Having focused on the top 320 privately owned and wealthy groups (Private Groups) earlier this year, the ATO Tax Avoidance Taskforce team is about to take its next step and review the next 1,200 largest Private Groups.
Who will be included in the next 1,200 Private Groups?
We know that the top 320 private groups were identified as groups with either:
greater than $350 million in turnover; or
greater than $500 million in net assets; or
- greater than $100 million turnover and greater than $250 million of net assets.
Based on the Privately Owned and Wealthy Groups Demographics released by the ATO last year, we would expect that the next 1,200 tax payers will have annual income between $100 million to $500 million. It is unclear which net asset threshold the ATO will apply, however we would expect the threshold to be lower for the next 1,200.
What is the ATO looking for?
We noted in our earlier Riposte the factors that capture the ATO’s attention. We understand that one of the current focuses is on large, one-off or unusual transactions.
We do not expect the review approach for the next 1,200 to be dissimilar to the top 320. A prevention rather than correction approach continues to be a strong theme, with the aim to build rapport between taxpayers and the ATO and promoting discussion of tax issues prior to lodgement of tax returns.
It is clear that the ATO’s focus on Private Groups will continue in the 2018 year. As such, these groups should expect to have more interaction with and correspondence from the ATO in the future.