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ATO - Targeted Areas of Focus 2024-25

ATO - Targeted Areas of Focus 2024-25

Key risk areas the ATO intends to focus on for Private Wealth in 2024–25.

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ATO focus for private wealth

Our key areas of focus are based on the risks and issues identified through our intelligence collection, risk detection and analysis and case work. While we are focused on improving tax performance across all tax and superannuation compliance obligations for the privately owned wealthy groups population, these are the foundational, emerging and evolving risks and targeted focus areas where we are investing more resources.

Foundational issues

Registration, lodgment and payment

Registration, lodgment and payment risks and issues include:

  • not registering for obligations where required, or being registered under the incorrect basis (accounting basis or reporting cycle)
  • failure to lodge tax returns, fringe benefits tax (FBT) returns or activity statements when required
  • not paying tax debts on time and not engaging with us.

Incorrect reporting

Incorrect reporting risks and issues include:

  • incomplete reporting of returns, activity statements and schedules (including information labels such as shareholder loans, assets and liabilities)
  • omitted income and sales (income tax and GST)
  • incorrectly claiming GST credits
  • ineligible research and development (R&D) expenditure being claimed
  • ineligible R&D activities being claimed
  • incorrectly claiming base rate entity status.

Tax advisers and professional firms

Risks and issues with tax advisers and professional firms include:

  • failure to lodge own tax returns or business activity statements (BAS)
  • failure to lodge partnership returns or statements of distributions
  • failure to pay own tax debts on time
  • inappropriate allocation of professional firm profits (PCG 2021/4)
  • intermediaries (including R&D consultants) encouraging aggressive tax arrangements or promoting tax avoidance or exploitation schemes.

Division 7A

Division 7A risks and issues include:

  • unreported shareholder loans
  • non-complying loan agreements
  • failure to make minimum yearly repayments or not applying the correct benchmark interest rate
  • inadequate record keeping
  • section 109R loan repayment arrangements including loans repaid just before the private company’s lodgment day with the intent to reborrow similar or larger amounts from the same company
  • requests for section 109RB discretions.

Capital gains tax (CGT)

CGT risks and issues include:

  • eligibility criteria when claiming small business CGT concessions
  • inappropriate calculations of the CGT discount
  • using the small business restructure rollover (Subdivision 328-G) incorrectly, including for reasons other than a genuine restructure of an ongoing business
  • capital losses from related party transactions (market value substitution rule)
  • incorrect application of Division 855 (non-resident access to concessions).

Property and construction

Risks and issues related to property and construction include:

  • capital versus revenue misclassification on disposal of real property
  • omission of income on disposal of real property
  • failure to lodge or report sales or GST on income tax returns or BAS as identified by the taxable payments reporting system
  • misreporting or underreporting of GST for real property
  • failure to meet GST reporting obligations for real property
  • failure to meet GST registration obligations for real property.

International transactions

Risks and issues related to international transactions include:

  • intangible migration arrangements
  • mischaracterisation of service transactions which results in mispricing and creates risk from a corporate residency and controlled foreign companies' perspective
  • withholding tax compliance
  • significant global entity compliance
  • related-party financing (including concerns with the use of non-commercial terms to push up financing costs in the property and construction industry).

Other domestic transactions

Risks and issues related to other domestic transactions include

  • non-arm’s length income in self-managed super funds
  • misinterpretation or disregard for family trust elections
  • residents not including distributions from foreign trusts (section 99B)
  • franking account balance discrepancies
  • 45 day holding rule (franking credit integrity rules).

Emerging or evolving risks and issues

Incorrect reporting

Emerging or evolving risks and issues with incorrect reporting include:

  • trusts over-claiming deductions that inappropriately reduce trust net income
  • increasing lodgments in industry sectors where R&D activities and expenditure may not be eligible
  • incorrectly claiming GST credits on employee allowances
  • incorrectly claiming GST refunds without sufficient evidence to substantiate claims.

CGT

Emerging or evolving risks and issues with CGT include:

  • Division 149 (pre-CGT asset)
  • reduction in capital gains and losses arising from CGT events in relation to certain voting interests in active foreign companies (Subdivision 768-G).

Other emerging areas

Other emerging or evolving risks and issues are:

  • inappropriate use of income tax exempt vehicles, including ancillary funds, to access tax concessions and private benefits where there is no entitlement
  • trust loss trafficking (inappropriate generation and use of losses)
  • share buyback arrangements
  • thin capitalisation rules
  • cryptocurrency based business models
  • possible passage of the Better Targeted Superannuation Concessions measure (yet to be re-introduced post-election).

Targeted focus areas

Succession planning

We continue our focus on risks that are arising in relation to the ageing demographic and succession planning.

We have seen an increase in succession planning activities as private groups restructure, dispose of assets or transfer wealth. This may be through mature family-controlled businesses being sold or passed onto the next generation, or the accumulated wealth from those businesses being transferred.

Transactions we commonly see that facilitate succession planning can include:

  • assets being moved around the group
  • family member interests being restructured
  • concessions, exemptions and rollovers being accessed
  • loans to shareholders or associates settled (Division 7A loans)
  • trusts being used to transfer wealth.

For more information, see Succession planning tax risks.

Private equity

A targeted focus area is the risk across the life of the private equity investment, including all private equity participants (firms, funds, target entities and investors) at different stages of the private equity lifecycle (pre-acquisition, acquisition, holding, pre-exit and exit).

Retirement villages

Targeted focus areas for retirement villages include:

  • reviewing the GST and income tax through the retirement village cycle
  • incorrect application of GST-free provisions
  • incorrect application of Division 135 (supplies of going concern)
  • related-party transaction and incorrect valuations between related parties
  • contentious land-lease structure.

GST focus areas

From a GST perspective, we're focusing on our 2 largest industries, retail and construction.

Retail

Our retail focus includes:

  • transactions between entities within the same private group
  • errors arising from systems with poor controls
  • omission of income from sales
  • misclassification of vouchers sales and warranty payments
  • claiming input tax credits for non-creditable acquisitions
  • failure to meet GST reporting obligation
  • failure to meet GST registration obligations.

Construction

Our construction focus includes:

  • misclassification of commercial adjustments such as contract variations
  • omission of income from sales
  • transactions between entities within the same private group
  • failure to lodge or report sales or GST on BAS as identified by the taxable payments reporting system
  • misreporting or underreporting of GST for construction sales or payments to suppliers, employees or contractors
  • failure to meet GST reporting obligation
  • failure to meet GST registration obligations.

 

 

 

ato.gov.au

Mario Chiodo

Mario Chiodo (CPA)

Having a wealth of knowledge and experience in public practice, before founding his own firm in 1985, Mario is a seasoned Partner and leader of the CP Partners team. Mario’s role over the years has been pivotal in guiding clients through complex financial landscapes and ensuring their success. He is committed to delivering high-quality service, fostering strong, long-term client relationships, and provides the CP team with strategic guidance and support. Mario is the office coffee machine’s biggest fan (it’s never too late for an espresso)! Outside of work, Mario enjoys gardening, spending quality time with his family and dog Marlie, and when the season is right, you’ll find him mastering homemade wine and smallgoods!

John Capuana

John Capuana (CPA)

John joined CP Partners back in 1997. In his role as Partner, he provides fundamental advice to clients, ensuring effective communication with both clients and the CP team. John values the long-term relationships he’s built with clients and the positive impact made by working together. His extensive experience in public practice has shaped his approach, allowing him to leverage lessons learnt throughout his career. John is a master of the lunchtime AFL quiz, and on weekends, he enjoys spending time with his family and granddaughter, hitting the golf course, and supporting his beloved Cats at AFL games in Geelong.

Alf Magnano

Alf Magnano (CPA)

In his role as Partner, Alf dedicates his efforts to guiding clients to achieve their business and financial goals in a way that is most beneficial for them. He particularly enjoys being available to provide support to clients as and when needed, always going the extra mile to help! Beginning in 2000, his journey with CP Partners has allowed him to refine his skills. He often mentors the CP team is various areas, helping to shape the next generation of accountants. Out of the office, Alf indulges in his passion for trekking through jungles in search of elusive plants, combining adventure with his love for nature. We have Alf to thank for the beautiful greenery spread throughout the CP office!

Gagan Bijan

Gagan Bijan (CA)

As the Finance Manager at CP Partners, Gagan’s day-to-day responsibilities ensure that internal finances are meticulously managed and under control. He thrives in his role as it allows him to leverage his expertise in financial management whilst continuing to widen his knowledge. Gagan has been instrumental in implementing key initiatives at CP Partners such as budgeting tools, software updates, and policy development. He remains our in-house IT expert! In his free time, Gagan enjoys watching soccer and barracking for India in the cricket.

Ruba Marcus

Ruba Marcus (CA)

Ruba is CP Partners’ inaugural Manager of Client Operations, which sees her managing the team budget and coordinating workflow each day. She is also a Senior Business and Tax Adviser and a member of Chartered Accountants Australia and New Zealand (CAANZ). Ruba is passionate about supporting our clients to achieve their business and financial goals as well as helping all CP team members develop and grow to fulfil their potential. Ruba has a wealth of knowledge, and enjoys taking on new challenges, having worked on businesses of all sizes and SMSFs for over 18 years! Outside of work Ruba loves spending quality time with her family.

Adam Gulliver

Adam Gulliver (CPA)

Adam is a senior accountant at CP Partners, dedicated to achieving the best outcomes for clients by providing valuable advice. He enjoys working with a diverse range of clients - striving to build strong relationships with each of them. He also takes pride in sharing knowledge to help the rest of the CP team learn and grow. Adam’s role has recently developed into the (self-appointed) president of the CP Partners ‘Social Club’, where he helps to organise team lunches and events! On the weekends, you’ll find Adam on the sidelines as an Interchange Official at AFL games. He has been a dedicated North Melbourne member for over 40 years! Adam appreciates a nice glass of wine and enjoys travelling, with plans to explore more of the world soon!

Geena Chiodo

Geena Chiodo (CPA)

Geena joined the CP Partners team in 2019, bringing 4 years of experience from various accounting roles within the construction industry. She is a member of CPA Australia, an Excel whiz, and has evolved into CP Partner’s go-to expert for all things Xero. Geena has a strong attention to detail and a passion for problem solving and teaching new skills to other team members. She finds great satisfaction in building strong client relationships and being their trusted point of contact. Out of the office, Geena enjoys travelling with her partner to sunny destinations, getting lost in a good book, supporting Collingwood at AFL games, and spending time with family, friends and her dog Marlie.

Sudath Dissanayaka

Sudath Dissanayaka (CA Provisional)

As an accountant at CP Partners, Sudath enjoys collaborating with the team and working on a diverse range of clients. He has a passion for continuous learning and relishes the dynamic nature of tax that ensures each day is unique! In the office, you’ll find Sudath mastering new software with ease and always excited to take on a new challenge. Outside of work, Sudath is a keen car and Lego enthusiast. He enjoys spending time with his family, his two Golden Retrivers, and baby daughter.

Navdeep Singh

Navdeep Singh (CA)

With over 17 years of experience in accounting, auditing, and taxation, Navdeep brings a wealth of knowledge to his role as Team Leader of CP Partners’ Indian team. His day-to-day responsibilities include managing workflow for his team and working on accounting and compliance for various sized clients. Navdeep has fantastic analytical skills and is an instrumental part of the CP team. Outside of work, Navdeep enjoys listening to good music, and on the weekends, you’ll find him playing local cricket.

Sahil Arora

Sahil Arora (CA)

Sahil’s journey with CP Partners began in 2022 when he joined as an accountant within the Indian Team. His day-to-day responsibilities involve working on accounting and compliance for individuals and businesses of all sizes. Sahil is a hardworking and reliable team member, who enjoys taking opportunities to deepen his technical knowledge. He has a calm and composed demeanour, which enables him to handle challenges and pressure situations with ease. Outside of work, Sahil enjoys practising yoga, watching cricket, and playing when he can too!

Elizabeth Magnano

Elizabeth Magnano

Liz joined CP Partners in 2016 and brings with her over 25 years of experience in delivering administration services for various accounting and financial planning firms. Liz remains focused on enhancing client services and providing timely advice and support to clients. She finds it most satisfying helping clients to achieve their financial objectives. Liz is an instrumental leader of the client services team, always going the extra mile to provide client support. Outside of work, Liz is a passionate Carlton supporter in the AFL and enjoys following the Australian cricket team.

Anna Atar

Anna Atar

Anna has been a valued member of the CP Partners team since 2001, bringing over 25 years of experience to her role. Throughout her tenure, she has embraced the evolving landscape of the accounting industry, dedicated to helping clients navigate changes. You’ll see Anna at the front reception desk, cheerfully greeting clients as they arrive. She takes great pleasure in interacting with clients and is an integral part of their journey as they achieve their financial and life goals with CP’s guidance. Outside of work, Anna enjoys gardening and cherishes spending time with her family, particularly since the arrival of her grandson.

Suzie Vasileski

Suzie Vasileski

Suzie joined CP Partners in 2022 as administration support, marking her first role at an accounting firm. Since then, she has become an integral part of the client services team, always happy to assist clients with their queries both on the phone and in person. Suzie's involvement in various aspects of accounting work means she discovers something new every day! Her enthusiasm, dedication, and clear communication style makes her a cherished member of the team. On the weekends, Suzie enjoys spending time with family, travelling around Australia and overseas, and eating out at beautiful restaurants!

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