What the Next 5,000 Program means for your private business and how to respond with confidence
Following the recent ‘Top 500’ compliance program for Private Groups, the Australian Taxation Office (ATO) has commenced a new compliance program focusing on the ‘Next 5000’ private groups in Australia.
Under this program, the ATO will be undertaking a ‘Streamlined Assurance Review’ of about 5,000 private groups controlled by high wealth individuals, referred to as the High Wealth Private Groups.
The ATO’s intention for this program is to provide high wealth private groups, the ATO and the wider community with confidence that groups in this program are paying the right amount of tax in respect of the group’s significant activities, events and transactions, through a process that it refers to as ‘justified trust’.
For the purpose of this program, the ATO defines ‘high wealth private groups’ as Australian resident individuals who, together with their associates, control wealth of more than $50 million.
This program does not include private groups that are already part of the Top 500 compliance program.
Justified trust is a concept from the Organisation for Economic Cooperation and Development (OECD). Justified trust builds and maintains community confidence that taxpayers are paying the right amount of tax, and allows the ATO to focus its resources in the right areas.
To establish justified trust across a private group, four pillars need to be met:
Commencing immediately, the ATO plans to notify affected taxpayers that it intends to engage with them over the remainder of this year.
The program is expected to continue for approximately four years.
We recommend that high wealth private groups that have not yet been contacted by the ATO prepare early and take steps to ensure that they are well placed to respond to these reviews in a manner that provides comfort, and enhances their relationship with the ATO.
Our experience from similar reviews for large private, public and international groups suggests that taxpayers that prepare early for these reviews achieve better outcomes.
Adverse outcomes from these reviews can lead to ATO audits as well as additional scrutiny going forward, both of which can be stressful and time-consuming.
Our Private Business and Tax Controversy specialists will work together to support you. Applying their technical expertise and experience from working with the ATO on previous programs including the Top 500 private groups and Top 1,000 public companies. Get peace of mind knowing that you are supported by a team built around you.