Compliance program 2011-12

Black-hole expenditure

We are concerned about the possible incorrect treatment of business capital expenditure. This includes:

• claiming black-hole expenditure as an operating expense of the business in the year costs were incurred
• claiming black-hole expenditure where it should, for example, otherwise be amortised over the life of an asset
• failing to apportion a claim where the business is in receipt of both assessable and non-assessable non-exempt income.

We will consider the correctness of approximately 32 claims made, which in aggregate amount to in excess of $210 million. We will also seek to identify events where it is reasonable to expect a claim to be made or where a claim is absent from the income tax return, to enable a deduction to be made.

Sections within Large businesses

• Good tax corporate governance
• Working together
• Obtaining certainty
• Cooperative compliance
• Corporate restructures mergers and acquisitions
• Foreign residents
• Inappropriate outcomes involving consolidation
• Profit shifting
• Private equity - exiting Australia
• GST and international and cross-border transactions
• Non-resident withholding tax
• Stapled group financing
• Taxation of financial arrangements (TOFA)
• Financial supplies and GST
• Foreign partnerships
• Black-hole expenditure
• Exploration expenditure
• Tax and capital losses
• Research and development claims
• Property transactions and GST
• Superannuation funds
• Alternative fuels