On the 3rd of November the Australian Taxation Office (ATO) announced the “Next 5,000 Tax Performance Program”.
The ATO will use data matching and analytic models to identify Australian resident individuals who, together with their associates, control wealth of more than $50 million.
What do we expect a review to look like?
- The ATO will most likely start by sending a questionnaire that needs to be completed. In a previous program this was a 40 page document.
- The ATO will then review the questionnaire and determine if they will proceed to the next stage (an audit) or tick off the review as being completed.
Why are the ATO doing this?
The ATO have found that there were many related party transactions and trust distributions not being recorded correctly. In addition, they also found:
- assets sales and capital gains tax not being reported correctly
- incorrect GST calculations
- common mismatches between the reported income and expenses between related parties
- lack of independent valuations to support pricing of transactions between related parties such as involving real property
- omission of related party income such as rental income
- issues with family trust elections
- loans which are not compliant with Division 7A of the Income Tax Assessment Act 1936.
What do you need to do now?
Rest assured, we prepare high quality workpapers when preparing your tax returns. However, we do need you to ensure that you have attended to all compliance and governance requirements for your organisation. As you know, we don’t review every transaction or review receipts for your transactions.
To learn more visit the ATO website and if you have any questions, please contact us to discuss
How can we help?
You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better.
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