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The Australian Taxation Office (ATO) has said that it will spend the next year focusing on profit shifting, tax crime, and the misuse of trusts.
The ATO's latest Compliance in Focus program provides information on key risks to and issues with the country's tax and superannuation systems, and sets out how the ATO intends to address them.
According to Second Commissioner Bruce Quigley, the ATO, together with the Government, is concerned about the use by multinational businesses of complex structures that enable them to shift profits to low tax jurisdictions. The ATO believes that around 1,300 large and international businesses, with an annual turnover of more than AUD250m (USD229.5m), are behaving in this fashion.
The ATO will accordingly review 41,000 activity statement refunds, to ensure that businesses are correctly reporting their goods and service tax (GST) transactions. It will also carry out 250 risk reviews and 70 audits, covering tax consolidations issues, capital gains, and complex structures. In the case of businesses with an annual turnover of between AUD2m-250m, the ATO will concentrate on the misuse of trusts and omitted income, capital gains non-disclosure and under-reporting, fraudulent phoenix behavior, and the correct filing of outstanding returns.
An information exchange deal with the UK and the US has so far identified more than 100 Australians involved in offshore structures in jurisdictions including Singapore, the British Virgin Islands, the Cayman Islands, and the Cook Islands. 291 income tax reviews and audits on those controlling net wealth greater than AUD30m raised an additional AUD1.1bn in revenue over the course of the 2012-13 financial year. A further 1,000 reviews and audits of individuals controlling net wealth of between AUD5m-30m will be carried out in 2013-14.
The ATO is making increasing use of data matching technology. Quigley expects that he ATO will match over 640m transactions over the next year as it improves its systems and expands the range of data and information it can match. Banks, share registries, employers, merchants, states and territories, and other government departments are among those reporting transactions to the ATO. This information is then used to pre-fill tax returns, and detect those aiming to avoid their tax and superannuation obligations. AUD947m was raised from such activity in the last financial year.
Commenting on the program, Quigley said: "We know most Australians do the right thing and our focus is on helping people comply. … However, we take firm action against people who cheat the system."
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