ATO to target overseas income, allowable deductions, small business and high income taxpayers.

In 2012/2013, the ATO Compliance Program will focus on:

1. income generated by Australians overseas. Irish Bentley currently act for clients hit with tax reassessments exceeding $40M involved in big-ticket items such as ‘Project Wickenby’.
2. ramping up domestic Reviews and Audits to detect (and penalise) misleading claims.

The ATO Compliance targets for 2011/12 include:

1. Deductions for Work-related Expenses:-
   Since 2007 deductions for work-related expenses have increased by 16%.
   The ATO has highlighted it will particularly scrutinize the deduction claims of:
   1. Carpenters and Joiners
   2. Earthmoving and Plant Operators
   3. Flight Attendants, and;
   4. Real Estate Employees.
2. Directors, Executives and those on incomes exceeding $1m.:-
   The ATO intends to review their closely held assets including charitable trusts and self-managed super funds.
3. Small Businesses:-
   The ATO plans to continue to target Small Businesses for:
   1.  unreported Cash Income – the ATO will investigate at least 46,000 small businesses are to be investigated for.
   2. failures in their PAYG obligations.
   3. superannuation non-compliance, with some 12,500 employers identified as worthy of further investigation, mostly in the following industries:
      1. Cafes, Restaurants and Bars
      2. Real Estate businesses
      3. Carpentry businesses
      4. IT services and design, particularly PC building businesses
      5. Accommodation providers
      6. Accounting.

In the Compliance Program Report of 2011/12 the ATO state, “This year we will:

• enhance our tax fraud detection and management
• concentrate on sham contracting arrangements where individuals are incorrectly set up as contractors, instead of as employees of a business
• deliver our GST commitments to the states and territories
• reduce phoenix arrangements through a coordinated program of reviews and audits of directors
• focus on those who fail to report some or all cash transactions to ensure a level playing field
• protect employee rights by ensuring employers are paying the correct amount of superannuation guarantee
• use data matching and risk profiling to identify those who are using non-lodgment or partial lodgment to circumvent their responsibilities
• identify businesses who have received government payments and review those suspected of not correctly reporting income or not meeting their pay as you go withholding and superannuation obligations
• examine businesses operating outside our small business benchmarks
• extend our focus on lodgment compliance within private groups, including wealthy Australians
• continue to deal with the abusive use of tax secrecy havens including Project Wickenby
• strengthen our involvement in multi-agency task forces that target the tax implications of organised crime
• consider tax exploitation schemes and apply promoter penalty legislation
• implement strategies to deal with concerns we have with trustees of self-managed superannuation funds
• regulate self-managed superannuation funds and act against the illegal access or release of superannuation
• engage our very largest taxpayers in cooperative compliance approaches
• examine large business corporate governance processes for managing income and indirect tax risks
• develop strategies to optimise the role of the Tax Practitioners Board, including the referral of tax practitioners who breach their responsibilities
• develop a framework to tailor information, products and services for registered agents that enable us to differentiate and target our approaches
• focus on tax returns or activity statements lodged by unregistered preparers.