In the report, the common tax issues observed by the ATO include:
- loans or payments to shareholders and their associates not complying with the requirements of Division 7A of the Income Tax Assessment Act 1936
- using tax losses and capital losses incorrectly, including reclassifying capital losses as revenue losses
- lack of record keeping in relation to a carry forward tax losses and capital losses from prior years
- non-arms' length arrangements involving family members or related parties that are designed to reduce or avoid tax that would otherwise be payable
- tax treatment of disposals - incorrect characterisation of property sales on capital account when they should be treated as sales arising from a property development business
- significant variances, discrepancies and errors in reporting of income and expenses revealed between tax returns and business activity statements
- incorrect GST treatment of face-value vouchers and deposits, and
- incorrect calculation of reduced input tax credit entitlements from acquisitions related to restructures, investments, and merger and acquisition activity.
According to the ATO, the Next 5,000 tax performance program seeks to give the community confidence that the Next 5,000 largest private groups are correctly treating the activities, transactions and events that have the highest impact on the amount of tax they pay.
Since the commencement of the program, the ATO has received over 30 voluntary disclosures from Next 5,000 private groups that total over $16.7 million in tax, penalties and interest from streamlined assurance reviews.
To find out more about the Next 5,000 findings report, click here.
If you require more information about the ATO’s private wealth compliance programs, you can visit our Tax Disputes Portal here or if you would like assistance in reviewing risks or uncertainties, please contact one of our team members below.
