CANBERRA, Aug. 22 (Xinhua) -- Australia's largest companies will be required to self-report "contestable" tax positions after the Australian Taxation Office (ATO) flagged a major change to its self-assessment process.
The change, effective from the financial year ending in June 2018, will see Australian companies with revenues of more than 200 million U.S. dollars face significant fines if they failed to self-report the potentially problematic positions to the ATO.
It represents a major shift away from the self-assessment principle the ATO has employed for decades and experts have warned that it could even be applied to small businesses and individual taxpayers.
In a letter to Australia's largest 1,000 companies, the ATO demanded that companies reveal their "reportable tax positions", a system whereby contentious tax declarations must be self-reported by the filing company when they lodge their return.
Even claims that the companies believe to be lineball decisions on whether they will be upheld must be reported, the ATO said.
The fines for companies that lodge claims that are incorrect or late have also been increased to a maximum of 400,000 U.S. dollars in addition to the payment of the disputed tax plus interest.
Tony Sloan, senior tax partner at consultancy firm BDO Australia, said that the changes were a "radical development."
"It is the biggest single move away from self-assessment by the ATO in decades," Sloan told Australian media on Tuesday.
"Until now, there have only been a handful of our very largest companies who have had to do this. Extending it to the top 1,000 is a serious escalation."
The ATO introduced the system to the top few companies in Australia in recent years, Sloan said.
"It's clear the ATO viewed this pilot version among the top companies as a success, and has now rolled it out much more widely," he said.
"All the ATO has to do is to drop the turnover threshold a bit more, and before you know it, even small business will end up getting caught in the dragnet. And there's nothing to stop individuals being hoovered up in the long term as well."
