Building Justified Trust in Medium and Emerging Privately-Owned Groups
The ATO has recently advised that it is building mechanisms to help establish ‘Justified Trust’ in its dealings with Medium and Emerging Privately owned groups.
Details of this program are available by following the link below:
The Medium and Emerging private groups tax performance program is one of the programs under the Tax Avoidance Taskforce.
The programs are aimed at building community confidence that private groups are paying the right amount of tax.
The program covers private groups linked to Australian resident individuals who, together with their associates control wealth between $5 million and $50 million, and
Businesses with an annual turnover of more than $10 million, that are not public or foreign owned and are not linked to a high wealth private group
Medium and Emerging private groups represent about 97% of the total private group population. Through the program the ATO seeks to increase understanding of the current environments these groups operate in. This will help to identify developing trends and tax risks that affect these groups, and design tailored approaches to mitigate those risks.
The Medium and Emerging private groups tax performance program runs for four years.
The ATO correspondence contains advice relating to Commercial deals, Tailored engagement and the Tax Avoidance Taskforce.
The following behaviours and characteristics may attract the ATO’s attention:
Tax or economic performance not comparable to similar businesses,
Low transparency of tax affairs,
Large, once-off or unusual transactions, including the transfer or shifting of wealth,
Aggressive tax planning,
Tax outcomes inconsistent with the intent of the tax law,
Choosing not to comply, or regularly taking controversial interpretations of the law, without engaging with the ATO,
Lifestyle not supported by after-tax income,
Accessing business assets for tax-free private use, and
Poor governance and risk-management systems.
Separate but related programs have been developed for Australia’s top 500 private groups, and also the ‘Next 5,000’ market segment of the ATO’s Justified trust Program. The Next 5000 includes any entities that are linked to Australian residents (and their associates) who control wealth of more than $50 million.
Please do get in touch with us if you would like to consider your preparedness for a review by the ATO.