Releasing the tax office’s compliance programme for 2009-10 yesterday, tax commissioner Michael D’Ascenzo said the ATO will focus on the use of arrangements between Australian and offshore entities, including branches to shift profits and tax from Australia to other countries.
“Cross-border tax avoidance schemes, particularly those involving tax havens and transfer pricing, will continue to be a priority,” D’Ascenzo said.
The authorities will focus on schemes including restructuring Australian-based operations to shift functions, assets and risks offshore on a non-arm’s length basis, such as the sale of intellectual property at a nominal price; paying excessive interest, guarantee and other fees; and allocating income and expenses to Australian businesses which are inconsistent with the economic activities conducted in Australia.
The commissioner said the tax office will monitor and undertake risk management activities with companies that have low or falling tax performance as a result of transfer pricing practices and raise awareness of new risks as they emerge.
He also said the ATO had identified taxpayers likely to be in serious risk of failing the thin-capitalisation safe-harbour debt test. He said the significant fall in the value of commodity, property and financial securities could lead to taxpayers inadvertently triggering the test.
D’Ascenzo said the Revenue will undertake a thin capitalisation project which will include following up on non-lodgement and incorrect completion of thin capitalisation schedules in addition to compliance activity as appropriate.
