Australia's Wealthiest - The ATO is Watching

The recently released BRW Rich 200 reveals a diverse mix of Australian entrepreneurs. An unsurprising feature of the list is that no fewer than 22 of the 200 (11%) have a significant participation in the thoroughbred industry. That figure would have been greater if Nathan Tinkler not fallen out of the top 200. But thoroughbred and wealth are ATO fodder. The Australian Taxation Office has a high wealth individuals (HWI) unit that scrutinises the wealthy.

Areas of dispute can involve the use of offshore tax residency by taxpayers to temporarily avoid tax obligations. For those involved in the thoroughbred industry, the pleasure aspect coupled with the genuine lag period of at least 10 years (time it takes to be consistently profitable) is ammunition for the ATO in their pursuit of revenue.

Our advice to those subject to HWI unit scrutiny is to be in a position to demonstrate that your horse interests are treated as seriously as your other business interests. That is, adopt strong business rules for your horse business through active management, analysis of performance and implemented changes to the ever evolving business model. Document everything as you would any business. The HWI unit is likely to take their time so be prepared for the long haul armed with your confidence that a robust business plan exists.