ATO Compliance Programme Includes Tax Avoidance Crackdown
Wednesday, July 25, 2012
The Australian Tax Office's (ATO) annual compliance programme has been released,
with Tax Commissioner Michael D'Ascenzo warning that efforts to combat tax avoidance
schemes will be stepped up.
Included in the programme is a list of those the ATO will place "under
the microscope." Over the course of the 2012/13 year, the ATO will concentrate
on: tax fraud and avoidance schemes; those who fail to declare all their income;
the highly wealthy; property-related tax issues, and employers who do not meet
their superannuation obligations.
The programme also details the focus areas identified as significant risks
to tax and superannuation compliance this year. They include:
- occupations that have shown a pattern of relatively high levels of work-related
claims, including IT managers, plumbers and defence force non-commissioned
- high income earners involved in tax avoidance schemes;
- unreported cash transactions within the plastering and café industries;
- contractor arrangements, in particular in the construction industry;
- the self-managed superannuation fund sector, and
- employer obligations for superannuation in high risk industries.
"By openly setting out our focus areas for the year ahead we want to encourage
people to make the right decisions. This includes helping them avoid being trapped
by tax schemes, in particular by stepping up our efforts to ensure people can
recognize, reject and report tax avoidance schemes," D'Ascenzo said.
During the year, the ATO will aim at improving the support it provides tax
practitioners. This will be done by offering premium phone services, tax technical
experts, relationship managers, and enhancements to online tools and portal
Officers will visit approximately 160 of the highest-risk tax practitioners
with a disproportionate number of clients failing to meet their lodgment obligations.
The ATO will conduct more than 40 separate consultations with around 400 tax
practitioners to co-design compliance approaches.
In addition, a research programme will allow the ATO to approach 3,000 tax
practitioners for their feedback, and the ATO will extend its consultation procedures
to obtain the views of regional and rural practitioners. Initiatives will be
undertaken to ensure that tax and BAS agents meet their own tax obligations.
Turning to individuals, the programme shows that the ATO will use extensive
data matching to focus on incorrect or fraudulent refunds for both over claims
and deliberate fraud. It will continue a focus on occupations that have shown
a pattern of relatively high levels of claims, and will review work-related
expenses for non-commissioned officers in the defence force, IT managers and
High income earners involved in tax avoidance schemes will be investigated,
with a particular focus on widely-marketed financial products that promise substantial
tax benefits as well as investments by medical practitioners. Third-party data
will be used to detect omitted income from dividends and interest, capital gains,
and foreign source income.
The ATO expects to complete around 120 reviews and 50 audits of Australians
with a net wealth of between AUD5m and AUD30m, and 200 reviews and 50 audits
of those with AUD30m or more in net wealth. Around 1,000 trustees will be contacted
in relation to the use of trusts to inappropriately minimize tax.
100 reviews will be undertaken in relation to higher risk cases where taxpayers
are suspected of having incorrectly reported capital gains or losses, and action
will be taken against employers not complying with their fringe benefits tax
obligations. Reviews will also be taken to ensure that small and medium-sized
enterprises have systems that adequately support correct goods and service tax
(GST) and excise reporting.
On the large business side, there will be 500 reviews and audits on mining,
manufacturing, wholesale trade, and financial and insurance services industries
in relation to GST business systems. 700 reviews and audits will be conducted
to address GST risks associated with the sale, transfer and acquisition of real
The ATO will closely monitor the implementation of the taxation of financial
arrangements (TOFA). It will look at corporate restructures, mergers and acquisitions,
conducting 20 risk review and consider incorrect or contrived application of
the consolidation cost-setting rules.
Lastly, with related-party arrangements that shift profits out of Australia
amounting to around AUD270bn annually, the ATO will continue a focus on multi-national
enterprises to ensure they pay the correct amount of tax, with 25 reviews and
29 audits being conducted.
D'Ascenzo was clear as to the impact such programmes have. He explained, "We
check over 600m transactions a year. This means that we can detect those who
do not report all their income from things like dividends and interest, capital
gains, and foreign income. Last year we stopped more than 109,000 income tax
returns for potentially incorrect or fraudulent claims saving the community
almost AUD200m in revenue."