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ATO embarks on next 5,000 private groups review

The Tax Office has now released a list of topics it will potentially cover in its assurance reviews of 5,000 privately owned and wealthy groups.

Tax&Compliance Reporter 29 September 2020
— 1 minute read

The ATO has commenced its Next 5,000 assurance review work program in relation to private groups connected to individuals with wealth over $50 million.

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The review will operate on the concept of the OECD’s justified trust and will seek to ensure that the particular taxpayer is paying the right amount of tax.

The topics that will be covered in the Next 5,000 program will include the group structure, tax governance and risk management, transactions, acquisitions and disposals, and tax risks flagged to the market.

It will also look to ensure any misalignment between the group’s accounting and tax results is explainable and appropriate, and that the right amount of tax on profit from Australia-linked business is being recognised in Australia.

Speaking on a recent KPMG webinar, ATO Deputy Commissioner Tim Dyce said the program was not intended as a “gotcha moment” but to foster willing participation and engagement across the tax system.

“You will understand what we consider is appropriate for next action — you won’t be surprised at the end,” Mr Dyce said.

“You will understand during the course of it as things emerge and there will be opportunities to help resolve those issues during the course of the examination rather than just a ‘gotcha moment’ at the end.

“We think that’s more efficient and we believe it’s a better experience, too, because for a lot of the issues, they may well be able to be resolved during the course of it and then we can actually end it.”

Mr Dyce said the ATO would also factor in the ongoing effect of COVID-19 into its work program.

“We also recognise that some businesses are still dealing with challenges as a result of COVID-19 and its consequences, so while we’re recommencing this work program, we do want to understand if there are particular circumstances that might require things to perhaps start a little later, or perhaps start now, but there might be times when it needs to slow down,” Mr Dyce said.

“We want to understand specific circumstances.”

ATO embarks on next 5,000 private groups review
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