999 vs $20,000 for instant write-off

• Document assumptions - If a rate cannot be verified, document why

• Flag dynamic vs hardcoded - Prefer dynamic rates from getCurrentTaxRates()

• Consider entity type - Same legislation applies differently to companies, trusts, individuals