The Budget provides funding to extend the Tax Avoidance Taskforce for a further two years to 30 June 2025, while expanding their digital data matching capabilities in respect of trust tax returns and payroll data exchanged with states and territories.
Tax Avoidance Taskforce
From 2023–24, the Government will provide the ATO with an additional $652.60 million in funding to extend the operation of the Tax Avoidance Taskforce by two years to 30 June 2025. The additional funding is expected to result in increased tax receipts of $2.1 billion over the forward estimates period.
The Taskforce undertakes compliance activities targeting multinationals, large public and private groups, trust and high wealth individuals. It also scrutinises specialist tax advisors and intermediaries that promote tax avoidance schemes and strategies.
With the ATO recently releasing a suite of public guidance products outlining its compliance approach to several key areas for private groups, including Division 7A and 100A, it is likely that the ATO will increase their scrutiny over these measures as part of this package.
Digitising trust income reporting
Approximately 3% of all trust tax returns are currently lodged via paper forms. The Government will digitise trust and beneficiary income reporting and processing by allowing all trust tax return filers the option to lodge electronically. The measure is intended to reduce processing times of tax returns to bring them in line with those of individual and company tax returns.
The measure is also intended to increase opportunities for pre-filling of trust income for beneficiaries and enhance ATO assurance processes. Accordingly, this measure is expected to increase the ATO’s data-matching capabilities for private group trust distributions.
The Government will consult with affected stakeholders, tax practitioners and digital service providers to finalise the design and specifications of the measure, which will commence from 1 July 2024, subject to advice from software providers about their capacity to deliver.
Increased sharing of payroll data with states and territories
The Government will commit to the development of IT infrastructure that will allow the ATO to share single touch payroll (STP) data with State and Territory Revenue Offices on an ongoing basis. Funding will be deployed following considerations of which states and territories are able to make investments in their own systems and administrative processes to pre-fill payroll tax returns.
While the measure should reduce compliance costs for businesses, we expect that the measure will also allow more timely compliance action to be taken by State and Territory Revenue Offices.