Global Daily Tax News, ATO Issues Warning To Medium, Emerging Private Groups, (Nov 22, 2024)

The Australian Taxation Office has said it will contact businesses and entities that newly meet the criteria as a Medium and Emerging private group and has listed four typical errors seen from probes into these businesses' affairs.

This categorization covers:

• private groups linked to Australian resident individuals who, together with their associates, control wealth between AUD5m and AUD50m; and

• businesses with an annual turnover of more than AUD10m that are not public or foreign owned and are not linked to a high wealth private group.

First, the ATO said groups with a trust or trusts in their business structure should revisit their governance and learn which trust activities typically attract the tax agency's attention.

Second, the ATO warned businesses with a Division 7A arrangement in place to complete annual checks to ensure the group remains compliant, with a particular focus on:

• incorrect accounting;

• loans that don't comply with Division 7A agreements;

• incorrect benchmark interest rates;

• reborrowing from a private company to make repayments on Division 7A loans.

Third, the ATO said taxpayers that are restructuring and looking to access capital gains tax concessions should check their eligibility each year, before applying for these concessions.

Finally, all taxpayers should ensure they have reported all of their income and correct any mistakes, the agency said.