It notes that the ATO will undertake 125 risk reviews and 26 audits of large and medium sized multinationals for profit shifting activities. Of particular interest is the ATO’s comment that it will be working with other jurisdictions with regard to reviews and audits of global businesses.
The ATO is also looking to make sure that tax consolidated groups are complying with the 2012 changes to the rules relating to rights to future income (RTFI) and residual tax cost setting (RTCS). This reiterates the need for taxpayers to examine deductions claimed relating to RTFI, consumable stores and work in progress to ensure that they are accurately reflected in the new Form C disclosures.
The ATO will also be examining behaviour arising from the recent federal budget announcements relating to the integrity of the consolidation regime. The ATO will undertake 250 risk reviews and 70 audits of large businesses covering tax consolidation issues, capital gains, complex structures and financial arrangements.
Other areas the ATO will be looking into include pay as you go (PAYG) withholding, trusts, offshore banking units, transfer pricing, thin capitalisation, complex financing arrangements and disguised asset sales.