New ATO review program – what you need to know

The ATO has announced a new reviewing process called the “Medium and Emerging Private Groups (MEPG) tax performance program.”

What is it?
The MEPG program is an ATO review which is not an official audit, but it can lead to one if issues are uncovered, which may include penalties.

Who does it relate to?
You or your business may be selected for the MEPG program if you belong to the following groups:
• Businesses with an annual turnover greater than $10 million (that are not public or foreign owned)
• Australian residents who control wealth between $5 million and $50 million.

Reasons you may be selected for the program
The major reasons or areas of scrutiny identified for selection in this program include:
• If you have management or administration fees charged to a related entity within your group structure.
• If the value of your property/asset purchases do not match up to your income as per your tax returns (the ATO uses data matching to check this).
• Groups that have experienced “rapid growth.”
• Larger private groups with higher risk issues/concerns.

Issues being uncovered/identified by the ATO include:
• No formal documentation for loans between entities or to shareholders.
• No review of tax return by client prior to lodgement.
• Inconsistent treatment of transactions across entities.
• Major tax decisions made without written advice, documentation or reasoning.

What will happen if you are selected for the review?
If you are selected for the review, the ATO will typically send out an information request and you will usually have a 28-day deadline to respond with the relevant information.

What can be done to protect yourself/your business?
As part of our regular business engagement with you, we will focus on these areas to ensure that your business is as safe as possible in line with tax governance requirements.
Being selected for a review shouldn’t result in a penalty if your information is compliant and up to date. However, even if this is the case, you will still need us to do the work for you in supplying the relevant information to the ATO. This can take significant time, and cost money. Participating in our Audit Shield service will help you cover the costs if you are selected for a review.

For further information about our Audit Shield service, please contact us.