Many more taxpayers have fallen into the scope of the Australian Taxation Office's (ATO) 2009/10 compliance program, with a new wealthy category coming under its radar.
The ATO has identified that $5 million in net assets as the level at which an individual is considered wealthy, rather than the previous $30 million.
While falling into the wealthy category does not automatically mean an ATO risk review or audit, it does make it more likely, according to HLB Mann Judd Sydney tax partner Peter Bembrick.
He said likely triggers for an ATO risk review or audit included business owners having a personal tax performance that varies substantially from the business performance, as well as tax losses that are not readily explained.
Bembrick said a lifestyle that is not supported by apparent after-tax income, or complex group structures and intra-group transactions that could potentially be used to minimise tax, were also likely triggers.
Treating private assets as business assets, and a mismatch of external data such as financial reports with reported tax affairs, were among other triggers, Bembrick said.
"Taxpayers still don't realise just how much data the ATO has access to from other sources, like financial institutions, so it can easily see if a taxpayer is withholding information. Computer matching makes this exercise automatic and easy to perform," he said.
"Insufficient information, especially if it looks as if the taxpayer is purposely holding back, will inevitably lead to a full review or audit."
Bembrick said the ATO is also targeting a number of areas for all taxpayers, such as offshore earnings and employee share schemes.
