The agency has updated its guide on “What attracts our attention”, with a list of activities it considers to be highly suspicious and worthy of further investigation.
These broad factors include:
• Tax or economic performance that is not comparable to similar businesses
• Low transparency of your tax affairs
• Large, one-off or unusual transactions, including the transfer of wealth
• Aggressive tax planning
• Tax outcomes that are inconsistent with the intent of the tax law
• Choosing not to comply, or regularly taking controversial interpretations of the law without actually engaging with the ATO
• Your lifestyle is not supported by after-tax income
• Accessing business assets for tax-free private use
• Poor governance and risk-management systems
However the ATO breaks these down further to look at suspect behaviours around particular taxes and deductions.
For instance, extracting profits from a business will catch the attention of the taxman where a complying loan agreement has not been put in place, amounts are taken from the company’s accounts but not repaid and interest income from a loan is not declared on the company’s tax return.
And the changes to the research and development tax incentive announced in the recent federal budget also means it is likely to attract heightened scrutiny.
Check out the full list of things the ATO is on the lookout for on the ATO website.