ATO REVEALS 2010-11 TAX TARGETS: High-paid workers and the wealthy face fresh crackdown

The ATO’s new compliance program for 2010-11 has revealed a continued focus on wealthy taxpayers, with wealthy taxpayers operating in private groups and executives earning more than $1 million firmly in the tax man’s sights.

While all workers can expect to face closer scrutiny of work-related expenses and other potentially fraudulent deductions, executives and directors earning high salaries can expect to be more closely examined than ever before.

Of particular focus for the ATO are high-paid executives overseas.

“The global mobility of Australian executives and other highly paid individuals employed overseas is of significant interest,” the ATO says in its compliance guide.

“Our concern is that some may not be reporting all the benefits they receive as income. We will closely scrutinise reporting of income from employee share schemes by company executives and directors, and remuneration payments received from overseas entities or paid from Australia to overseas accounts.

“We will contact executives, directors and other employees we identify as being involved in employee share schemes due to a restructure, demerger or takeover, to remind them of their obligations.”

In addition to this, any executive earning over $1 million can expect to be scrutinised if they claim large deductions or credits or if they try to hide income.

The ATO’s crackdown on the wealth is also set to continue, with a renewed focus on the use of offshore tax havens and other tax minimisation strategies.

For those taxpayers with between $5 million and $30 million in wealth, the ATO will specifically be watching out instances where group property is used with fringe benefits tax or deemed dividend provisions applied, where capital gains are not declared and where tax havens are used.

For those taxpayers with fortunes over $30 million, the ATO will be watching how “complex business structures” are used to dodge tax.

“Australia’s wealthiest citizens often have complex business structures. This can create opportunities for non?compliant behaviour. These structures can enable some to attempt to fund their lifestyles without relying on income in a conventional taxable form. There is often very little public information available on these wealthy individuals and their structures.”

The ATO says it currently has 200 high-net-worth audits in progress, with 70 expected to be completed during 2010-11. A further 360 risk reviews are also scheduled to take place.