The Australian National Audit Office’s Report No 35 assessing the effectiveness of the ATO’s activities to promote tax compliance by high wealth individuals (HWIs) was tabled in Parliament on Wed 4.6.2014. The ATO defines HWIs as Australian resident individuals who, together with their associates, effectively control an estimated net wealth of $30m or more.
The ANAO reported the ATO has had a particularly extensive HWI active compliance focus, conducting audits and risk reviews of over 90% of the population between 2009-10 and 2012-13 and collecting almost $852m as a result of the compliance activities ($671m from audits and id=”mce_marker”81m from risk reviews). However, it said the results of the activities have not always been commensurate with the level of effort deployed by the ATO.
Going forward and in anticipation of a focus on a larger pool of HWIs (from 2,600 to around 6,300), the ANAO said there was scope for the ATO to improve its risk assessments to better target active compliance activities and reduce compliance costs for both HWI taxpayers and the ATO. The ANAO made 2 recommendations aimed at improving the reliability of the Risk Differentiation Framework (RDF) through analysis of active compliance outcomes, and improving resource allocation by having greater regard to compliance risk and financial return. The ATO has agreed to the recommendations.
[LTN 106, 4/6/14]