The ATO in 2017: What are they looking for? 

January 2017

The ATO has released information about what it is likely to get its attention in 2017 from a compliance and review perspective. 

The Australian Tax Office recently released a document that detailed the key behaviours and characteristics that will get its attention from a compliance and review perspective. 

The document focuses on economic groups with an annual turnover of $2 million and resident individuals with a net wealth of more than $5 million, however, it should serve as a warning to all privately held groups. 

What is on the ATO's radar?

There are many characteristics that have the potential to catch the ATO's attention regarding tax law. Some of these include:

  • Large capital losses;
  • When net capital gains reported in a tax return is different to the ATO's estimates based on its data matching capabilities;
  • Entities using the small business capital gains tax concessions;
  • Directors of private companies reporting a low level of salary and wages or directors fees in their tax returns;
  • Private companies issuing different classes of shares i.e. dividend access shares;
  • Mismatches between the FBT return and employer tax returns for employee contributions towards fringe benefits;
  • Situations where living away from home allowances are being paid;
  • Non-lodgement of an international dealings schedule;
  • R&D tax incentives claimed in the agriculture, building and construction, mining, and software development industries;  
  • Distributions by trusts to complying superannuation funds;
  • When there is a significant different between the distributable income of a trust and its taxable income;
  • Property developers attempting to take advantage of CGT concessions; and
  • A high proportion of unidentified expenses to total expenses.
While this is not an exhaustive list, practitioners should review the ATO document to  understand the issues that the ATO is currently focusing on as well as the specific transactions or areas where a greater level of care needs to be taken. 

Talk to your accountant

If you're concerned about any of the areas mentioned above, a conversation with your accountant to review your risks can help. Contact us on 02 9957 4033 for more information. 

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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