Recently, the Australian Taxation Office (ATO) announced an expansion to its ‘Tax Avoidance Taskforce’, increasing its focus on “supporting and ensuring private groups and high wealth individuals pay the right amount of tax”.
The Commonwealth Government in 2016 funded the Taskforce with $679 million over four years with further funding of $1 billion over four years announced in the 2019/20 Budget to extend the Taskforce’s operation until the 2022/23 income year.
The ambit of the Taskforce is very wide and the additional funding is intended to allow the Taskforce to “expand [its] risk, assurance and compliance strategies and increase [its] coverage across multinationals, public groups, private groups, wealthy Australians and inappropriate trust arrangements. [The Taskforce] will also intensify…work to deal with promoters of tax avoidance.”
With this extra funding, the ATO is increasing staff numbers to monitor tax avoidance with the Taskforce now having three tax programs for private groups:
Top 500 private groups program – intended to focus on Australia's largest private groups which will involve regular one-to-one engagement with the ATO to help the ATO understand the taxpayer’s business, drivers, and risk position. That is, a preventative, rather than corrective, approach.
High wealth private groups program – Australian resident individuals who, together with their associates, control wealth of more than $50 million. The ATO will engage with this group on a one-to-one basis but in a more targeted manner than for the Top 50 group.
Medium and emerging private groups program – said to include 97% of the total private group population, this program will cover:
private groups linked to Australian resident individuals who, together with their associates, control wealth between $5 million and $50 million; and
businesses with an annual turnover of more than $10 million, that are not public or foreign owned and not linked to a wealthy individual.
With the third group the ATO will use data and analytics to understand the taxpayer’s operating environment and to show tax risks and trends.
Taxpayers within the three groups can expect to receive notification letters from the ATO. The ATO started sending letters last week. Questions in the letters typically cover tax governance arrangements and requests for further information.
The expansion of the Taskforce and the tax performance program for private groups means those taxpayers falling within its ambit will need to engage with the ATO directly and regularly to ensure they are complying with their tax obligations now and assuring the ATO they have the systems in place to ensure future compliance
Sladen Legal’s tax practice is a leader in dealing with the ATO on behalf of high-net wealth individuals and private groups. If you have any questions or require help in this area, please contact one of our tax lawyers:
Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176
E: nbrydges@sladen.com.au
Sam Campbell
Senior Associate | Business Law
M +61 423 515 454 | T +61 3 9611 0135
E: scampbell@sladen.com.au
