Martin Taylor Associates Logo
Menu

Latest News

ATO - Targeted Areas of Focus 2024-25

Share this article:

Key risk areas the ATO intends to focus on for Private Wealth in 2024–25.

.

ATO focus for private wealth

Our key areas of focus are based on the risks and issues identified through our intelligence collection, risk detection and analysis and case work. While we are focused on improving tax performance across all tax and superannuation compliance obligations for the privately owned wealthy groups population, these are the foundational, emerging and evolving risks and targeted focus areas where we are investing more resources.

Foundational issues

Registration, lodgment and payment

Registration, lodgment and payment risks and issues include:

  • not registering for obligations where required, or being registered under the incorrect basis (accounting basis or reporting cycle)
  • failure to lodge tax returns, fringe benefits tax (FBT) returns or activity statements when required
  • not paying tax debts on time and not engaging with us.

Incorrect reporting

Incorrect reporting risks and issues include:

  • incomplete reporting of returns, activity statements and schedules (including information labels such as shareholder loans, assets and liabilities)
  • omitted income and sales (income tax and GST)
  • incorrectly claiming GST credits
  • ineligible research and development (R&D) expenditure being claimed
  • ineligible R&D activities being claimed
  • incorrectly claiming base rate entity status.

Tax advisers and professional firms

Risks and issues with tax advisers and professional firms include:

  • failure to lodge own tax returns or business activity statements (BAS)
  • failure to lodge partnership returns or statements of distributions
  • failure to pay own tax debts on time
  • inappropriate allocation of professional firm profits (PCG 2021/4)
  • intermediaries (including R&D consultants) encouraging aggressive tax arrangements or promoting tax avoidance or exploitation schemes.

Division 7A

Division 7A risks and issues include:

  • unreported shareholder loans
  • non-complying loan agreements
  • failure to make minimum yearly repayments or not applying the correct benchmark interest rate
  • inadequate record keeping
  • section 109R loan repayment arrangements including loans repaid just before the private company’s lodgment day with the intent to reborrow similar or larger amounts from the same company
  • requests for section 109RB discretions.

Capital gains tax (CGT)

CGT risks and issues include:

  • eligibility criteria when claiming small business CGT concessions
  • inappropriate calculations of the CGT discount
  • using the small business restructure rollover (Subdivision 328-G) incorrectly, including for reasons other than a genuine restructure of an ongoing business
  • capital losses from related party transactions (market value substitution rule)
  • incorrect application of Division 855 (non-resident access to concessions).

Property and construction

Risks and issues related to property and construction include:

  • capital versus revenue misclassification on disposal of real property
  • omission of income on disposal of real property
  • failure to lodge or report sales or GST on income tax returns or BAS as identified by the taxable payments reporting system
  • misreporting or underreporting of GST for real property
  • failure to meet GST reporting obligations for real property
  • failure to meet GST registration obligations for real property.

International transactions

Risks and issues related to international transactions include:

  • intangible migration arrangements
  • mischaracterisation of service transactions which results in mispricing and creates risk from a corporate residency and controlled foreign companies' perspective
  • withholding tax compliance
  • significant global entity compliance
  • related-party financing (including concerns with the use of non-commercial terms to push up financing costs in the property and construction industry).

Other domestic transactions

Risks and issues related to other domestic transactions include

  • non-arm’s length income in self-managed super funds
  • misinterpretation or disregard for family trust elections
  • residents not including distributions from foreign trusts (section 99B)
  • franking account balance discrepancies
  • 45 day holding rule (franking credit integrity rules).

Emerging or evolving risks and issues

Incorrect reporting

Emerging or evolving risks and issues with incorrect reporting include:

  • trusts over-claiming deductions that inappropriately reduce trust net income
  • increasing lodgments in industry sectors where R&D activities and expenditure may not be eligible
  • incorrectly claiming GST credits on employee allowances
  • incorrectly claiming GST refunds without sufficient evidence to substantiate claims.

CGT

Emerging or evolving risks and issues with CGT include:

  • Division 149 (pre-CGT asset)
  • reduction in capital gains and losses arising from CGT events in relation to certain voting interests in active foreign companies (Subdivision 768-G).

Other emerging areas

Other emerging or evolving risks and issues are:

  • inappropriate use of income tax exempt vehicles, including ancillary funds, to access tax concessions and private benefits where there is no entitlement
  • trust loss trafficking (inappropriate generation and use of losses)
  • share buyback arrangements
  • thin capitalisation rules
  • cryptocurrency based business models
  • possible passage of the Better Targeted Superannuation Concessions measure (yet to be re-introduced post-election).

Targeted focus areas

Succession planning

We continue our focus on risks that are arising in relation to the ageing demographic and succession planning.

We have seen an increase in succession planning activities as private groups restructure, dispose of assets or transfer wealth. This may be through mature family-controlled businesses being sold or passed onto the next generation, or the accumulated wealth from those businesses being transferred.

Transactions we commonly see that facilitate succession planning can include:

  • assets being moved around the group
  • family member interests being restructured
  • concessions, exemptions and rollovers being accessed
  • loans to shareholders or associates settled (Division 7A loans)
  • trusts being used to transfer wealth.

For more information, see Succession planning tax risks.

Private equity

A targeted focus area is the risk across the life of the private equity investment, including all private equity participants (firms, funds, target entities and investors) at different stages of the private equity lifecycle (pre-acquisition, acquisition, holding, pre-exit and exit).

Retirement villages

Targeted focus areas for retirement villages include:

  • reviewing the GST and income tax through the retirement village cycle
  • incorrect application of GST-free provisions
  • incorrect application of Division 135 (supplies of going concern)
  • related-party transaction and incorrect valuations between related parties
  • contentious land-lease structure.

GST focus areas

From a GST perspective, we're focusing on our 2 largest industries, retail and construction.

Retail

Our retail focus includes:

  • transactions between entities within the same private group
  • errors arising from systems with poor controls
  • omission of income from sales
  • misclassification of vouchers sales and warranty payments
  • claiming input tax credits for non-creditable acquisitions
  • failure to meet GST reporting obligation
  • failure to meet GST registration obligations.

Construction

Our construction focus includes:

  • misclassification of commercial adjustments such as contract variations
  • omission of income from sales
  • transactions between entities within the same private group
  • failure to lodge or report sales or GST on BAS as identified by the taxable payments reporting system
  • misreporting or underreporting of GST for construction sales or payments to suppliers, employees or contractors
  • failure to meet GST reporting obligation
  • failure to meet GST registration obligations.

 

 

 

ato.gov.au

Share this article:

Contact Us

Orbost

Bairnsdale

Stylised Map Martin Taylor Associates Logo

ABN: 73 094 911 412

Liability limited by a scheme approved under Professional Standards Legislation.

Andrew Martin CA

Born in Mansfield in the Victorian high country, Andrew started school in Orbost. After graduating from Melbourne University in 1992, Andrew commenced his career with what was then Price Waterhouse (now PWC). Andrew moved to Bairnsdale in 1995 and has lived in East Gippsland ever since. One of the founders of the practice in 2000, the year GST came to Australia, Andrew is married to Michelle, a third generation East Gippsland resident, and proud father of Nelson and Georgia, who attended local schools for their primary and secondary education.

Andrew and Georgia are keen participants in triathlon and multi-sport events, and in 2022 participated as father and daughter in the Age Group Triathlon World Championships in Abu Dahbi. This year, they will participate together in the Multi-Sport World Championships in Townsville.

As the owner and founder of a business in East Gippsland, Andrew understands the local issues that impact on your business. The impact of flood, bush fires, drought, and the vagaries of world commodity prices can be better understood when you are deeply immersed in the local community.

Dealing with banks and the Australian Taxation Office when you live in a rural area is easier to understand when they happen in your back yard.

Ryan Gaul CA

Ryan, a Chartered Accountant, relocated from Essendon to Lakes Entrance in 2020 to be with his wife, Morgan. In Melbourne, Ryan worked under the guidance of accountant and player manager Peter Jess, serving clients that ranged from small to medium-sized businesses, AFL players, entertainers, and athletes.

After his move to Lakes Entrance, he joined Martin Taylor Associates. Since joining the firm Ryan has enjoyed the challenges of the agricultural sector and has worked closely with Andrew to develop his knowledge in this area.

Ryan is actively involved in the local community. He joined the Buchan Football Netball Club as a player and took on the role of Treasurer. He also serves as the Treasurer for the East Gippsland Farm Dog Group. Ryan’s wife Morgan runs her own speech pathology business which services the East Gippsland region.

Jan Roach

Jan has worked in public accounting in Orbost for 40 years and is one of the founders of the practice. Married to Johno (now retired long-term builder), proud mother of Adam, Paul and Nick and proud grandmother to Owen, Tess, Teagan, and Millie.

Having been in business, Jan understands compliance can sometimes be overwhelming, and will help you navigate the right path. Jan has a strong affiliation with our trade and primary producer clients.

Kerry Ellis

Kerry has worked in administration in public accounting and legal practices for nearly 15 years. Kerry understands when you contact us, you need to talk to someone who has or can get an answer to your query. Kerry controls the workflow in our practice and manages our interactions with the ATO, ASIC and the banks. Kerry understands the challenges of providing information to big bank data centres and dealing with Centrelink.

Contact Us

Tax Diary

General Calculators

Accounting Videos

Tax Deductions

Secure File Transfer

Secure File Transfer is a facility that allows the safe and secure exchange of confidential files or documents between you and us.

Email is very convenient in our business world, there is no doubting that. However email messages and attachments can be intercepted by third parties, putting your privacy and identity at risk if used to send confidential files or documents. Secure File Transfer eliminates this risk.

Login to Secure File Transfer, or contact us if you require a username and password.

General Disclaimer

The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on the website is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs.

Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice.

Privacy Policy

Martin Taylor Associates is committed to providing quality services to you and this policy outlines our ongoing obligations to you in respect of how we manage your Personal Information.

We have adopted the Australian Privacy Principles (APPs) contained in the Privacy Act 1988 (Cth) (the Privacy Act). The NPPs govern the way in which we collect, use, disclose, store, secure and dispose of your Personal Information.

A copy of the Australian Privacy Principles may be obtained from the website of The Office of the Australian Information Commissioner at https://www.oaic.gov.au/.

What is Personal Information and why do we collect it?

Personal Information is information or an opinion that identifies an individual. Examples of Personal Information we collect includes names, addresses, email addresses, phone and facsimile numbers.

This Personal Information is obtained in many ways including correspondence, by telephone and facsimile, by email, via our website www.martintaylor.com.au, from your website, from media and publications, from other publicly available sources, from cookies and from third parties. We don't guarantee website links or policy of authorised third parties.

We collect your Personal Information for the primary purpose of providing our services to you, providing information to our clients and marketing. We may also use your Personal Information for secondary purposes closely related to the primary purpose, in circumstances where you would reasonably expect such use or disclosure. You may unsubscribe from our mailing/marketing lists at any time by contacting us in writing.

When we collect Personal Information we will, where appropriate and where possible, explain to you why we are collecting the information and how we plan to use it.

Sensitive Information

Sensitive information is defined in the Privacy Act to include information or opinion about such things as an individual's racial or ethnic origin, political opinions, membership of a political association, religious or philosophical beliefs, membership of a trade union or other professional body, criminal record or health information.

Sensitive information will be used by us only:

Third Parties

Where reasonable and practicable to do so, we will collect your Personal Information only from you. However, in some circumstances we may be provided with information by third parties. In such a case we will take reasonable steps to ensure that you are made aware of the information provided to us by the third party.

Disclosure of Personal Information

Your Personal Information may be disclosed in a number of circumstances including the following:

Security of Personal Information

Your Personal Information is stored in a manner that reasonably protects it from misuse and loss and from unauthorized access, modification or disclosure.

When your Personal Information is no longer needed for the purpose for which it was obtained, we will take reasonable steps to destroy or permanently de-identify your Personal Information. However, most of the Personal Information is or will be stored in client files which will be kept by us for a minimum of 7 years.

Access to your Personal Information

You may access the Personal Information we hold about you and to update and/or correct it, subject to certain exceptions. If you wish to access your Personal Information, please contact us in writing.

Martin Taylor Associates will not charge any fee for your access request, but may charge an administrative fee for providing a copy of your Personal Information.

In order to protect your Personal Information we may require identification from you before releasing the requested information.

Maintaining the Quality of your Personal Information

It is an important to us that your Personal Information is up to date. We will take reasonable steps to make sure that your Personal Information is accurate, complete and up-to-date. If you find that the information we have is not up to date or is inaccurate, please advise us as soon as practicable so we can update our records and ensure we can continue to provide quality services to you.

Policy Updates

This Policy may change from time to time and is available on our website.

Privacy Policy Complaints and Enquiries

If you have any queries or complaints about our Privacy Policy please contact us at:

(03) 5152 6213