For the first time in over 2 decades, the ATO has revised the threshold for high wealth individuals, to be defined as those with a net wealth of $50 million or more, up from the previous threshold of $30 million.

Changes to the threshold, which have been untouched since 1996 when the Commissioner first introduced the HWI Taskforce, aim to bring Australia in line with tax authorities around the globe.  It is thought that the new threshold is generally accepted by the OECD and tax administrations around the world, as an acceptable and appropriate level.

It is also expected that high wealth individuals can expect increased scrutiny and tailored enquiries, from specialised and multidisciplinary ATO teams empowered to drive these reviews.

It is also important to note that the Tax Avoidance Taskforce, which recently received an additional $1 billion in funding from the Government, will improve the taskforce’s Serious Financial Crimes programs. The additional funding is forecasted to return $3.6 billion over the estimate period (not advertised).

The ATO is warning that high net wealth individuals should also have robust tax risk management processes in place and seek specialist advice to form a Reasonably Arguable Position, before taking a tax position that could result in attracting the ATO’s attention.

It is believed that presently, the major causes for concern are trust arrangements which exploit mismatches between income for accounting purposes and income for tax purpose, one-off transactions between related parties which do not appear to have a commercial purpose, and lifestyle choices that are not commensurate with a taxpayer’s reported income.

If you have any questions or need advice and clarity specific to your individual needs, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.

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