Each year, the ATO's Compliance Program sets out:
- the practices and patterns of activity that attract the ATO's attention;
- how the ATO plans to respond to them; and
- how the ATO will help those trying to comply.
The Federal Commissioner for Taxation released the 2008/2009 Compliance Program on 13 August 2008.
The key themes for 2008/2009 - with more information below
This year the ATO:
- continues its theme of promoting good corporate governance in large business;
- will look closely at corporate restructures that shift assets and risks offshore;
- will target unfair practices in the cash economy that adversely impact small businesses. In this area, the ATO will develop benchmarks to guide businesses on how to get their tax reporting right and will increase its data matching activities to catch under-reporters;
- will look at compliance risks associated with partnership and trust distributions by working with tax agents to encourage reporting of incorrectly declared distributions; and
- will look at remuneration packages of directors and senior executives of private and foreign owned companies to ensure that equity benefits and cash or share bonuses are correctly reported.
The headline issues
The ATO's headline issues in 2008/2009 are:
- Delivering on new measures and government policy
- Saving for retirement
- Maintaining compliance in a global economy
- Improving small business compliance
- Tackling abuse of the tax system
For individuals the ATO will focus on:
- capital gains from the sale of property, shares and other assets;
- expansion of the ATO's review of compliance activities in respect of senior executives and directors;
- work-related expense claims, particularly out-of-pattern claims for self-education, car and travel expenses; and
- tax returns that reflect a pattern of poor knowledge and practice by tax agents.
Micro enterprises (annual turnover less than $2 million)
For enterprises turning over less than $2 million, the ATO will focus on:
- helping these businesses stay on track with their tax obligations;
- audit coverage of employers;
- cash economy activities;
- correct reporting of offshore income; and
- risk profiling to detect debt problems much earlier so the ATO can make contact and help business before the problem escalates and becomes more difficult to address.
Small to medium enterprises (annual turnover between $2 million and $250 million)
For enterprises turning over between $2 million and $250 million, the ATO will focus on:
- income tax compliance, particularly for those enterprises which turnover between $100 million and $250 million;
- monitoring high wealth individuals through reviews and audits, and developing a more sophisticated risk-assessment approach to the tax compliance of these individuals; and
- communicating the new fuel tax credit measures to eligible businesses.
Large businesses (annual turnover in excess of $250 million)
For enterprises turning over more than $250 million, the ATO will focus on:
- good corporate governance and providing greater certainty for tax risk-management;
- new tax measures related to financial arrangements, managed fund distributions and consolidation;
- complex transactions; and
- global restructures that shift assets, functions and risks offshore.
The ATO and tax practitioners
The ATO states that in 2008/2009 it will continue to improve tax administration to reduce compliance costs and enhance the ATO's service and advice to tax practitioners.
As part of its program concerning SMSFs, the ATO will pilot an electronic auditor tool with SMSF auditors and will conduct approximately 900 reviews and audits of approved SMSF auditors.
Serious abuse of the tax and superannuation systems
Once again, the ATO will focus on tackling cross-border tax crime, including through Project Wickenby. The ATO has formed new partnerships with law enforcement agencies and foreign tax agencies and will continue to work with these partners to investigate serious breaches of the tax system.
The ATO also intends:
- to tackle refund fraud, such as stolen identities used to commit tax fraud; and
- to look at the investment of wealth generated through illegal activities in legitimate financial channels such as share trading.
If you have any questions about the ATO Compliance Program or would like advice concerning yours or your clients' tax compliance, contact Maddocks on (03) 9288 0555 and ask for the Cleardocs Help Desk: they will put you through to the relevant Tax and Revenue or Tax Disputes Team member.