The Australian Taxation Office (ATO) has published updated guidance on “What attracts our attention”, highlighting behaviours, characteristics, and tax matters that may trigger scrutiny. The guidance details factors affecting privately owned and high-wealth groups, including aggressive tax planning, unusual transactions, governance issues, and specific concerns around company structures, capital gains, fringe benefits, and other compliance areas.
The Australian Taxation Office (ATO) has released updated guidance on What attracts our attention, outlining the behaviours, characteristics, and tax matters that may draw scrutiny. The guidance highlights a wide range of factors associated with privately owned and high-wealth groups that could trigger ATO attention.
The following behaviours and characteristics may attract attention:
- Tax or economic performance not comparable to similar businesses
- Low transparency of tax affairs
- Adviser influence on tax affairs
- Large, one-off or unusual transactions, including the transfer or shifting of wealth
- Aggressive tax planning
- Tax outcomes inconsistent with the intent of the tax law
- Choosing not to comply, or regularly taking controversial interpretations of the law, without engaging with the ATO
- Lifestyle not supported by after-tax income
- Accessing business assets for tax-free private use
- Poor governance and risk-management systems
- Not participating or selectively participating in the tax system
- Failing to meet third party, employer and indirect tax obligations
- Misreporting or incorrectly treating transactions
- Accessing concessions or refunds not entitled to
- Structuring to minimise or avoid tax
- Using cross-border transactions or structures to minimise or avoid tax
Updated guidance has also been released providing further details on specific issues that may attract the ATO’s attention, including:
- Non-lodgment within privately owned and wealthy groups
- Understand why avoiding or delaying payment of tax by not lodging your tax obligations will attract our attention.
- Private company benefits (including Division 7A): Understand the focus on arrangements that extract wealth from private companies to avoid the correct amount of tax.
- Specific Transactions and taxes: Understand the transactions and taxes that attract attention.
- Private use of assets or private pursuits in business: Understand why business assets used for a mix of business and private purposes may attract attention.
- Capital gains tax issues: Learn which capital gains or losses, disposals and small business concession claims attract attention.
- Debt forgiveness for commercial entities: Learn which situations where an entity has had a debt forgiven (either formally or informally) attract attention.
- Incorrect claims for franking credits: Understand when franking credit claims may attract attention.
- Non-application of taxation of financial arrangement rules: Understand the focus on entities that don’t apply the TOFA rules correctly.
- Revenue losses: Understand when revenue losses incurred and used by privately owned and wealthy groups attract attention.
- Fringe benefits tax issues: Understand which FBT issues attract attention.
- Deductions for bad debts: Learn which deductions claimed for bad debts attract attention.
- Excise and excise equivalent goods issues: Learn which excise and excise equivalent transactions and governance issues attract attention.Specific Business structure issues: Understand the risks associated with structures and transactions that attract attention.
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- Consolidation issues: Learn which consolidation issues attract attention.
- Demerger issues: Understand the situations where a demerger attracts attention.
- Lower company tax rate: Learn when concessional tax rate claims attract attention.
- Allocation of professional firm income: Why individual professional practitioners who redirect their income to an associated entity attract attention.
- Self-managed super fund transactions and schemes: Learn which SMSF transactions and schemes attract attention.
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