The ATO are currently ramping up their audit activity with “The next 5000 performance program” which focuses on high wealth private groups who control wealth of more than $50m.
Privately owned and wealthy groups with a combined annual turnover — including associated subsidiaries of more than $10 million, or controlled wealth of over $5 million, are also likely to be captured by the ATO audits.
The next 5000 program will run for four years from 2019-20. The ATO uses data matching and analytic models to identify wealthy individuals and link them to associated entities.
In the review, the ATO will be looking at:
- information about the group’s tax governance policies and how effective they are
- information about the group’s structure
- whether any of the risks that the ATO flagged in practical compliance guidelines or tax alerts are relevant and, if so, information about the particular transaction and tax treatment to make sure it was correct
- information about any significant or new transactions and the tax outcomes of those transactions
- information and explanations about any differences between accounting and tax results.
The ATO has released the client experience roadmap as a guide to how the reviews will take place. The roadmap can be viewed by clicking the below link.
We recommend that large and privately owned wealthy groups ensure they are prepared for a review including:
- Review your audit insurance policy and ensure that it covers a review (as opposed to an audit). If you are concerned about your policy or don’t have insurance, please contact your broker to discuss.
- Ensure that your records are easily available and information, particularly in relation to capital gains, re-structures or unusual transactions, is complete.
- Ensure that you can explain your internal processes, systems, and controls in relation to tax compliance
- If there are any areas that you are concerned about, consider whether a voluntary disclosure should be made before you are selected for review by the ATO
If you are selected for review it is important to respond quickly and with all necessary information that has been requested. Therefore, it is critical to be prepared in order that the review can proceed as smoothly as possible.
If you would like to discuss your situation and in particular if thought should be given to a voluntary disclosure, please contact our office on 07 3831 1055.