On 19 July 2012, The Commissioner of Taxation, Michael D'Ascenzo released the "ATO 2012-2013 Compliance Program".
General
Given The ATO's focus areas for the year ahead are:
- tax fraud and avoidance schemes. In this regard, the ATO regularly publishes tax alerts in relation to contentious tax schemes coming to its attention;
- people who fail to declare all their income;
- the highly wealthy;
- property-related tax issues; and
- employers who do not meet their superannuation obligations. It is further noted that with effect from 1 July, 2012, a director can be personally liable for any unpaid PAYG tax and Superannuation Guarantee Charge (SGC) amounts.
Employees and Private business
Occupations with historically high work-related claims – defence force personnel, plumbers and information technology (IT) managers will be scrutinised. In addition to which the following areas have been identified as posing significant risks to tax and superannuation compliance this year:
- high income earners involved in tax avoidance schemes;
- unreported cash transactions within the plastering and café industries;
- contractor arrangements, especially those in the construction industry;
- the self-managed superannuation fund sector; and
- employer obligations for superannuation in high risk industries.
In regard to private business tax issues, the ATO will be focussing on: the participation of wealthy individuals in the tax and superannuation systems; the use of trusts to inappropriately minimise tax. In relation to trusts, we expect the ATO to be looking closely at a range of issues including: the timing of trustee resolutions in respect of the distribution of trust income; whether TFN withholding requirements have been complied with; and also unpaid trust distributions to corporate beneficiaries. In this respect it is timely to note that TFN notification forms would be required to be lodged for all affected beneficiaries by 31 July 2012; Division 7A – treatment of private company profits; capital gains – non-disclosure and incorrect reporting; employer compliance with fringe benefits tax rules; integrity of business systems for GST and excise obligations; and GST and property transactions. Large businesses sector
In the large business sector, the ATO will be focusing on the more complex areas of Australian tax law which include:
- implementation of the taxation of financial arrangement (TOFA) rules;
- related party profit shifting arrangements – transfer pricing and thin capitalisation.
- It is highlighted that multinational groups preparing their Australian 2012 income tax returns may be confronted with the new International Dealings Schedule (IDS) which requires disclosure of substantially more information when compared to the former Schedule 25A. Also, the Government is reforming the transfer pricing provisions, with proposed law changes being effective from 1 July 2004. In this respect, it is recommended that affected taxpayers consider the implications of the proposed changes to current, future and past transfer pricing policies/ documentation;
- corporate restructures including mergers and acquisitions;
- consolidation – inappropriate outcomes. This will include a focus on recent amendments to
- the residual tax cost setting and rights to future income rules;
- research and development claims;
- integrity of business systems for GST;
- GST and financial supplies; and
- taxation of alternative fuels; clean energy measure – fuel tax amendments.
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