Compliance program 2011-12

Executives, directors and other highly paid individuals

We review the tax affairs of individuals with incomes over $1 million and in particular their use of closely-held entities, including charitable trusts and self-managed superannuation funds.

This year we will pay particular attention to:

• large deductions, including gifts and donations and the cost of managing tax affairs
• incorrect calculations of net capital gains and losses
• deductions for contributions to self-managed superannuation funds
• claims for large revenue losses
• non-disclosure of partnership and trust distributions
• alienation of personal services income
• non-commercial loans with related entities
• under-reporting of employment benefits including participation in employee share schemes.

Over the last four years we have reviewed the tax affairs of a high risk group of over 2,000 highly-paid people. During this time we corrected around 60% of tax returns as a result of audit or review. This included correcting higher deductions or loss claims where people were not entitled to them. Other areas of concern are the omission of income, especially from employee share schemes, and the use of tax-minimisation strategies.

This year we will also focus on a number of highly-paid professions, including those from medical practices and football codes.

Sections within Individuals

• Employees and contractors
• Work-related expenses
• Overseas income
• Pre-filling tax returns
• Information matching
• Refund fraud
• Split loans
• Referrals to the Tax Practitioners Board
• Superannuation
• Executives, directors and other highly paid individuals