The ATO has announced its intention to target large
private groups to ensure they are paying the correct amount of
In a media release on 16 April 2015, Acting Second Commissioner
Michael Cranston announced the ATO plans to be more proactive in
assessing taxpayers that fall into this category.
'We are shifting our approach and will be visiting our
largest private groups to look at their tax affairs in real time,
raise any concerns and resolve issues before companies lodge their
tax returns,' he said.
All large private groups (and their advisers) are now on the ATO
radar and can expect an approach from the ATO under this revised
The ATO categorises large private groups into the following
private groups – annual turnover in excess of $2
wealthy Australians – individuals who control assets with
a net value of $5 million to $30 million; and
high wealth individuals – individuals who control assets
with a net value of more than $30 million.
However, the ATO accepts that these categories are not mutually
exclusive and some taxpayers may fall into more than one group.
The ATO has identified the following behaviour as being high
risk for attracting its attention:
tax or economic performance that is not comparable to similar
low transparency of tax affairs;
large, one-off or unusual transactions, including transfer or
shifting of wealth;
a history of aggressive tax planning;
tax outcomes inconsistent with the intent of the law;
choosing not to comply or regularly taking controversial
interpretations of the law;
lifestyle not supported by after-tax income;
treating private assets as business assets;
accessing business assets for tax-free private use; and
poor governance and risk-management systems.
If taxpayers meet a number of these characteristics, they may be
deemed to be a high risk taxpayer.
Clients who may be at risk of review should consider a number of
steps so they are prepared if they are subject to an ATO
Clients who have a high risk of adverse assessments if they are
audited could consider making a voluntary disclosure to provide a
stronger negotiating position and reduce the risk of penalties and
If a client has particular risk issues but does not want to
make a voluntary disclosure, it is important to document a
'reasonably arguable position' so that this material can be
produced to the ATO early in the review process.
Our experience is that it is easier and less expensive to
provide a detailed reasoned response before the ATO has adopted an
If the ATO commences a review, advisers and clients
try to limit face to face meetings with the ATO and avoid
responding to ATO questions orally;
get the ATO to put all questions in writing; and
take care in drafting responses to ATO queries and get advice
We have seen many tax disputes arise because the initial
responses have not been properly prepared. A common theme is
advisers making statements and providing information in response to
ATO requests that subsequently put the taxpayer at a disadvantage
at the objection and appeal stages.
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2010, 2011 and 2012
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2012 (Best Brisbane Firm)
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Australian Law Firm (revenue less than $50m)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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