As published on internationalinvestment.net, Tuesday December 3, 2019.
The Australian Taxation Office (ATO) has launched a four-year investigation of the country's 500 wealthiest high wealth private groups (HWPGs).
HPWGs are Australian resident private groups who, along with their associated entities, control over A$500m of net assets, or have businesses with a gross annual turnover of A$350m.
In his next push to combat tax avoidance and strengthen tax governance, the Commissioner of Taxation is allocating significant resources and will be giving close attention to the business activities of HWPGs.
"HWPGs should carefully consider their responses to the ATO as this will generally determine whether you will be subject to a more rigorous audit regime in the future"
During the campaign, the Commissioner of Taxation's Tax Avoidance Taskforce will be requesting information from HWPGs about their intergroup dealings and general business conduct. It will use the responses to assign each group a risk rating and triage each for its turn to undergo a full audit.
These questionnaires will try to identify any unusual behaviour or activity which suggests a need for further investigation.
"HWPGs should carefully consider their responses to the ATO as this will generally determine whether you will be subject to a more rigorous audit regime in the future. Once audit activity is undertaken, amended assessments and penalties may follow. It is uncommon for the ATO to progress through that stage without seeking to recover," Damien Bourke of law firm Holding Redlich said.
As part of the review program, the ATO is specifically targeting HWPGs where there is activity falling within the categories including significant tax deductions and losses; related party transactions; use of private company assets; unpaid present entitlements from trusts to private company beneficiaries; payments from trusts and small business capital gains tax concessions.
Wealthy Australians have lobbied the tax office to exempt some of their companies from increased scrutiny. These large private groups have long fought moves to increase transparency in the sector, including by claiming public disclosure of tax information would put the rich at risk of kidnapping.