Spotlight on Wealthy Tax Cheats

The Australian Taxation Office has announced a new targeted campaign to ensure wealthy Australians and their private groups do not dodge their tax obligations.

Acting Second Commissioner Michael Cranston said the ATO was taking a prevention-before-correction approach and ramping up face-to-face engagement with key taxpayers to protect revenue.

“While most wealthy Australians and their private groups do the right thing – contributing around $31 billion in income tax last financial year – some choose to avoid tax,” Cranston said.

“We are shifting our approach and will be visiting our largest private groups to look at their tax affairs in real time, raise any concerns and resolve issues before companies lodge their tax returns.

“There are about 175 private groups controlling almost 6000 entities with more than $1 billion in turnover or $500 million in net assets and we will begin our visits by the end of the month.

“We risk-review all wealthy Australians and their private groups. About 30 per cent are considered high-risk and we regularly ensure they are compliant through reviews, audits and the provision of advice.”

Cranston said if taxpayers are open and transparent with the ATO, they can expect better services and faster turnaround on key decisions.

“We have announced today that the ATO will sign-off on the previous year’s tax returns of taxpayers who have been open and transparent with us about their affairs, have good compliance records and are considered low-risk. This will provide certainty for about 30,000 privately owned and wealthy groups that they will not be subject to audit for specific income years,” he said.

Cranston said the ATO has developed online tools and information to help taxpayers and their advisers understand their tax and superannuation obligations.

“We’ve got a new online resource dedicated to privately owned and wealthy groups with key information and guidance as well as advice on what might attract our attention,” he said.

“We are providing real-time information on risks, activities and results in this market as part of our commitment to being transparent in our approach to our compliance activities.”

The ATO said the following behaviour would attract its attention:

• Tax or economic performance is not comparable to similar businesses

• Low transparency of tax affairs

• Large, one-off or unusual transactions, including transfer or shifting of wealth

• A history of aggressive tax planning

• Tax outcomes inconsistent with the intent of the law

• Choosing not to comply or regularly taking controversial interpretations of the law

• Lifestyle not supported by after-tax income

• Treating private assets as business assets

• Accessing business assets for tax-free private use

• Poor governance and risk-management systems.

For more information go to ato.gov.au/privategroups.