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ATO observations on large business taxation issues

ATO observations on large business taxation issues

Angela Wood, Peter Madden and Glen Hutchings provide an outline of the ATO Deputy Commissioner's presentation on large business taxation issues to the KPMG Tax practice in Singapore.

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Observation deck

On 4 April 2018, the tax practices of KPMG Australia and KPMG Singapore hosted an event in Singapore for over 120 Asia Pacific (ASPAC) regional tax directors. The keynote speaker was the Australian Taxation Office's (ATO) Deputy Commissioner of Taxation, Public Groups and International, Jeremy Hirschhorn.

Mr Hirschhorn presented on the ATO’s current taxation administration and focus areas for public groups including 'Justified Trust', early engagement, the Top 100 taxpayer experience, the Top 1,000 taxpayer experience, new entrants and the pathway for resolution of disputes.

Following Mr Hirschhorn's insights a panel discussion, chaired by Angela Wood and including Peter Madden, Glen Hutchings and Simon Clark, Tax Partner, KPMG Singapore, was held. The panel discussed the practical implications of recent Australian taxation developments including the Federal Government's announcement regarding stapled structures.

Themes emerging from this presentation and the subsequent panel discussion included:

  • Transfer mis-pricing (as referred to by Mr Hirschhorn) is seen by the ATO as the biggest driver of the income tax gap for large corporate groups in Australia.
  • The ATO will continue to push to obtain information held offshore, with non-compliance with requests impacting review/audit processes and outcomes.
  • Early engagement remains very high on the ATO agenda.
  • ATO’s focus areas for public groups currently include: fragmentation of business structures (including stapled structures), financing (including cross-currency interest rate swaps) intellectual property migration, thin capitalisation calculations, the promotion of tax schemes by intermediaries, offshore services hubs and the natural resources sector.

Challenges remain for tax functions of multinational enterprises (MNEs), as they seek to achieve the right balance to manage tax risk and compliance in Australia. The type and intensity of interaction expected of MNEs by the ATO has shifted. The legislative and policy landscape continues to evolve quickly and MNEs must continue to re-evaluate their approach.

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