ATO targets top corporates .

PIRATE: Australian Taxation Office (ATO) in Fyshwick 02/12/98 which has been targeted with letter bombs by embittered former tax office worker Colin Dunstan.

THE taxman will target big multinationals this year and scrutinise cross-border financial arrangements designed to shelter profits.

In the 2010-11 compliance program, due for release today, the Australian Tax Office vows to target companies that restructure their operations to shift assets overseas and thus lower their tax bills in Australia.
The document raises the sale of intellectual property rights, a tactic favoured by multinationals looking to assign the rights to more favourable tax jurisdictions.
The ATO remains concerned about the loading of high debt on thinly capitalised companies to generate excessive interest deductions to lower the tax bill.
Among the areas where the ATO is ramping up its scrutiny of mechanisms designed to shift profits overseas or losses to Australia are the use of cross-border financial arbitrage measures such as asymmetric swaps.
The swaps have been an issue in the banking sector as the structure has been used between big local banks and their offshore banking units, which are taxed at a lower rate.
The ATO's compliance strategy specifically identifies the "inappropriate use of offshore banking units" as an area of concern.
In 2009-10, the ATO audited 36 large businesses and undertook more than 350 risk reviews.
That activity resulted in an extra $1 billion in tax collections, $2.2bn in new income tax liabilities -- after $244m in credits were issued to taxpayers who won lawsuits about past audits -- and more than $870m in notional tax.
The ATO has also said it will review corporate restructures, mergers and acquisitions, particularly where they involve complex or novel financial arrangements or "steps which do not appear to be necessary to achieve the business needs of the parties". Specifically, it has said it will review so-called treaty shopping by private equity.
This follows ATO draft determinations issued after it launched a claim against TPG Capital -- the former private equity owners of Myer -- claiming TPG had treaty shopped to send the $1.5bn it made from the float to offshore tax havens.
The government is reviewing the policy, and the ATO has deferred its final decisions on the matter until that is complete.
The ATO has also signalled it will single out major law and accounting firms, as well as investment banks, involved in "aggressive tax planning".
The ATO is also targeting the potential for business to over-claim GST input credits, particularly those involved in capital raisings, managed funds and super funds and securitisation.
To target so-called "black holes", where businesses claim expenses that are not recognised under the tax law, the ATO will review claims from companies involved in mergers and acquisitions and capital raisings.
It will also roll out more education to businesses involved in IPOs, mergers and acquisitions, and other types of raisings.
The tax office raised an extra $840m in GST liabilities in 2009-10 after conducting audits on areas including financial supplies and property transactions.
The ATO will also be scrutinising claims for losses in the wake of the recent global economic downturn.