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  • Next 5,000 private groups tax performance program

    The Next 5,000 tax performance program is funded by the Tax Avoidance Taskforce and seeks to give the community confidence that Australia's largest privately owned and wealthy groups are paying the right amount of tax.

    Through one-to-one engagements we aim to increase their ongoing and willing participation in the tax and super system. The program focuses on prevention rather than correction by letting those taxpayers know about potential tax risks specific to their business and providing public advice and guidance on relevant issues.

    The Next 5,000 program runs for four years from 2019 onwards.

    On this page

    Who is covered by this program

    We use data matching and analytic models to identify Australian resident individuals who, together with their associates, control wealth of more than $50 million. We then look at the whole group of entities.

    Our private group approach helps us to better understand these businesses and provide them with a tailored experience.

    The Next 5,000 program does not include private groups in our Top 500 private groups tax performance program.

    See also

    How we tailor our approach to you

    To better tailor our approach and develop strategies to address and mitigate tax risks we identify trends and priority issues specific to your groups. We work with you by:

    • letting you know about issues that attract our attention
    • publishing public advice and guidance on relevant issues
    • sending you information specific to your business about potential risks we have identified.
    • providing certainty on significant commercial deals through early engagement and pre-lodgment agreements
    • engaging through tailored reviews (primarily through streamlined assurance reviews and specific reviews) and, where appropriate, audits.

    See also

    Contacting you about risks specific to your business

    Using data you have provided in your tax return or BAS matched against other data reported to us, we can identify potential tax risks specific to your business. We will contact you about the risks we have identified by:

    • sending you information about potential tax risks for your business and what action you can take to prevent tax errors or get further advice (without any follow-up contact from us)
    • sending you a letter with details of a discrepancy we have identified in your tax return and what you can do to review or correct the potential error
    • notifying you that we will conduct a specific review.

    Then you can review your records to check for any potential errors, or contact us to discuss the issue.

    Specific reviews focus on specific issues that are generally shorter in duration than assurance reviews and do not use our justified trust methodology.

    In most cases, specific reviews will be completed within 90 days. Specific reviews generally focus on a transaction, event, or discrepancy we have identified in your tax returns or BAS. By focussing on one or two specific issues, we can usually resolve these reviews quickly by getting you to provide us with further information.

    Streamlined assurance reviews

    A streamlined assurance review enables us to resolve issues quickly and cooperatively in a transparent way. This is an assurance program, where we apply the justified trust methodology to obtain assurance that the group has correctly reported and paid the right amount of tax in respect of the main trading entities including any significant transactions, events or activities within the group.

    Review process

    A printable version is also available – Next 5,000 Program Client Experience Roadmap (PDF, 465KB)This link will download a file

    The streamlined assurance review process generally includes the following steps.

    Step

    Description

    ATO issues notification letter 3 months before commencement (or less as agreed)

    ATO calls client

    Client receives letter of commencement

    Meeting (face-to-face or phone)

    ATO issues request for information (RFI) providing the client with 28 days to respond

    Phone discussion

    Client sends RFI response to ATO

    Ongoing discussion or further request for information (if required)

    ATO issues streamlined tax assurance report (STAR) to client

    Discuss next steps

    In most cases, streamlined assurance reviews will be completed within four months of us receiving the information we request from you in our initial RFI. If we expect it will take longer then we will discuss this with you.

    Generally, through this review process we'll:

    We'll notify you in writing

    We'll notify you in writing that we plan to start a streamlined assurance review. Normally this will be three months before we intend to start a review. At this time, you may provide documents you should already have (for example, financial statements and tax reconciliations) to help us better understand your circumstances.

    We'll meet with you to understand your business

    We'll meet with you to get a better understanding of your business and to discuss timeframes and the information we'll need from you.

    We'll write to you to request information

    We'll write to you setting out the information we need you to provide for the review. The evidence we gather will help us to assure that you are correctly reporting and paying the right amount of tax in respect of the main trading entities including any significant transactions, events or activities within the group.

    We'll contact you to discuss next steps

    After we receive your response and consider the information you have provided, we'll contact you to discuss our analysis and next steps. We may organise a meeting to discuss areas of concern we have identified.

    How justified trust applies to your review

    Justified trust is a concept from the Organisation for Economic Cooperation and Development (OECD).

    In a streamlined assurance review, we apply the justified trust methodology to the significant transactions, events and activities of your group or trading entities, by reviewing the following four key areas.

    Four key areas of our justified trust approach that we apply to streamlined assurance reviews

    Area

    What we seek

    Details

    Governance

    We seek to understand the design of your tax governance framework, in relation to accountable management and oversight, recognising tax risks and seeking advice.

    The effective design of the governance framework should be 'fit for purpose' and appropriate to your group structure and tax issues, aligned with the environment it operates in.

    This gives us confidence that tax outcomes are being correctly reported and will continue to be.

    This includes:

    • the key roles and responsibilities related to recognising and managing tax risks
    • the processes and controls in the preparation of your income tax return
    • the processes and controls in place to seek advice from your advisor or the ATO.

     

    Tax risks flagged to market

    We seek to prove that tax risks we have communicated to the market are not present.

    Tax risks flagged to market include via Practical Compliance Guidelines and Tax Alerts.

    If a risk is identified, we seek to:

    • understand the transaction
    • understand the tax treatment
    • assure the transaction is being reported correctly and the correct amount of tax is being paid. 

     

    New and significant transactions

    We seek to understand your current business activities, particularly significant or new transactions, and the tax outcomes of these.

    This includes:

    • new or significant transactions
    • ordinary business transactions such as  
      • cost of goods sold
      • revenue
      • depreciation
      • expenses
    • specific industry issues.

     

    Book to tax

    We seek to understand the difference between business performance and tax performance.

    This includes:

    • statement of taxable income for main trading entities
    • trust distributions.

     

    See also

    How to prepare for a streamlined assurance review

    Prepare for a review by considering the questions and documents we will typically ask for outlined in Preparing for your Next 5,000 streamlined assurance review.

    This list is not exhaustive and we may ask additional or tailored questions.

    You should have many of the documents we typically request, such as:

    • information used to prepare your tax return
    • your company’s group structure
    • tax governance documents.

    Our streamlined assurance reviews generally focus on the preceding two years, so we're likely to request information for this time period.

    What to expect at the end of the review

    At the end of the streamlined assurance review, we will share our findings with you by:

    • outlining the transactions, events and activities where we agree with the tax treatment you adopted and have tax assured
    • giving specific feedback, which may highlight areas for improvement and provide guidance on what you can do to mitigate future risks
    • outlining where we're unsatisfied with your risk approach and detailing the steps to mitigate these risks.

    If there are no outstanding concerns we will conclude the review.

    Where we do have concerns we may recommend that you to take action to mitigate a risk or correct an error, or we may decide to further review the issue or commence an audit.

    Any future reviews will only be based on:

    • issues or years that have not been assured as part of the streamlined assurance review
    • new information or significant changes in your tax situation.

    Temporary full expensing and loss carry back claims

    From 2021 onwards the review may look at claims for temporary full expensing (TFE) and loss carry back (LCB).

    We may want to:

    • discuss how these budget measures may impact future lodgments
    • review any past TFE and LCB claims.

    When reviewing TFE and LCB claims we may request information outside of the usual two-year time period for streamlined assurance reviews.

    GST-integrated reviews

    We will also undertake a limited number of GST-integrated reviews as part of the Next 5,000 program. We will apply a GST lens to significant transactions, events and activities that are being assured for income tax, as well as consideration of GST risks flagged to market. We will tell you that it is a GST-integrated review in the notification letter.

    Where we review GST consequences of significant transactions, events and activities, we will seek objective evidence from you in support of your GST treatment. You will receive recommendations in your final report on these GST issues.

    These GST-integrated cases are completed within the normal streamlined assurance review time frames.

    Findings report – Next 5,000 tax performance program

    We have published our first Findings report for the Next 5,000 program. This is based on our findings, current at 5 November 2021. The report provides:

    • our observations and insights into the tax performance of Next 5,000 private groups that we have engaged with through streamlined assurance reviews, including the common tax issues, risk themes and behaviours, and the importance of good tax governance
    • the profile of a typical Next 5,000 group and the characteristics that define the Next 5,000 population
    • an outline of how we engage with a Next 5,000 group and how we apply the justified trust methodology in our streamlined assurance reviews
    • our observations into the GST issues we have observed arising from significant activities, events or transactions
    • our approach to resolving issues and our focus for 2021/22.

    View the report at Findings report Next 5,000 tax performance program.

    Last modified: 07 Dec 2021QC 60504