ATO’s Top 500 program to take action against wealthy private groups not paying enough tax

The ATO’s will take action against wealthy private and family groups refusing to engage with it about their tax obligations.

The Australian Taxation Office has some of the country’s wealthiest private and family groups in its sights, promising “firmer” action on those refusing to engage with it.

The ATO’s Top 500 program is part of its Tax Avoidance Taskforce which ensures Australia’s largest public and private groups are paying the correct amount of tax. It was designed as an invitation for Top 500 groups to be proactive in demonstrating that they were meeting and want to continue to meet their tax and superannuation obligations.

During 2022-23, Top 500 groups provided 29 voluntary disclosures that led to an increase of $31.3m in tax liabilities.

An ATO spokesman said while most of the Top 500 private groups engaged transparently under the program, they will be taking a tougher stance.

“Under the expanded Top 500 tax performance program we’re taking firmer action on large private groups who do not wish to engage with us,” he said.

“Over the next 12 months we’ll increase our review and audit activities to determine whether those disengaged Top 500 groups are paying the right amount of tax. We’ll also be focusing on the small number of Top 500 groups that are late in satisfying their BAS payment obligations.”

Inclusion criteria is either have more than $250m in turnover, regardless of net asset value; more than $500m of net assets, regardless of turnover; more than $100m in turnover and more than $250m net assets; be a market leader; or group of specific interest.

At the end of 2022-23 there were 30 groups that met the ATO’s justified trust criteria – enough evidence that would lead a reasonable person to conclude the Top 500 group paid the right amount of tax and will continue to pay the right amount of tax.

There were 323 groups engaging and making progress towards justified trust, 41 engaged but unwilling to progress towards justified trust; 38 were not assessed; and six not engaged.

The ATO spokesman said more Top 500 clients had been assessing and improving their tax governance since it published practical guidance.

“We’ll continue to support Top 500 clients with getting the basics right through effective tax governance, and to build tax governance into their internal succession plans,” he said.

“We’ve rolled out differentiated approaches (and) we’ve also adopted streamlined assurance approaches to leverage the audited financial statements that are used as a basis for the preparation of the Top 500 groups’ tax returns.”