Compliance program 2011-12

Highly wealthy individuals

We are continuing our focus on highly wealthy individuals. We define a highly wealthy individual as an Australian resident who, together with associates, effectively controls $30 million or more in net wealth. At June 2011, we have identified and are monitoring the compliance of 2,660 highly wealthy individuals.

We are increasing our engagement with the tax practitioners and advisers managing the affairs of these people. We will work with key intermediaries to co-design products that help taxpayers achieve practical certainty and reduce ongoing compliance costs. These products may include annual compliance agreements and private binding rulings.

As we identify additional highly wealthy individuals, we will engage with them to help them understand our compliance approach and how we can support them in applying appropriate tax governance arrangements.

We manage our interventions according to our risk-differentiation framework. This enables us to apply an appropriate strategy, depending on the individual risk profile of taxpayers.

Common risks associated with highly wealthy individuals include:

• classification between revenue and capital account items
• capital gains tax not being returned
• Division 7A - access to company profits other than via dividends
• overseas interests and international dealings
• arrangements involving trusts.

These risks will be the subject of ongoing risk assessment and audit activity according to the strategies outlined in the risk-specific sections later in this chapter.

We will be contacting highly wealthy individuals where we identify outstanding lodgment obligations. We will also work closely with those who have been subject to compliance activity to clarify their payment obligations and support the collection of any outstanding debt.

Last year, we raised over $800 million in income tax adjustments from highly wealthy individuals, although much of that remains in dispute.

This year we will complete more than 380 risk assessments and reviews and 60 audits of these highly wealthy individuals.

Sections within Small-to-medium enterprises

• Private groups
• Highly wealthy individuals
• Wealthy Australians
• $100 million - $250 million segment
• Employer obligations
• Lodgment compliance
• Trusts
• Phoenix arrangements
• Overseas interests and international dealings
• Division 7A
• Capital gains tax
• Foreign residents
• Capital and revenue losses
• Restructuring by professional firms
• Fringe benefits tax
• Taxation of financial arrangements (TOFA)
• Small business and general business tax break
• Goods and services tax (GST)
• Refund integrity
• Property
• Retirement villages
• Integrity of business systems
• Financial supplies
• International and cross-border transactions
• GST serious evasion
• Excise
• Excise equivalent goods
• Tax reporting of exports including excisable goods
• Wine equalisation tax
• Alternative fuels
• Superannuation
• Managing business tax debt