Many advisers might have some idea what attracts the ATO’s attention to privately owned and wealthy groups, but now it has uploaded its own list of features on its, website, which comprise the following behaviours and characteristics may attract its attention:
- tax or economic performance is not comparable to similar businesses;
- low transparency of tax affairs;
- large, one-off or unusual transactions, including transfer or shifting of wealth;
- a history of aggressive tax planning;
- tax outcomes inconsistent with the intent of tax law;
- choosing not to comply or regularly taking controversial interpretations of the law;
- lifestyle not supported by after-tax income;
- accessing business assets for tax-free private use;
- poor governance and risk-management systems.
The ATO says there are also specific behaviours and characteristics that attract its attention in relation to a range of issues eg: CGT; Consolidation; Demergers; Franking credits; FBT; International; Lifestyle assets; Non-lodgment; Private company profit extraction (including Div 7A); Professional firms; Trusts.
[ATO – Wealthy Groups; LTN 110, 14/6/17; FJM]