The Australian Tax Office broadens its targeting of private groups

Having focused on the top 320 privately owned and wealthy groups ("Private Groups") earlier this year, the Australian Tax Office ("ATO") Tax Avoidance Taskforce team is about to take its next step and review the next 1,200 largest Private Groups. We set out further details below.

Who will be included in the next 1,200 Private Groups?

We know that the top 320 Private Groups were identified as groups with either:

• greater than AUD350 million in turnover; or
• greater than AUD500 million in net assets; or
• greater than AUD100 million turnover and greater than AUD$250 million of net assets.

Based on the Privately Owned and Wealthy Groups Demographics released by the ATO last year, we would expect that the next 1,200 tax payers will have annual income between AU$100 million to AU$500 million. It is unclear which net asset threshold the ATO will apply, however we would expect the threshold to be lower for the next 1,200.

What is the ATO looking for?

We noted in our earlier Riposte the factors that capture the ATO’s attention. We understand that one of the current focuses is on large, one-off or unusual transactions.

We do not expect the review approach for the next 1,200 to be dissimilar to the top 320. A prevention rather than correction approach continues to be a strong theme, with the aim to build rapport between taxpayers and the ATO and promoting discussion of tax issues prior to lodgment of tax returns.

What’s next?

It is clear that the ATO’s focus on Private Groups will continue in the 2018 year. As such, these Groups should expect to have more interaction with and correspondence from the ATO in the future.