The ATO has released its Compliance Program for 2009/10, and some areas of focus include:

• Increased scrutiny of individual and business returns, in particular losses, high risk refunds, eligibility for tax offsets and employee share schemes;

• Highly paid company directors and executives – the ATO will be expanding data matching activities involving executive and director remuneration to ensure shares and options are correctly reported;
  
• The monitoring of wealthy Australians will be expanded to include individuals with a net wealth of between $5 million and $30 million;
  
• Businesses that don’t declare all cash income to gain a competitive advantage can expect contact from the Tax Office as programs to deal with the cash economy are expanded;
  
• Employers who don’t withhold any pay tax or do not make super contributions for their employees;
  
• ‘phoenix’ activity, where company directors use serial use serial liquidation as a means of avoiding their financial obligations; and
  
• Dodgy schemes, particularly those offering illegal early access to superannuation savings, as well as cross-border tax avoidance schemes, particularly those involving tax havens and transfer pricing.

 Cash economy

In relation to the cash economy, in 2009/10:

• They plan to conduct around 3,700 audits, and visit 8,000 businesses that they believe are at risk of cash economy activity to check they are meeting their obligations;
  
• They will send 35,000 letters to businesses that could be at risk of participating in the cash economy; and
  
• Where they identify taxpayers in the cash economy who deliberately evade tax, they will respond vigorously by working closely with law enforcement agencies to investigate and prosecute those who cheat.

 Businesses which will be attracting their attention are:

• The home renovations sector;
  
• Some sections of retail industry such as small value, high turnover retailers; and
  
• Sections of the hospitality industry offering lower cost products.

Other compliance “highlights”

The following represent some other specific areas of focus for the ATO.

Information matching – Individuals

• Matching over 400 million records from third parties and looking at such things as health insurance policies that don’t provide sufficient private patient hospital cover.
  
• Following up over 500,000 reported income discrepancies and issuing 100,000 letters advising taxpayers where the ATO has some concerns with the income reported

Superannuation

• Focusing in implementing and raising awareness of the reduction to concessional contributions caps to ensure that people who exceed the caps are identified and action taken in a timely manner.
  
• Following up complaints from employees about employers not paying the correct amount of superannuation

Supporting people in financial distress

Providing individuals and businesses with a range of practical support to assist hem during the economic downturn including:

• Fast tracking refunds;
  
• Giving businesses more time to meet lodgement and payment obligations without penalties;
  
• Payment arrangements over an extended period of time; and
  
• Remitting penalties and interest.

Businesses

• Identifying and educating industries at high risk of not meeting superannuation guarantee obligations (focusing on road freight transport, automotive repair and electrical services industries).
  
• Identifying possible cash economy participants using additional information sources including benchmarks and following these cases up.

Self-managed superannuation funds

• Matching the increase in SMSFs with increased compliance work
  
• Active compliance activities covering at least 10% of all new funds during the year focusing on loans, in-house assets, borrowings and non-arm’s length transactions
  
• Ensuring approved auditors fulfil their role properly.
  

Disclaimer: This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in this article is for guidance only and should not be relied upon without obtaining professional advice having regard to your specific circumstances.
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