Tax scheme promoters, Project Wickenby, identity crime, tax havens, failure to declare capital gains and an expanded focus on high wealth individuals have been identified by the Australian Tax Office (ATO) as key risk areas for the year ahead.
In releasing the Compliance Program 2006-07 Tax Commissioner Michael D’Ascenzo said that most people try to do the right thing and meet their tax obligations.
“Our role is to help them get over the line. We understand we can all make honest mistakes and we will treat people reasonably and fairly in those situations,” D’Ascenzo reassured, continuing:
“However, we will continue to ensure there are real and tangible risks for those who do not comply."
“This is all about fairness for taxpayers and a level playing field for business.”
High on the agenda is continuing to improve services to the community, in particular for agents who advise most Australians on their tax obligations. This includes developing technology and facilities such as e-tax to make it easier for taxpayers to comply.
“The new promoter penalties legislation means we can now deal more effectively with those who promote aggressive tax schemes,” D’Ascenzo said.
“Promoters of aggressive schemes will no longer be able to pass on all the tax risks to investors.”
Serious fraud and evasion continues to be on the radar, according to D’Ascenzo:
“We are working closely with other agencies to combat serious non-compliance on a number of fronts."
“We share information and resources with Australian agencies - including referring matters for prosecution - and work closely with tax and law enforcement agencies overseas."
“And, working with others, we will continue our push to detect and bring to account those who use false or stolen identities to defraud the community’s revenue system."
“Given the increasing use of online services, we encourage tax agents and the community to think about the level of safeguards, such as anti-virus protection, on their computers in order to protect personal information.”
This year the ATO is looking at arrangements that use tax havens and countries with strong bank secrecy rules to identify attempts to avoid Australian tax obligations. The focus on the improper use of 'tax havens' is reflected in Project Wickenby.High wealth individuals with a net wealth of around A$30 million will continue to be under scrutiny this year.
“Our attention is attracted when the tax performance of private groups and public companies, or individuals who control them, is out of line with economic performance, or wealth accumulation is inconsistent with the performance of the group,” D’Ascenzo stated.
The ATO will also keep tabs on the growing number of senior company executives whose total remuneration exceeds A$1 million.
Failure to report capital gains, and arrangements designed to avoid or minimise capital gains tax, will again be in the spotlight this year.
“Around 6,000 high risk individual investors will be checked to make sure capital gains have been declared," D’Ascenzo said.
"Businesses who deliberately manipulate their affairs, or use complex structures to minimise a capital gain, can also expect to hear from us," he added.
The ATO plans to write to 23,000 individual taxpayers who purchased investments last year to alert them to their obligations when they sell an asset.
D’Ascenzo continued:
“By openly telling the community what we are looking at we want to encourage people to voluntarily comply with their obligations."
“While the program is primarily aimed at areas of concern, this year I have included some personal tips to help people comply."
“People using e-tax can now download medical expenses, benefits and child care claim data for their returns. Agents can also download child care information and we are working to expand their access to this type of third party data."
“Data-matching with third parties will continue to be a feature of our compliance approach which effectively targets errors and failure to comply, but also means we don’t unnecessarily bother people who get it right.”
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