The Federal Government continues its focus on tax integrity and compliance programs by committing significant additional funding aimed at raising further revenue from audit and review activity.
Personal Income Tax Compliance Program
The Budget provides the ATO with an additional $80.3 million to extend its Personal Income Tax Compliance Program for a further two years from 1 July 2023. It is expected to increase tax receipts by $674.4 million.
The additional funding will aim to modernise the ATO’s guidance products, engage earlier with taxpayers and tax agents and target compliance activities in key areas of non-compliance, including the over claiming of deductions and incorrect reporting of income.
Tax Avoidance Taskforce
In the March Budget, the previous government had already extended the operation of the ATO’s Tax Avoidance Taskforce to 30 June 2025 by announcing an additional $652.6 million in funding. The current government doubles down on this measure by extending the program for another year to 30 June 2026 committing a total of $1.1 billion to the program in the process. This measure is expected to result in increased tax receipts of $2.8 billion in total over the forward estimates period.
The Federal Government anticipates that the additional funding will enable the ATO to pursue new priority areas of observed business tax risks, complementing its ongoing focus on multinational enterprises and large public and private businesses.
With the ATO’s recent activity in several key areas for private groups, including Division 7A and section 100A, we anticipate that the ATO’s increased scrutiny on the middle market will continue into the foreseeable future.
Shadow Economy Program
The Federal Government will extend the ATO’s Shadow Economy Program for a further three years from 1 July 2023, providing an additional $685.2 million to both the ATO and Treasury which is expected to generate an increase in tax receipts of $2.1 billion. The Shadow Economy Program is targeted at activities such as cash transactions that take place outside the tax and regulatory system.
Tax Practitioners Board Compliance Program
The Budget commits $30.4 million to the Tax Practitioners Board (TPB) over four years from 1 July 2023 to increase compliance investigations into high-risk tax practitioners and unregistered preparers. This measure is expected to increase tax receipts by $81.9 million.
It is anticipated that the TPB will use new risk engines to better identify tax practitioners who engage in poor and unlawful tax advice, thus improving tax compliance and raising industry standards.
Taxable Payments Annual Reports (TPARs)
The Government has announced it will defer the requirement to report transactions relating to the sharing economy as part of the TPAR regime.
Reporting of transactions relating to the supply of ride sourcing and short-term accommodation will now commence on 1 July 2023, and the reporting of other sharing economy transactions (including but not limited to asset sharing, food delivery and tasking-based services) will now commence on 1 July 2024.