From 1 July 2016, two kinds of reporting entities are obligated to report information about certain transactions to the Australian Taxation Office (ATO) under changes to Subdivision 396-B of Schedule 1 of the Taxation Administration Act 1953. These entities are States and Territories who are required to report information about real property transfers and the Australian Securities and Investment Commission (ASIC) who is required to report data concerning transactions in shares or units in unit trusts.
Reporting entities must prepare a report setting out the required information about transactions in a specified period, such as an income year or other period. The information required to be reported is expressed as being very broad although the Commissioner of Taxation does have certain powers in relation to reporting obligations including the power to exempt a specific entity from any reporting and the power to exempt a specific entity from reporting specified classes of transactions. The information required about a transaction must relate to identification, collection or recovery of either a possible tax-related liability or reduction of a possible tax-related liability of a party to the transaction (disregarding any tax exemption that may apply). Further, the information requested about a transaction may relate to the identity of the parties to the transaction.
From 1 July 2017 other entities will also be required to report under this regime, including government entities (but not a local governing body) (relating to grants to entities with an ABN), trustees of unit trusts and trustees of trusts other than unit trusts (in relation to transactions involving a unit in a unit trust), listed companies (in relation to transactions involving shares in a company not reportable to ASIC) and brokers (market participants) (relating to transfers and name changes of shares or units in a unit trust).
The significance of these changes is it continues to greatly increase the scope of the ATO’s information gathering powers, compelling named reporting entities to provide information in relation to relevant transactions to the ATO on a continuous and regular basis into the future. This adds further ammunition to the armoury available to the ATO particularly in relation to data matching.
To discuss this further or for more information please contact: