ATO compliance activity and voluntary disclosures
The Australian Taxation Office (ATO) Taskforce activity raised over $2.8 billion in tax liabilities from businesses and individuals. It is assumed this amount includes primary tax, penalties and interest.
The Governments return on investment must be good because in the 2019-20 Federal Budget, the ATO received an additional $1 billion funding (over the next four years) to expand its Tax Avoidance Taskforce. On another front, the tip-off line has been running hot with nearly 60,000 tip-offs called in to the ATO within just 11 months - close to a 40% increase. The above together with other ATO compliance activity indicates an increase of targeted and tailored activity over a number of sectors.
From my experience in establishing the High Income/Wealth Individuals Program when I was with the ATO, history shows that as the ATO information gathering, data and systems improve; tried and true compliance programs are consequently rolled out to a wider range of taxpayers. For example, activities in the large enterprise segment are being rolled out to medium enterprises.
With the realignment of the ATO’s Client Engagement Groups to a more holistic view of taxpayer’s interaction across the tax and superannuation system, whole of tax reviews as compared to specific one off tax reviews, will become more frequent. For example, GST staff are now integrated into the main stream income tax with the objective GST and income tax reviews to be conducted at the same time.
The ATO receives a constant stream of information from numerous sources (e.g. company registers, financial institutions, state revenue authorities, the ASIC, land title registries). With increased ATO activity, taxpayers should be aware of the benefits of making a voluntary disclosure to the ATO of any mistakes or omissions made in lodgements.
Should a tax shortfall arise as a result of an amended assessment, penalties (of up to 100%) and interest (at statutory rates) are generally payable on the shortfall amount. However, if a shortfall amount arises as a result of a voluntary disclosure by the taxpayer, there may be a reduction of the shortfall penalties as follows:
Apart from civil penalties, the general approach of the Director of Public Prosecutions is that it is unlikely a person who makes a genuine voluntary disclosure will be prosecuted, unless the offence exhibits a significant degree of criminality.
If you have questions or would like to discuss making a voluntary disclosure, please contact HopgoodGanim Lawyers’ Taxation team.