ATO outlines tax avoidance risks on its radar for large businesses

The ATO has highlighted some of its priorities for large and multinational public businesses in 2025, including major focus areas for the Tax Avoidance Taskforce.

Fiona Knight, deputy commissioner, said the Tax Avoidance Taskforce will focus on arrangements that appear to be designed to avoid the inclusion of capital gains in the assessable income of Australian resident entities when disposing of assets.

Other risks include issues involving intellectual property and intangibles, including whether appropriate royalties are being paid and income generated in Australia is being appropriately taxed.

“We’re also seeing an increase in private equity investments, which require us to understand very complex and opaque offshore structures,” Knight said.

“Importantly, in this area, we don’t simply look at individual transactions, but we also consider the revenue risk across the life of the investment. This includes all private equity participants (firms, funds, target entities and investors) at different stages of the private equity lifecycle (pre-acquisition, acquisition, holding, pre-exit and exit).

Knight noted the Tax Office and taskforce would also ensure large taxpayers were held accountable and reinforce the taskforce’s role in assuring the community that Australia’s largest taxpayers were meeting their tax obligations.

She said this was an important challenge for the ATO over the upcoming year as it continued to shift its engagement with the largest public businesses to “real time.”

Work already provided by the taskforce in assurance and compliance had resulted in strengthened community confidence, yet shifting engagement with larger taxpayers to real time was the “next step” in the process, Knight explained.

“The taskforce has allowed us to undertake an ambitious program to generate long-term change in the large market,” she said.

“The foundation of the Australian tax and super systems is the willingness of all Australians and businesses operating in Australia to cooperate with us. Voluntary compliance is stronger when the community has confidence in the fairness and integrity of the systems.”

“Therefore, ensuring the continued tax performance of public multinationals and large taxpayers is essential in maintaining this confidence.”

According to the ATO, the taskforce was successful in holding the largest and wealthiest taxpayers to account over the course of 2023 and 2024, having directly secured over $10 billion in additional revenue.

From 2016 to 30 June 2024, the taskforce funding helped secure around $32.4 billion in additional tax revenue and raised $38.7 billion in tax liabilities from large public groups, multinationals, wealthy individuals and private groups.

Knight said that more than half of the additional revenue raised by the taskforce reflected the increased tax paid by businesses that had changed their arrangements to remain compliant with the ATO and taskforce.

“Crucially, the taskforce has also allowed us to both settle disputes and to provide clear guidance and engage with taxpayers early to prevent disputes,” she said.

The taskforce aimed to have engaged with the top 100 public businesses about moving to real-time engagement by the end of 2025.

“We expect that businesses with mature tax governance frameworks will work to understand our guidance, and will recognise that when they engage with this tailored, transparent and swift service, they’ll be able to minimise post-lodgement disputes.”

“Early engagement improves the taxpayer experience and allows us to resolve issues and ‘lock in’ future arrangements in line with our guidance. This provides certainty for us and the taxpayer moving forward.”