Early Engagement and Dispute Resolution Privately owned and wealthy groups experience
Greg Reed
Acting Senior Director , Engagement and Assurance
Services, Private Groups and High Wealth Individuals
Australian Taxation Office
11 February 2016
Outline
Privately owned and wealthy groups
o Who are they?
Reinventing the ATO
o What we heard
o Our approach
o What attracts our attention
Early engagement
o Early engagement approach
o Mutual Expectations
o Early engagement for advice
Early Dispute Resolution
o It’s in everyone’s interest
Privately owned and wealthy groups Who are they?
Economic groups with an annual
turnover of greater than
$2 million that are not public
groups or foreign-owned.
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.
Australian-resident
individuals who, together
with their associates,
effectively control an
estimated net wealth of
$30 million or more.
In 2012-13 revenue reported:
$34.8 billion in tax revenue
$20.4 billion in net GST
$35.6 billion in net PAYGW
a total of $90.8 billion in revenue 4,610 High wealth Individuals
155,270 Private groups
114,870 Wealthy
Australians
8.7% Of private groups have links to at least one HWI
33.6% Of private groups have links to at least one WA
57.7% Of private groups have no links to an HWI or WA
The majority (97%) of privately
owned and wealthy groups are
represented by a registered tax
agent.
Economic groups with an
annual turnover of greater than
$2 million that are not public
groups or foreign-owned.
There are over 150 of the largest
privately owned and wealthy groups
with either:
Turnover of $1 billion or more and/or
net assets of $500 million or more
Market leaders
Find out more at www.ato.gov.au/privategroups (search for “private groups”)
To see better use of technology, to get
quicker outcomes and reduce
compliance costs
More certainty and timely advice
To know what the ATO knows means
there are opportunities to self-correct
and provide information
Tailored engagement that’s timely,
efficient and sensitive to business needs
Reinventing the ATO What we heard
Find out more at www.reinventing.ato.gov.au
From what you told us, we developed the Reinventing the ATO Blueprint
which includes the privately owned and wealthy group experience
The privately owned and wealthy group experience
The Blueprint
Every year counts
A new online resource dedicated to privately owned and wealthy groups:
relevant and up-to-date information, including ‘Recent developments’
guidance on the kinds of issues that draw our attention.
Tax compliance
for small-to-medium enterprises
and wealthy individuals
Previously NOW
Online resource for privately owned and wealthy groups
Find out more at www.ato.gov.au/privategroups
What attracts our attention Current issues
Retirement schemes
Capital verses revenue distinction
Research and development tax offsets
Moving business and business assets
into SMSFs inappropriately
Pre- and post-CGT assets on
transition and disposal
International tax issues
Find out more at www.ato.gov.au/privategroups (search for “attracts our attention”)
Risk Differentiation Framework
Lower risk Considered to have acceptable tax
and economic performance
Engagements and service focus
on making it easy to get things
right and may include: – Help and education initiatives
– Advice and guidance services
– Pre-lodgment support
Higher risk Higher risk categorisation may
warrant us asking further questions
Does not assert non compliance
Assurance activities may include – Pre-lodgment correspondence
– Risk Reviews
– Audits
Find out more at www.ato.gov.au/privategroups (search for “how we assess risk”)
Early engagement overview Broad principles
Building and actively promoting strong working relationships
It’s about establishing a productive and professional working relationship built on transparency, so that we can offer the right services, assurances and engagement.
Understanding the business of the private group, including tax governance
With your help, we’ll be timely, efficient and sensitive to the impact on the group’s business and affairs. By understanding the business better, knowing the stage of the business lifecycle, we can streamline our engagement.
Face to face discussions about the private group and what we know
Using the private group approach, centred on the controlling mind of the group, from a whole of tax and super perspective, we’ll confirm our understanding of the perceived tax risk, and engage in real time.
Being transparent in our communication and decision making
We’ll give the level of certainty needed about tax outcomes for the duration of our engagements, clear contact points and ways to reduce timeframes to minimise impacts on business.
We will:
be transparent in explaining why we have contacted you, what we know about
you and any concerns, so there are no surprises
provide information about what we know using an Income tax risk report
ask for information that will help us understand your group structure/tax
consolidated group (and changes to it) and your whole tax and super
circumstances so we can provide a tailored approach
ask you about your tax attributes and financial information – including how the
group has been financed (e.g. offshore funding arrangements and any intra-group
transactions) where applicable
work through any significant transactions or commercial deals so we can
provide the right services to help you get things right and provide you with the
level of certainty needed
build an ongoing one on one relationship and point of contact with you so we
can help you get things right from the start
seek to understand your tax governance framework
Early engagement approach Mutual expectations
We ask that you:
be open and transparent with us so we can understand your circumstances,
issues and concerns - two-way transparency. This would ordinarily include
contacting us when you are contemplating a significant transaction or
arrangement so we can give the level of certainty you require before or at the
time of the event
have the right people available for our ongoing engagements. This would
ordinarily include the controlling mind / principal of the groups / high wealth
individual, the tax and/or legal adviser
review your tax governance including any improvements if needed
Early engagement approach Mutual expectations
For easier access to this service (what you need – when you need it),
use our two new entry points found in the privately owned and wealthy
groups online resource:
Call back request Make a call back request and one of our senior officers will call you to answer any
questions you have on this approach and whether it is suitable to your circumstances.
Early Engagement (advice) request START the process by submitting your completed downloadable PDF
to a dedicated mailbox
Early engagement for advice Making a request
For private, class, and product rulings, we are adopting an early
engagement model for complex matters – early engagement
discussions prior to seeking formal advice.
Find out more at www.ato.gov.au/privategroups (search for “early engagement advice”)
Early Dispute Resolution
Our Aim
Alternative Dispute Resolution
1. Facilitative process (Mediation and In-house facilitation)
2. Advisory process (Neutral evaluation)
3. Determinative process (Arbitration and Expert determination)
4. Blended dispute resolution process (Conciliation and Conferencing)
Types of ADR processes
Alternative Dispute Resolution
Dispute resolution where an independent person (an ADR practitioner)
assists people in dispute to resolve or narrow the issues between them What
Flexible
Cost effective
Private and confidential
Self-directed
Why
Cost of litigation out of proportion to possible benefits
Wanting to narrow or clarify facts and issues in dispute or if evidentiary
issues arise
Maintain or improve relationship between parties in dispute
When
By agreement between the parties How
www.ato.gov.au (search for “Alternative dispute resolution”)
PS LA 2013/3: Alternative Dispute Resolution (ADR) in ATO
disputes
Find out more
Questions?
© COMMONWEALTH OF AUSTRALIA 2015
This presentation was current in November 2015
ato.gov.au/privategroups
Thank you
