Our actions
We expect to collect more than 91% of income tax from high wealth groups voluntarily, without our intervention. Our engagement activities increase this to almost 93%.
The key to an effective tax system is a high-level participation. Taxpayers have more confidence in the tax system and participate if they:
- value the system
- feel the system is fair
- have trust and confidence in us as the administrator.
Our strategies to reduce the gap and encourage participation are based on these principles.
In addressing this gap, we seek to improve the overall health of the tax system. The best way to achieve a sustained reduction in the gap is to make it easier for high wealth private groups to get their tax right, and hard to get it wrong.
As part of our Tax Avoidance Taskforce activities, through the Top 500 private groups tax performance program and Next 5,000 private groups tax performance program, we monitor high wealth individuals and their associated groups and work with them to confirm that they pay the right amount of tax and are meeting their tax obligations.
We work with high wealth private groups to:
- give them certainty about how we view their tax affairs
- support them to correct mistakes
- mitigate against future tax issues.
We support people trying to do the right thing and if they make mistakes, but where we detect tax avoidance schemes or evasion, we take firm action such as penalties and prosecution when appropriate. This keeps the system fair for everyone.
Our findings from case work shows that many risks associated with entities failing to pay the right amount of tax, includes:
- arrangements that circumvent integrity provisions related to unpaid present entitlements and loans made to shareholders and their associates
- trust election and distribution issues, including family trusts
- calculation of capital gains, including cost base, concessions, rollovers and losses
- incorrect reporting of capital works and capital allowance deductions
- understated interest income from non-arm’s length (related party) loans
- mismatches in reported income and expenses between related parties
- international tax matters including controlled foreign companies, transfer pricing, and intangibles migration
- deductibility matters, including related party service or management fee arrangements, and deductions claimed for private pursuits and activities.
We help taxpayers get their tax obligations right in real time with our early engagement and pre-lodgment activities, including our:
Our analysis shows that between 2017–18 and 2022–23 high wealth groups made around 18% of amendments voluntarily.
We continue to improve our risk models and develop our data and analytical tools so we can proactively engage these groups and help them comply.
Tools and tips to help get it right
We offer a range of tools and services to help taxpayers understand the tax consequences of significant and complex transactions.
We encourage taxpayers to engage with us or their advisers when planning activity outside their normal business, including expanding activity offshore or transitioning to retirement.
To avoid mistakes, high wealth private groups should:
- have strong tax governance practices and system controls
- seek advice from tax professionals when considering making changes to their business or wealth management structures
- gain greater certainty about the tax consequences of significant transactions or changes in structure before they happen by talking to us.
Find out about tax issues for trusts, including tips and traps for trustees and beneficiaries.