If you are a business owner, it is crucial to be informed about the Australian Taxation Office’s (ATO) latest tax update and the specific obligations that might apply to you.
The ATO recently disclosed the key characteristics, behaviors, and tax issues that will be under close scrutiny during its review of privately owned and wealthy groups.’
Who does this affect?
The ATO will be closely examining businesses falling under the following categories:
- Companies and their associated subsidiaries with an annual turnover greater than $10 million, which are not public groups or foreign-owned.
- Resident individuals who, together with their business associates, control a net wealth of over $5 million.
What the ATO is watching out for
Assistant Commissioner Jenny Lin emphasized the importance of staying up-to-date with the ATO’s focus areas, as they regularly review this content to keep it current. Understanding the specific behaviours and tax issues that concern privately owned and wealthy groups will help ensure compliance and avoid unwanted attention.
Some of the behaviours and characteristics that could attract the ATO’s attention include:
- Tax or economic performance that doesn’t align with similar businesses in the industry.
- Low transparency of tax affairs.
- Large, one-off, or unusual transactions, including the transfer or shifting of wealth.
- Engaging in aggressive tax planning.
- Tax outcomes that appear inconsistent with the intent of the tax law.
- Choosing not to comply with tax laws or regularly adopting controversial interpretations without engaging with the ATO.
- Leading a lifestyle that seems incompatible with reported after-tax income.
- Accessing business assets for tax-free private use.
- Poor governance and risk-management systems.
How to ensure compliance
To safeguard your business and ensure compliance with the ATO’s regulations, it’s essential to be proactive. If you have any concerns about your business arrangements, consider reaching out to the ATO promptly to seek guidance and clarification.
Transparency and open communication with the ATO are key to avoiding potential issues. By understanding the ATO’s focus areas and complying with tax laws, you can mitigate the risk of unwanted scrutiny and penalties.
Choose KMT Partners for expert tax services
Navigating the complexities of tax laws and compliance can be challenging for business owners. At KMT Partners, we specialise in providing expert tax services tailored to your specific needs. Our team of experienced accountants will help you stay ahead of the game and ensure that your tax affairs are in order.
Remember, non-compliance with tax laws can have severe consequences, including the loss of retirement savings for SMSF trustees engaging in illegal early release arrangements. Let KMT Partners assist you in making the right financial decisions for a secure future.
Contact us today to learn more about how we can support your business and ensure compliance with the latest tax updates from the ATO.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.