tax-compliance-verification

name	tax-compliance-verification
description	Systematic verification of tax calculations, rates, thresholds, and legislative references against ATO publications. Ensures every output from the platform is legislatively correct and defensible.

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Ruling current	Not withdrawn or superseded	TR 2019/1 (check ATO legal database)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

  
    certified|remediation_required
    0-100
  

Best Practices

1. Always verify against primary sources - ATO.gov.au, not secondary commentary
2. Check effective dates - Rates change annually, verify FY applicability
3. Test boundary conditions - $19,999 vs $20,000 for instant write-off
4. Document assumptions - If a rate cannot be verified, document why
5. Flag dynamic vs hardcoded - Prefer dynamic rates from getCurrentTaxRates()
6. Consider entity type - Same legislation applies differently to companies, trusts, individuals