A10.1The following is extracted from the Tax compliance for small-to-medium enterprises and wealthy individuals guide available on ato.gov.au.

Several characteristics may attract our attention, including:

  • tax performance varying substantially from business performance
  • inconsistencies in activity statements or spikes in refund claims
  • large, one-off or unusual transactions
  • tax and economic performance varying significantly from similar businesses in the same industry
  • unexplained losses
  • a history of aggressive tax planning by individuals or their advisors
  • weaknesses in compliance structures, processes and approaches
  • tax outcomes inconsistent with the intent of tax law
  • lifestyle not supported by after-tax income
  • treating private assets as business assets
  • accessing business assets for tax-free private use
  • not disclosing offshore dealings with overseas entities, especially low-tax jurisdictions and tax havens that allow banking secrecy
  • using complex structures and intra-group transactions to minimise tax
  • transactions where the tax and economic outcomes are inconsistent
  • poor governance and risk-management systems
  • distortions and inconsistencies in market valuations and apportionments
  • business performance falling outside small business benchmarks (for businesses with turnover of up to $15 million).

We take these characteristics into account when developing our view of potential risks and determining our compliance approach.