Tax Compliance 2013

Data Matching and Third Party Information

The Government will provide $77.8 million over four years to the ATO to improve compliance by expanding data matching with third party information. This will cover not only domestic activities but extend to Austrac reported transactions.  Treasury said the information provided will also improve the pre-filling of tax returns and the measure will establish new and strengthen existing reporting systems for:

• taxable Government grants and certain other Government payments
• sales of real property, shares and units in managed funds
• sales through merchant debit and credit services
• managed investment trust and partnership distributions, company dividend and interest payments, and
• transactions reported to the ATO by the Australian Transaction Reports and Analysis Centre

Trusts Taskforce

The Government has announced nearly $70 million in funding over 4 years for an ATO taskforce to target the use of Trust structures by wealthy individuals.  The Assistant Treasurer announced that the ATO would focus on arrangements to avoid and evade tax, including mis-characterising transactions, concealing income, entering contrived loan agreements and artificially reducing trust income.

Dividend Washing

The Government has announced that the practice of ‘dividend washing’ (or dividend double dipping) will be specifically legislated against from 1 July 2013. This practice involves a shareholder (often a superannuation fund) selling shares ex-dividend and then re-acquiring equivalent shares which still carry the right to a dividend (known as cum-dividend shares). In effect the shareholder receives two sets of franking credits for the same parcel of shares.