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  • Next 5,000 tax performance program

    The Next 5,000 tax performance program (previously known as the high wealth private groups tax performance program) is a key element of the Tax Avoidance Taskforce. The program seeks to give the community confidence that Australia's largest privately owned and wealthy groups are paying the right amount of tax.

    We aim to increase ongoing willing participation by applying our justified trust methodology in our one-to-one tailored engagements. The program also focuses on prevention rather than correction through providing public advice and guidance on issues relevant to the Next 5,000 population.

    The Next 5,000 program runs for four years from 2019–20.

    On this page:

    Who is covered by this program

    We define high wealth private groups as Australian resident individuals who, together with their associates, control wealth of more than $50 million. The program doesn't cover private groups that are already a part of the Top 500 private groups tax performance program.

    We use data matching and analytic models to identify wealthy individuals and link them to associated entities. We then look at the whole group of entities.

    This private group approach helps us to better understand the businesses of high wealth private groups and provide them with a tailored experience.

    See also:

    How we tailor our approach to you

    We engage with each high wealth private group directly or through targeted guidance on the relevant issues.

    We identify trends and priority issues specific to high wealth private groups to better tailor our approach and develop strategies to help you address and mitigate tax risks. We work with you by:

    • letting you know about issues that attract our attention
    • publishing public advice and guidance on relevant issues
    • providing certainty about significant commercial deals through early engagement and pre-lodgment agreements
    • engaging through tailored reviews (primarily through streamlined assurance reviews) and, where appropriate, audits.

    See also:

    Streamlined assurance reviews

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

    Generally, the review will proceed as follows:

    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.

    More time to respond due to COVID-19

    During 2020–21, you may be offered an alternative to the three-month notification period to help you in managing the effect of COVID-19 on your business. In this case, we will work with you to start the streamlined assurance review straight away and then will give you additional time to respond to our request for information (10 weeks).

    We'll meet you to better 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 paying the right amount of tax in respect of the main trading entities and 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.

    In many cases, we'll complete the review within four months. This starts from the time we receive your response to our initial request for information.

    How justified trust methodology applies to your review

    When engaging with you, we review the following four key areas.

    Four key areas of the justified trust methodology for streamlined assurance reviews

    Area

    What we seek

    Details

    Governance

    We seek to understand the design of your tax governance framework. This gives us confidence that tax outcomes are correct and will continue to be in future years.

    This includes:

    • the processes and controls in the preparation of your income tax return process
    • the key roles and responsibilities related to recognising and managing tax risks
    • how your governance controls are tested.
     

    Tax risks flagged to market

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

    Tax risks flagged to market includes PCGs and Tax Alerts.

    If a risk is identified, we seek to:

    • understand the transaction
    • understand the tax treatment
    • assure the correct reporting of the transaction and the correct amount of tax is paid.
     

    New and significant transaction

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

    This includes:

    • new or significant transactions
    • ordinary business transactions (cost of goods sold, revenue, depreciation, expenses, etc.)
    • 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
    • trusts distributions.
     

    See also:

    What to expect at the end of the review

    At the end of the streamlined assurance review, we will share our findings with you. We'll:

    • outline the transactions, events and activities where we agree with the tax treatment adopted and have tax assured
    • give specific feedback, which may highlight areas for improvement and provide guidance on what you can do to mitigate risks in the future
    • outline any risks we're not satisfied with and detail the next steps to mitigate these risks

    If there are no outstanding concerns about your tax affairs, we will conclude the review. Any future reviews will only be either:

    • based on issues or years that have not been assured as part of the streamlined assurance review
    • where we become aware of new information or you have significant changes in your tax situation.

    See also:

    How to prepare for a review

    You should already 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 reviews generally focus on the past two years, so we're likely to request information for this time period.

    We will undertake a limited number of GST integrated reviews in 2020–21. Under an integrated review, we will also consider the GST consequences of the significant transactions, events and activities.

    You can prepare for the review by considering the questions and documents we typically ask for by viewing our Preparing for a Next 5,000 streamlined assurance review page. This list is not exhaustive, and in some cases we may ask additional or tailored questions.

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    Last modified: 01 Oct 2020QC 60504