Large business

As part of our risk-differentiation strategy we informed large businesses about their relevant tax risk for income tax, GST and excise. We are encouraging large business to engage with us earlier in relation to matters which their own governance arrangements would regard as risky or uncertain.

At 30 June 2011, we had 17 annual compliance arrangements with 10 large corporate taxpayers (one taxpayer has two annual compliance arrangements), five government departments and one state-owned corporation across one or more taxes. These arrangements are aimed at providing practical certainty in real time. Large corporations with annual compliance arrangements for income tax had a combined turnover of almost $150 billion - about 11% of the public company total.

After an external review and extensive co-design with taxpayers and advisers, we revised our advanced pricing agreement program for transfer pricing, which covers around 40% of total cross-border, related-party dealings. However, transfer-pricing risks are increasing in size and complexity, raising concerns about whether the current statutory provisions meet modern requirements.

Aggressive tax planning

Our booklet, Understanding tax-effective investments - helping you make the right decision, helps people recognise the features of tax-avoidance schemes and to reject them, either as a participant or as a promoter.

To increase understanding of the promoter penalty laws and highlight the need for improved governance in managing promoter penalty risks, we published our guide for tax intermediaries, Good governance and promoter penalty laws.

In 2010-11 we issued 10 taxpayer alerts providing early warnings about schemes and arrangements of concern. This is less than in previous years due to our early identification and intervention. We conducted 265 reviews of the conduct of tax intermediaries, leading to voluntary self-correction of minor contraventions of the promoter penalty laws. We also undertook nine civil investigations on more significant contraventions, leading to execution of voluntary undertakings and commenced proceedings in the Federal Court.

Nevertheless we remain concerned about mortgage structuring arrangements marketed without a product ruling from us.

We also undertook a range of activities, including issuing 72,262 warning letters, conducting 295 reviews or audits and completing 156 settlements of scheme-related liabilities. As a result of these activities, we raised over $12.5 million in liabilities and over $0.6 million from self-amendments.

    Last modified: 31 Oct 2011QC 28036