Reason for the program
The Next 5,000 tax performance program is funded by the Tax Avoidance Taskforce and seeks to give the community confidence that Australia's largest privately owned and wealthy groups are paying the right amount of tax.
Engagements under this program focus on providing certainty of the tax treatment in relation to significant transactions, activities or events and potential tax risks specific to your business. By working with Next 5,000 groups, we aim to increase ongoing and willing participation in the tax and super system.
Who is covered by this program
We use data matching and analytic models to identify Australian resident individuals who, together with their associates, control wealth of more than $50 million. We then consider all entities within a group.
Our private group approach helps us to better understand private group businesses and provide you with a tailored experience.
The Next 5,000 program doesn't include private groups in our Top 500 private groups tax performance program.
How we tailor our approach to you
To better tailor our approach and develop strategies to address and mitigate tax risks, we identify trends and priority issues specific to Next 5,000 groups. We work with you by:
- letting you know about issues that attract our attention
- publishing public advice and guidance on issues relevant to you
- providing certainty on significant commercial deals through early engagement and pre-lodgment agreements
- engaging through tailored reviews and, where appropriate, audits.
Our tailored approach includes working with groups to provide certainty on the tax treatment of significant events, transactions, or complex tax issues. A key focus of all our engagements is early resolution, where appropriate. This may involve correcting tax errors and improving existing processes to help you get things right and avoid similar errors.
Where groups are unwilling to work with us in an open and transparent way, we:
- take firmer action, such as traditional reviews and audits
- consider the option of using our formal information gathering powers, if necessary.
Types of engagement you can expect
We select the most appropriate type of engagement for your group based on:
- the size and structural complexity of your operations
- results from our data analytics and risk models.
Broadly, we use 3 types of engagement in the Next 5,000 program:
- streamlined assurance reviews based on our justified trust methodology
- reviews on risks specific to your business
- pre-lodgment compliance agreement for your commercial deals and restructure events.
Streamlined assurance reviews
For large groups with complex structures we take an assurance approach through a streamlined assurance review to gain confidence that your group has paid the right amount of tax.
Reviews on risks specific to your business
As part of the Next 5,000 program, we also undertake reviews that apply a risk-based approach to groups. This is different from an assurance approach such as the streamline assurance reviews that apply our justified trust methodology. We base case selection on our profiling and data analytics. These relate to:
- the presence of key priority areas
- any new emerging issues affecting private groups.
These areas are a combination of client behaviours and transactions that we have observed in the Next 5,000 population. These are:
- experiencing rapid growth, which may lead to incorrect reporting if the tax governance framework isn't fit for purpose to support the expansion
- expanding offshore or engaging in cross-border transactions with related parties
- entering into arrangements such as intra-group transactions to inappropriately transfer domestic wealth
- undertaking wealth extraction including by the use of private equity funds
- considering tax efficient structures to pass on wealth to the next generation.
We use comprehensive risk reviews where we have identified multiple key priority areas, issues or risks through our profiling and data analytics.
There are also specific risk reviews that generally focus on or 2 specific potential tax risks that we believe we can work with a group to resolve quickly.
In most cases, we expect that specific reviews can be resolved by:
- getting further information from you
- you completing some specific action, such as lodging an outstanding schedule.
GST-integrated reviews
We also undertake a number of GST-integrated reviews as part of the Next 5,000 program:
- This may be as part of a streamlined assurance review, comprehensive or a specific risk review.
- Where we consider GST, we will seek objective evidence from you in support of your GST treatment.
- We complete GST-integrated reviews within the normal review timeframes.
Next 5,000 findings report
We have published our Findings report Next 5,000 tax performance program. This is based on our findings, current as at 31 August 2023.
The report includes:
- our observations and insights on the tax performance of Next 5,000 private groups that we have engaged with through streamlined assurance reviews
- common tax issues, risk themes and behaviours and the importance of good tax governance
- the profile of a typical Next 5,000 group and the characteristics that define the Next 5,000 population
- an outline of how we engage with a Next 5,000 group and how we apply the justified trust methodology in our streamlined assurance reviews
- our observations on the GST issues we have observed arising from significant activities, events or transactions