High net worth Australians will remain under high ATO scrutiny this financial year. The ATO recently released an online guide that outlines its approach to ensuring Australia’s wealthiest individuals and private companies uphold strict tax compliance.

BLOG: ATO shines spotlight on wealthy Australians

Such focus on the nation’s wealthiest individuals and private companies began in 2009-10. The ATO’s ultimate goal is for a greatly improved tax compliance rate amongst wealthy Australian individuals and private companies through willing participation – and to influence wealthy Australians to pay their fair share of tax.

According to its online guide, the ATO will consider the following to be ‘red flag’ behavior amongst Australia’s wealthy:

  • Low transparency of tax affairs
  • Large ‘once-off’ or unusual transactions
  • A track record of ‘aggressive tax planning’
  • Lifestyles ‘not supported by after-tax income’

Also on the ATO’s radar will be individuals treating private assets as business assets and those who use business assets for tax-free private use.

Baby boomers will be closely scrutinised in the coming financial year too as the ATO aims to identify those who avoid paying capital gains tax by passing wealth to their children.

Overarching components of in the ATO’s strategy are:

  • Gaining a greater and more detailed understanding of wealthy Australians
  • Treating systematic tax risk
  • Heightening ATO visibility in the community through education