Are you a Next 5,000 private group? Australian resident individuals who, together with their associates, control more than $50 million, are in our Next 5,000 private groups tax performance program unless they fall within the Top 500 tax performance program.
Through our reviews with these groups, we’ve found that when they seek the right tax advice for significant transactions, they’re more likely to make correct disclosures and adopt the right tax treatments. This saves them time and money.
In cases where Next 5,000 groups don’t have that advice, we often see:
- cost base errors
- reporting of transactions in the wrong year, or not at all
- mischaracterisation of the sale of a property as revenue or capital.
For example, a Next 5,000 group subdivided properties, reported sales of $18 million on capital account, then applied the capital gains tax (CGT) discount to reduce those capital gains by 50%. During our review, the group couldn’t support its tax position, so we started an audit. We found the properties were revenue assets so the CGT discount couldn’t be claimed.
We amended the group’s tax returns, which increased their tax payable to almost $3.5 million, plus interest and penalties.
We want to share these insights with you ahead of tax time, so you can avoid these errors.
Tips for correct reporting
If you undertake significant transactions or activities, ensure you:
- define what counts as a significant transaction or event for your group
- identify and record the sale of significant assets and material transactions through the year
- keep records to substantiate expenses and income relating to an asset or event
- seek independent valuations to support sales between related parties
- communicate significant transactions to your tax agent and advisers in a timely and accurate way.
You can also read our Next 5,000 Findings Report for more insights on meeting your specific Next 5,000 tax obligations.
Keep up to date
We have tailored communication channels for medium, large and multinational businesses, to keep you up to date with updates and changes you need to know.
Read more articles in our online Business bulletins newsroom.
Subscribe to our free:
- fortnightly Business bulletins email newsletterExternal Link
- email notifications about new and updated information on our website - you can choose to receive updates relevant to your situation. Choose the 'Business and organisations' category to ensure your subscription includes notifications for more Business bulletins newsroom articles like this one.