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Consumer Electronics and IT Companies that have in the past delivered large revenues but small profits are set to be investigated by the the Australian Taxation Office. Among the issues to be probed is transfer pricing, research costs when the bulk of products are imported, and phoenix arrangements, in which companies try to avoid tax by liquidating trading entities.The ATO has said that they are set to crack down on large businesses sending profits offshore. They will also investigate the borrowing agreements of multinational corporations and scrutinise transfer pricing where goods are purchased from a parent company higher than what the goods are being sold for to other subsidaries in an effort to repatriate money back to a parent Company without paying local taxes.
According to the Australian newspaper 400 large businesses will be reviewed and 150 top companies will be audited. 17 of the country’s 1300 large businesses — defined as those with turnover of more than $250 million a year — have been identified by the tax office as “higher-risk” taxpayers and will be subject to extra scrutiny.
Another area of concern is “profit shifting”, where profits are sent to related companies overseas to “shelter” them.
About 50 audits would be conducted of companies involved in a range of these “international issues”, the tax office said.
ChannelNews has been told that at least two major consumer electronics companies and three IT companies are set to face an ATO grilling.
With IT companies several research and development claims are set to be probed.
