The Australian Taxation Office has warned that it will be undertaking reviews and audits of taxpayers who have claimed tax losses and are identified as higher risk. During 2007 and 2008 $26 billion of tax losses were reported and the Tax Office is concerned of the potential threat to revenue resulting from the utilisation of these losses in future years.
Some of the key areas of focus will include an examination of trust losses and company losses where there has been a change in the beneficial ownership of the company’s shareholding. The key industry sectors likely to be examined are construction, finance, retail, manufacturing and transport.
In some circumstances it is possible to ensure that losses are preserved by using the appropriate elections prescribed by the taxation laws and/or ensuring that continual compliance with carry forward loss rules continue to be satisfied until such time that losses are recouped.
If you have reported tax losses in recent returns and are concerned about the increased Tax Office activity please contact your client services partner, Murray Howlett of our Taxation Services Division on (07) 3023 1300.