Acting Second Commissioner Michael Cranston of the Australian Taxation Office (ATO) said yesterday that the ATO was ramping up its face to face engagement with Wealthy Australians in the future.

In their media release, the ATO states that “There are about 175 private groups controlling almost 6000 entities with more than $1 billion in turnover or $500 million in net assets and we will begin our visits by the end of the month.”

This implies that these are the only businesses that need to be concerned. The Tax office however defines Wealthy Australians as Australian-resident individuals who, together with their associates (often including small business enterprises), effectively control an estimated net wealth of between $5 million and $30 million. Individuals who control net wealth of $30 million or are considered High Wealth Individuals.

Of concern is that the ATO may seek to engage with private groups that are below the turnover and net asset thresholds in the media release.

The ATO are obviously migrating their successful real time engagement approach in dealing with risk in the large public corporate groups area into the large private group area. This approach can involve ATO officers being resident within organisations for a period of time. The intent of the approach being the prevention of certain behaviour in these private groups, prior to it occurring.

The types of behaviour the ATO are concerned with are detailed in their media release dated 16 April 2015.

The media release indicated that 30% of Wealthy Australian private groups are considered high risk.

Private groups should take the opportunity to:

  • Determine if there are potential risk areas in their groups;
  • Develop reasonably arguable position papers and/or apply for private rulings as appropriate;
  • Understand their rights and obligations when dealing with the ATO; and
  • Develop plans and strategies to ensure the organisation deals with arrival of ATO officers in a proactive and organised manner.

Should you require further information or assistance please contact your RSM representative.

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