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ATO Risk Assessments
YOUR CLIENT MAY BE AN ATOTARGET
ATO released statements about SMEs
Slide 2
Where your client’s dealings are transparent the ATO
can tell you what they kno...
Slide 3
What data does the ATO use?
Slide 4
1. Tax return data
• Company tax return:
o Financial and other information – item 8
• ...
What data does the ATO use?
Slide 5
2. ASIC register
• Company ownership
3. Land titles
• Land disposal
4. Motor vehicle r...
What is higher risk?
• The ATO’s view of risk categorisation is based on
their risk differentiation framework (RDF)
• SME ...
What is higher risk?
Risk differentiation framework
Slide 7
2 1
3
“Higher risk
categorisation may
warrant us asking
furthe...
When are income tax profiles used?
1. Specialised tax conversations/ engagements
• Via a staged approach
o Commenced mid-A...
What can you do?
Slide 9
• If you receive one, your client is likely to be
higher risk
• Get familiar with the “Additional...
What can you do?
Slide 10
• If you find no issues or are unsure, you can:
• Take no action (an “information product” only)...
What can you do?
Slide 11
• If you do find possible issues, you can:
• Take no further action and hope to avoid an ATO
rev...
Current SME areas attracting ATO attention
Slide 12
1. Valuations
• Integral to many tax transactions:
o MNAV $6M test,Val...
Current SME areas attracting ATO attention
Slide 13
2. Egregious use of trusts
• The ATO recognises that trusts can be use...
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ATO risk assessments: Your client may be an ATO target

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In an attempt to increase their communication with taxpayers, the ATO has introduced an Income Tax Profile scheme. Although the risk assessment reports distributed do increase transparency from the ATO, they also generate much confusion and concern – or at the other end of the spectrum, disregard and indifference.

If your client receives an assessment outlining them as high-risk, you need to be prepared to answer their questions and take action. Where has this data come from? What does it mean to be high-risk? Is your client facing an ATO audit?
This webinar gives you an overview of the Income Tax Profile process, what it means for your clients, and tips and tricks for dealing with any issues that may arise.

Published in: Law
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ATO risk assessments: Your client may be an ATO target

  1. 1. ATO Risk Assessments YOUR CLIENT MAY BE AN ATOTARGET
  2. 2. ATO released statements about SMEs Slide 2 Where your client’s dealings are transparent the ATO can tell you what they know about your client, including the ATO view of your client’s group tax risk profile. By sharing information about what the ATO knows, the report provides you and your client with an opportunity to self-correct and provide information. Higher risk categorisation may warrant the ATO asking further questions.
  3. 3. Slide 3
  4. 4. What data does the ATO use? Slide 4 1. Tax return data • Company tax return: o Financial and other information – item 8 • Trust tax return: o Financial and other information – items 32-35 o Statement of distribution – item 54 • Partnership tax return: o Financial and other information – items 32-35 o Statement of distribution – item 51
  5. 5. What data does the ATO use? Slide 5 2. ASIC register • Company ownership 3. Land titles • Land disposal 4. Motor vehicle registry • FBT 5. AUSTRAC (Australian Transaction Reports and Analysis Centre) • International transactions • Money laundering
  6. 6. What is higher risk? • The ATO’s view of risk categorisation is based on their risk differentiation framework (RDF) • SME groups are ranked against another based on: • Likelihood of risk of non-compliance – how may risk rules are triggered • Consequence of non-compliance – dollar impact of identified risks Slide 6
  7. 7. What is higher risk? Risk differentiation framework Slide 7 2 1 3 “Higher risk categorisation may warrant us asking further questions” - ATO
  8. 8. When are income tax profiles used? 1. Specialised tax conversations/ engagements • Via a staged approach o Commenced mid-April 2015 – targeted 2,100 private groups o Continued April/June 2016 – targeted 7,500 private groups • An information product and no action is required 2. Reviews and audits • To be transparent about why the ATO is reviewing/auditing your client Slide 8
  9. 9. What can you do? Slide 9 • If you receive one, your client is likely to be higher risk • Get familiar with the “Additional Risk Information” • Review your client records in those areas
  10. 10. What can you do? Slide 10 • If you find no issues or are unsure, you can: • Take no action (an “information product” only) • Contact the ATO o The ATO call centre may be able to help o If you have an ATO contact in the private groups and high wealth individuals area – make contact o Via Redchip –Trung has personalATO contacts
  11. 11. What can you do? Slide 11 • If you do find possible issues, you can: • Take no further action and hope to avoid an ATO review/audit • Make contact with your ATO contact o Clarify the risk to ascertain if an issue actually exists and provide an explanation for their records o Consider making a voluntary disclosure to avoid penalties and accruing punitive interest
  12. 12. Current SME areas attracting ATO attention Slide 12 1. Valuations • Integral to many tax transactions: o MNAV $6M test,Value shift provisions, Consolidations tax cost setting process, Balancing adjustments, Goodwill • The ATO have created an instruction form to support professionals when requesting valuation consultant services in an ATO dispute • This means that either: o The ATO views any valuation you provided as not reasonable o There was no valuation at the time of the tax transaction
  13. 13. Current SME areas attracting ATO attention Slide 13 2. Egregious use of trusts • The ATO recognises that trusts can be used legitimately for asset protection, succession planning and tax planning • However, they have set up a task force focusing compliance activities on trusts used for tax avoidance or evasion arrangements

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