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This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in these articles is for guidance only and should not be relied upon without obtaining professional advice having regard to your direct circumstances.

 

ATO to look at wealthy business execs

Business executives making more than $1 million a year and the nation's wealthiest individuals are set to get a knock on the door from the taxman.

Tax commissioner Michael D'Ascenzo, announcing the tax office's compliance program for this financial year, said the wealthy and high income earners are set to come under extra scrutiny.

But ordinary business operators and taxpayers won't be left out, with the tax office also ramping up its focus on cash payments, new entrants to the rental investment market and people who falsely claim deductions.

In the just completed 2005-06 financial year, the tax office estimates it collected $4 billion in extra tax and penalties through its compliance programs. Total tax collections were $214 billion.

Mr D'Ascenzo said this year the focus would be on the very wealthy, people who actively sought out aggressive tax planning schemes and those who attempt to use tax havens to avoid scrutiny.

As part of this approach, business executives with remuneration packages worth $1 million or more are likely to face special scrutiny.

"In 2006-07 we will have a special focus on high income individuals, including reviewing the tax affairs of some senior company executives whose total remuneration exceeds $1 million," he said. "We will examine incentives such as options, rights issues, cash bonuses and non-income capital benefits."

This new approach is on top of the tax office's normal focus on the country's 1,000 wealthiest people - those with wealth of $30 million or more.

Last year the tax office conducted 61 risk assessments of the country's 1,000 richest people. This year it plans to carry out 150.

That's on top of 37 audits already under way in the area. There will be about another 35 audits this year.

Mr D'Ascenzo warned high income individuals that all efforts to illegally avoid tax would be under scrutiny.

"We are also improving our techniques to detect undetected income by high wealth individuals," he said.

"This will include monitoring the media more closely, seeking information offshore, making better use of external databases, using new technology to identify risks and using expanded tax returns.

"We will also have an increased focus on prosecution."

The tax office is broadening its focus on people in the cash economy.

Investigations this year will focus on the building and construction, used motor vehicle wholesalers and retailers, restaurants, cafes and takeaways, licensed hotels and registered clubs, the adult industry, horse racing and fishing areas.

Claims for deductions made by ordinary taxpayers in particular industries will be checked thoroughly. These include accountants, hospitality workers, mechanics, IT professionals and miners.

Tax agents themselves will get a going over, with the tax office to investigate more than 100 people who could be operating illegally.

There is continuing concern about promoters of tax minimisation schemes.

Mr D'Ascenzo said there would be a particular focus on promoters operating out of Vanuatu and the Pacific region, as well as high-risk arrangements involving tax havens or countries that do not provide banking information to Australia.

He also urged tax agents and people who use online services to complete their tax to be careful of possible viruses upsetting their tax affairs.

"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," he said.

August 17, 2006  AAP

 


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