How we engage with Next 5,000 groups
We engage with the Next 5,000 privately owned and wealthy sub-population through the tax performance program. We engage with Next 5,000 groups in a range of ways based on the:
- size of operations
- structural complexity
- consequence of tax issues
- risk of non-compliance.
We involve groups that are large and have complex structures through a streamlined assurance review. We engaged with other groups through risk reviews.
Within the Next 5,000 sub-population, we have approximately 346 corporate tax transparency (CTT) entities. This represents more than a doubling of the CTT entities in the population, largely due to the change in the CTT reporting threshold for private companies dropping from $200 million total income to $100 million from the 2022–23 income year. 78% of Next 5000 groups in this year’s CTT report have had compliance coverage in the last 5 years.
This sub-population is always a focus and will continue to be reviewed in line with broader approach outlined above.
That is for groups that have large and complex structures we review these groups and CTT entity through a streamlined assurance review. For other groups we review through risk reviews. Our findings in relation to these entities are similar to the rest of the Next 5,000 sub-population.
For further information see Next 5,000 private groups tax performance program.
Demographics
The Next 5,000 sub-population covers Australian residents who together with their associates, control a net wealth of over $50 million. These groups hold around $1.6 trillion in net assets and contribute more than $18.9 billion in tax revenue each year.
Based on 2022 income tax returns lodged and corresponding third party data, our analysis shows that there are about 10,385 groups in Australia that have net wealth over $50 million. There is typically a lot of churn in the population and we are taking additional steps to understand this.
Considering the economic size of these groups, even one error can have a big tax impact. The high profile of these groups also means that their level of participation can influence community confidence in and perceptions of fairness of the tax system.
Most are well established, multigenerational businesses that have been operating for many years. Many are family businesses or closely controlled groups.
These businesses often choose private structures because they allow for:
- more flexibility
- greater control over operations
- fewer reporting requirements.
As a business grows, structures become more complex. A typical Next 5,000 group includes:
- 12 entities made up of 6 companies, 4 trusts and 2 other entities such as a self-managed super fund or private ancillary fund
- a group head who is 65 years old
- 41 employees
- total income of $6.7 million
- net wealth of $82.6 million
- income tax of $596,900
- net GST of $91,600
- PAYG withholding of $283,200.
Some Next 5,000 groups have philanthropic interests and include an ancillary fund or charity.
Figure 1: Typical Next 5,000 group
Groups by entity type
There are over 162,000 entities within the Next 5,000 sub-population. The group structures used by Next 5,000 groups can be complex with some groups comprising many entities.
They may contain any combination of company, partnership and trust structures operating both inside and outside of consolidated groups. Currently the Next 5,000 sub-population includes:
- 74,571 companies
- 53,581 trusts
- 19,080 individuals
- 8,179 super funds
- 6,621 partnerships.
Figure 2: Next 5,000 groups by entity type
Groups by industry
Within the privately owned and wealthy market the top 3 most prevalent industries include:
- financial and insurance services
- professional scientific and technical services
- construction.
This is reflected in the Next 5,000 sub-population where over half operate in at least one of the following industries:
- 30.5% financial and insurance services
- 8.2% construction
- 5.2% agriculture, forestry and fishing
- 5.9% rental, hiring and real estate services
- 5.1% wholesale trade
- 6.2% professional, scientific and technical services.
The remaining groups operate in:
- 4.5% manufacturing
- 4.8% retail trade
- 2.8% accommodation and food services
- 2.7% health care and social assistance
- 1.5% transport, postal and warehousing
- 1.0% administrative and support services
- 21.6% remaining industries.
Figure 3: Next 5,000 groups by industry
Note: Due to rounding, the total figure adds to 99.9%.