The Tax Avoidance Taskforce was originally established in 2016 to tackle tax avoidance for all types of taxpayers (from multinational conglomerates to individual taxpayers). From 2016 to 2019, the government funded the taskforce with $679 million. Earlier this year, in the 2019 –20 Federal Budget, the government provided a further $1 billion to extend the operation of the Tax Avoidance Taskforce through to 2022-23.
"We believe in lower taxes but we also believe in everyone paying their fair share," said Treasurer Josh Frydenberg at the 2019-2020 Federal Budget.
With this additional funding, the ATO is hiring extra staff to monitor tax avoidance and now has three established programs for private groups and high wealth individuals:
- Top 500 private groups program, which will involve regular one-to-one engagement between the ATO and Australia’s private groups. This expands the ATO’s previous Top 320 program, focussing on prevention, rather than correction, and is designed to provide assurance to the community that Australia’s largest private groups are paying the right amount of tax. Similar to the ATO’s Top 100 and Top 1000 programs (for public groups and international taxpayers), the program will involve the review of:
- the effectiveness of the group’s tax compliance and governance framework
- the tax risks already flagged to the market in relation to private groups (including unit trust arrangements, private company benefits, Division 7A and commercial debt forgiveness)
- the group’s significant and new transactions, and
- any differences between the taxpayer’s accounting income and taxable income.
- High wealth private groups program, which will involve regular one-to-one engagements between the ATO and Australia’s high wealth individuals (who, together with their associates, control wealth of more than $50 million). The program will involve either a streamlined or targeted approach and does not cover taxpayers who are already part of the Top 500 program.
- Medium and emerging private groups program, which will use enhanced data and analytics to identify trends and priority tax risks associated with “medium and emerging private groups”. These groups include the following (not covering taxpayers who are already part of the Top 500 program):
- private groups linked to individuals who, together with their associates, control wealth between AUD$5 and AUD$50 million, or
- businesses with an annual turnover of more than $10 million.
Taxpayers who fall within the above three groups can expect to receive notification letters from the ATO stating they have been identified as part of these programs and taxpayers should start preparing for the process. For the Top 500 program, agents and advisors should expect to receive notifications letters. These notification letters will include a Request for Information, which the ATO will tailor to suit each taxpayer’s unique business circumstances.
How ABL can help
Arnold Bloch Leibler's taxation practice is a market leader in dealing with the ATO for private groups and high wealth individuals. We understand the importance of engaging with the ATO in a timely, effective and commercial manner. Our experience and knowledge mean we understand how the ATO approaches their review and engagement processes and we are best placed to advise on the management and resolution of any disputes. We have an extensive history of dealing with the ATO at all stages of disputes, from the earliest stages through to litigation in the courts and, where appropriate, engaging with the ATO in alternative dispute resolution to ensure that disputes are resolved in a commercial and satisfactory manner.
If you would like further details about the information contained in this bulletin or assistance with any tax-related issues, please contact one of our team members below.