Category: ATO

Gold trader Alex Mendieta investigated by ATO over tax fraud

The gold and diamond trader is the subject of an investigation by the tax office over his alleged involvement in a GST scam that has cost the Commonwealth government more than $879 million in lost revenue.

Source: Gold trader Alex Mendieta investigated by ATO over tax fraud

ATO’s tax gap figures revealed: $2.5 billion missing from corporates, multinationals

In the 2014-15 year there was a huge $3 billion variance between tax bills initially issued by the ATO to 81 large companies, and the money the agency ended up pocketing after it cut deals with these companies.

Source: ATO’s tax gap figures revealed: $2.5 billion missing from corporates, multinationals

ATO admits working hours inefficient after staff backlash over request to work nine more minutes – ABC News (Australian Broadcasting Corporation)

The Australian Taxation Office admits its working hours do not meet community expectations and are inefficient.

Source: ATO admits working hours inefficient after staff backlash over request to work nine more minutes – ABC News (Australian Broadcasting Corporation)

ATO chief lashes multinational companies ‘gaming the system’ to avoid paying tax in Australia – ABC News (Australian Broadcasting Corporation)

Australia’s top taxman Chris Jordan lashes out at multinational companies failing to pay their fair share of tax.

Source: ATO chief lashes multinational companies ‘gaming the system’ to avoid paying tax in Australia – ABC News (Australian Broadcasting Corporation)

BHP unpaid tax bill may exceed $522m: Murdoch Media’s Terry McCrann opinion is not to chase this tax??

BHP Billiton's half year results in Melbourne

BHP Billiton has been hit with a $522 million tax bill that could rise well beyond that over the use of its Singapore office to shift profits.

THE mining giant, Australia’s largest taxpayer and company by market value, has vowed to contest the Tax Office’s bill even though investigations into the alleged use of BHP’s Singapore marketing hub are continuing.

The Tax Office has completed a look at the early years of the hub’s operations but is still auditing BHP’s profits over the past six years, which included record earnings between 2011 and 2013 as the iron ore price soared. The bill so far includes $221 million in interest and penalties for tax avoidance. It also emerged on Monday that while BHP did pay Australia taxes on profits out of its Singapore marketing hub, it was at roughly half the Australian corporate tax rate of 30 per cent. The revelations came when BHP responded to questions from a Senate inquiry into corporate tax avoidance – made under threat of being in contempt after not answering for “commercial sensitivity” reasons at a public hearing. The ATO has accused BHP and other miners of misusing transfer pricing – selling commodities such as iron ore to its own companies at a low price – to shift profits to low tax havens, costing Australia billions in revenue. BHP’s profits in its Singapore marketing hub were $US5.7 billion between 2006 and 2014. It paid $A945 million tax in Australia on that amount and $US121,000 in Singapore – the latter tax rate effectively zero. The ATO’s dispute with BHP also relates to the Singapore hub being 58 per cent owned by BHP in Australia and 42 per cent by its UK listing, with the latter paying no Australian tax. Rival miner Rio Tinto paid more than $100 million to settle a tax bill related to its Singapore hub, tax commissioner Chris Jordan revealed at the inquiry last week. BHP defended its use of transfer pricing, saying it believed its actions were proper, commodity sales to the Singapore hub were at arms length and within OECD principles. It said the Singapore government had given BHP a tax incentive for its contribution to that country’s commodities sector, with Asia representing 65 per cent of its sales. Australia needed other countries to cooperate to make it easier to stop the flow of funds to low-tax jurisdictions, Deakin University lecturer and tax specialist Dr Adrian Raftery said. But countries such as Ireland and Singapore were prepared to lose on tax revenue but benefit economically in terms of employment and infrastructure. “A systematic approach has got to occur, leadership has got to come from other big nations, the US and UK,” he told AAP. BHP also revealed that it spent $8.5 million on the 2010 media campaign opposing the Rudd Government’s mining tax. It did not disclose to the Australian Electoral Commission at the time that it gave $4.25 million to the Minerals Council of Australia, which made its own filing.

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Actions speak louder than words

joe

  • November 15, 2014
  • Written by:

Joe Hockey has been making noise about tax avoidance.

“They’re stealing from us and our community,” he told the Nine Network on Friday, labelling tax cheats as “thieves.”

Tony Abbott told us we should judge the Coalition on their actions rather than their words – sound advice considering their words bear no resemblance to what they actually do – so it would be timely to consider what they have done to address this growing problem.

While other countries are their closing their tax minimisation loopholes, the Abbott government has spent the past year opening them up.

One of Treasurer Joe Hockey’s first acts in office was to roll back Labor’s measures to tackle profit shifting and improving tax transparency – effectively handing back $1.1 billion to big global firms.

As it pushes for a G20 summit agreement this weekend to crack down on corporate tax evasion, the Abbott government has set a timetable for action that is about one year behind the biggest European economies including Britain, France and Germany.

The “early adopters” in the global program will begin exchanging information in September 2017, however, the exchange of information with Australian authorities will not take place until September 2018.

In March this year, the ATO announced an amnesty for offshore tax cheats.  For those who come forward before the end of the calendar year, there is a guarantee of no prosecution and only four years of offshore income is assessed with a maximum shortfall penalty of 10 per cent.

“For lots of people, their forebearers came from war-torn Europe”, tax lawyer Mark Leibler told the ABC’s AM program.  “They wanted to keep nest eggs overseas, not primarily in order to avoid or evade tax, but just as a measure of security.”

So these people and their families have been avoiding tax since they arrived here after the war but let’s not worry about that.

Around $150 million worth of assets is the most declared by one person so far. The money has come from 40 countries including Switzerland, the UK, Hong Kong, Israel and Singapore.

Australian Tax Office deputy commissioner, Greg Williams, said new migrants with limited knowledge of Australia’s tax system and people that have deliberately sent money offshore are also among those coming forward.

“You’ve got that whole gamut from old money, new money, recent migrants and people sending the money offshore,” he said.

These ‘people’ include our own government.

Australia’s Future Fund has revealed it has invested more than $20 billion through offshore tax shelters, including the Cayman Islands, warning of lower returns if it does not minimise its tax bill.

The $77bn fund for federal public-servant pensions has revealed that 14.4 per cent of its assets, worth about $11bn, are invested in subsidiaries based in the Cayman Islands (a tax haven in the Caribbean) and a further 1.3 per cent is in its subsidiaries in the British Virgin Islands and Jersey.

On top of this, the fund has tipped 12.6 per cent of assets, about $9.6bn, into private market vehicles based in these tax shelters and a small fraction is invested in a vehicle based in Luxembourg.

Answers to a Senate inquiry revealed that, at June 30, the fund held stakes in 15 tobacco manufacturers including a $55.4 million stake in British American Tobacco in Britain, $44.5m in Lorillard and a $44.9m investment in Philip Morris in the US.

Individuals within the government also embrace the benefits of tax “minimisation”.

In July, it was disclosed that Malcolm Turnbull, Australia’s second-richest parliamentarian, has invested in a ”vulture fund” based in the tax haven Cayman Islands.

Mr Turnbull, who has divested himself of shares and switched his investments to managed funds and hedge funds since being elected, updated the register of members’ interests on June 18.

The IPA, not surprisingly, is against any moves to tighten up the laws.

“Inspired by the sensationalist headlines, the emerging policy agenda for a clamp down on tax avoidance should be seen for what it truly is: a ploy by indebted countries, with overgrown public sectors, to hoover up more cash from productive people and enterprises, stifling tax competition in the process.”

You have to give them credit for never letting morality or ethics interfere.  They were no doubt impressed when their much-loved patron, Rupert Murdoch, single-handedly blew an almost billion dollar hole in our budget when the ATO chose not to appeal a court ruling condoning Murdoch’s tax avoidance practices.

In a 1989 meeting, four News Corp Australia executives exchanged cheques and share transfers between local and overseas subsidiaries that moved through several currencies.

They were paper transactions; no funds actually moved. In 2000 and 2001 the loans were unwound. With the Australian dollar riding high, News Corp’s Australian subsidiaries recorded a $2 billion loss, while other subsidiaries in tax havens recorded a $2 billion gain.

By last July that paper “loss”, booked against News Corp’s Australian newspaper operations, had become an $882 million cash payout.

Under a legal arrangement when the company was spun off last June, News was forced to pass all of the tax payout to Mr Murdoch’s 21st Century Fox.

News Corp said it had retained $A81 million because it faced income tax charges on the interest payments by the Tax Office. However it seems unlikely to actually pay these funds: News Corp Australia carried another $1.5 billion in tax deductions from a separate paper shuffle that it made when News reincorporated in the US.

The Australian Taxation Office says its $882 million loss to Rupert Murdoch’s News Corporation may just be the tip of the iceberg.

Tax Commissioner Chris Jordan and deputy Neil Olesen told a parliamentary inquiry the Tax Office has recently lost even more valuable cases against individual taxpayers.

“There are others bigger than this one,” Mr Olesen told a parliamentary hearing in March. “There were significant amounts at stake that we were also unsuccessful with through the courts.”

In a current case, Australian tax authorities allege multinational oil giant Chevron used a series of loans and related party payments worth billions of dollars to slash its tax bill by up to $258 million. The claim is now being heard before the Federal Court of NSW.

Despite growing pressure to crack down on multinationals reaping massive profits in Australia each year and paying little tax, the ATO has been scaling back its technical ability to force the “transnationals” to pay up.

After cuts of $189 million in the May budget, the ATO announced that they had to cut staff by 2,100 people by the end of October.

Community and Public Sector Union (CPSU) deputy national president Alistair Waters said “The tax office has provided evidence to the Senate that for every $1 spent on resources by the tax office, that collects $6 in tax revenue.  Obviously if you are pulling resources out of the tax office that makes it easier for people who might want to avoid paying their tax.”

Public servants with hundreds of years of combined technical know-how have left the ATO’s “Internationals’ Group” in recent years, with the process accelerated by the present massive cuts to the agency.

Private advisors hired by “transnationals” to minimise their tax payments know too much about internal workings of the ATO and are using their insider knowledge to profit their clients.

Case deadlines of 90 days imposed on audit teams by ATO bosses eager to increase the number of cases covered have allowed transnationals to simply “wait out” the Taxation Office or to have low-ball settlements accepted.

Swedish furniture giant IKEA paid just $7.7 million in tax in Australia in 2013-2014, despite banking an operating profit of $92 million for its Australian activities that year.

Even the government’s domestic decisions belie their stated willingness to crack down on tax rorting.

Repealing the legislation regarding novated car leases and FBT cost us $1.8 billion in revenue and the only people to benefit are those who fraudulently claim business usage of their car, and the salary-packaging industry that has sprung up to service this perk.

But what can you expect from a Prime Minister who keeps caucus waiting for an hour – his excuse being “he had to schedule an early morning visit to a cancer research centre in Melbourne on Tuesday so that he could justify billing taxpayers to be in the city for a “private function” the night before”.

Or a Treasurer who defended “his practice of claiming a $270-a-night taxpayer-funded travelling allowance to stay in a Canberra house majority-owned by his wife” as did the Communications Minister who “rented a house from his wife Lucy when in Canberra.”

In Canberra, MPs are not required to show a receipt to prove they stayed in a hotel because the blanket $270 rate applies whether you stay in a hotel or a house owned by yourself or another person.

Because of the rules, many MPs purchase property in Canberra to provide a base during parliamentary sittings and use their travel allowance to pay off their mortgage.

We also have our Prime Minister, Attorney-General, Foreign Minister and Agriculture Minister defending their practice to claim travel and accommodation costs to attend weddings whilst grudgingly refunding the money only after it was exposed in the press.  Attendance at sporting events apparently still constitutes official business.

Tony Abbott had promised to lead an honest government that would respect taxpayers’ money and end the age of entitlement.

Joe Hockey has “vowed to give the Tax Office whatever laws it needs” and is “determined to use all available resources to close tax loopholes.”

Sorry boys – your actions make me doubt your sincerity.

G20 Brisbane: Five corporate tax havens around the world and how the summit can crack down on them By Paul Donoughue, staff. By scacking 4700 experts in this area from the ATO

Bermuda beach

G20 Brisbane: Five corporate tax havens around the world and how the summit can crack down on them By Paul Donoughue, staff

Prime Minister Tony Abbott has nominated global tax avoidance as one of the key issues on the agenda for this weekend’s G20 summit in Brisbane.

Major companies including Google and Apple have faced strong criticism over their efforts to lower their tax bills by shifting profits to jurisdictions with low or non-existent corporate tax rates.

Mr Abbott told the World Economic Forum earlier this year taxes needed to be fair “in order to preserve the legitimacy of free markets”.

“For the leaders of the countries generating 85 per cent of the world’s GDP merely to agree on the principles needed for taxation to be fair in a globalised economy would be a big step forward.”

The Lowy Institute’s Mike Callaghan said the issue was a complex one that will not be resolved in a single leaders’ summit.

“But what you need to see in Brisbane is what I call a down payment – something that you can point to to say, ‘this is a demonstration that G20 is trying to respond to the way global companies operate’,” he told ABC News Online.

“And what they could agree to in Brisbane is this sharing of what’s called country-by-country reporting.”

Currently, the Australian Tax Office can only see the local tax bill of a multi-national company, he said. But G20 leaders will likely formalise an OECD plan for countries to share information on what companies are doing internationally in regards to their taxes.

“The ATO could have more information [if] this multinational doesn’t seem to make much profit in Australia but has very large payments to subsidiaries in low-tax jurisdictions [and] doesn’t seem to have any workers employed there or any investment there but has huge profit centres.”

In light of this, we take a look at some of the world’s tax havens and which companies are taking advantage of them.

United States

One of the worst-offending countries when it comes to facilitating tax avoidance is – surprisingly – the US, said University of Sydney senior lecturer in business Dr Antony Ting.

“The research shows the US government has been knowingly helping these multi-nationals to avoid foreign tax,” Dr Ting told ABC News Online.

“The government’s justification is ‘I want to help my companies be more competitive in the world’.”

In an attempt to draw corporations away from the major hubs of New York and New Jersey, the US state of Delaware has made it quick and easy to register a corporation.

A New York Times investigation in 2012 found more than 200,000 businesses – including major US tech companies – were registered at a single address.

However, the site was little more than a forwarding address for each firm. The idea, critics said, was to take advantage of the state’s low corporate tax rate.

Ireland

“The tax rule in Ireland is a perfect accompaniment to the US tax laws,” Dr Ting said.

Last year, Apple faced criticism after paying $193 million in tax on $26 billion in profits in Australia thanks to its creative accounting practices.

CEO Tim Cook was forced to face Congress and deny Apple was unfairly avoiding tax by using a method known as the “double Irish”.

It involves a company based in the US or elsewhere setting up an Irish subsidiary, which usually only exists on paper.

That subsidiary, however, while registered in Ireland, is allowed under locals laws to be taxed in another jurisdiction.

In many cases, that is somewhere like the Cayman Islands or Bahamas, which have corporate tax rates of 0 per cent.

“You can set up a company that will not be taxed anywhere in the world,” Dr Ting said.

“Most of the profits Apple generates in Australia [are] never taxed anywhere in the world.”

Forbes has rated Ireland as one of the top 10 tax havens of the world, though the country is seeking to close these kinds of loopholes.

Bermuda

Bermuda, a British dependency, is one of several small jurisdictions – many of them islands – that does not have a corporate tax rate.

Along with the Cayman Islands and the Isle of Man, it has become an attractive destination for off-shore banking and financial services firms.

However, Bermuda denies it is a tax haven. Writing in The Guardian, MP Walton Brown said instead of collecting tax from companies, Bermuda charges customs duties.

“Over the last 15 years, when the OECD and the Financial Action Task Force began its continuing commentary on ‘harmful tax regimes’, Bermuda signed 42 tax information exchange agreements with countries seeking information about their citizens and companies,” he said.

“We signed the first tax agreement with our largest trading partner, the United States, in 1988. All a signatory country has to do is submit the tax request and Bermuda responds.”

Luxembourg

Luxembourg is a landlocked country in western Europe with a population of about 500,000. It is one of the smallest sovereign nations in Europe, and has one of the highest GDPs per capita in the world.

Major international firms, including Pepsi, IKEA and FedEx, have sought deals with Luxembourg to lower their tax bill, according to emails obtained by the International Consortium of Investigative Journalists.

In light of those revelations, there have been calls this week for Jean-Claude Juncker, head of the European Commission, to step down, given he was the leader of Luxembourg when the deals were allegedly reached.

Mr Juncker is attending the G20 summit this week.

Members of the European parliament have meanwhile called for a probe into tax avoidance in the EU and the laws that facilitate it.

A 2011 report found Luxembourg was the easiest country in the EU in which to pay your company taxes: it takes just 59 hours, or a little over one full-time employee’s working week, compared to 616 in Bulgaria.

Cayman Islands

The Cayman Islands, a British Overseas Territory in the Caribbean Sea near Cuba and Jamaica, collects no corporate tax.

The island, with a population of just over 50,000 and a GDP per capita of about $50,000, is considered a global hub for off-shore banking.

Hundreds of international banks have branches there and the banking sector is one of the largest in the world.

This development brought the scrutiny of the OECD, and in 2009 US president Barack Obama singled the Cayman Islands out as a significant tax shelter.

In 2011, advocacy group the Tax Justice Network labelled the state the fourth safest tax haven in the world.

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Abbott government rips up the rulebook for the ATO’s new building

Coalition making good on election promises: Mathias Cormann.

Reporter for The Canberra Times

The Abbott government will ignore Commonwealth value-for-money rules on official real estate as it forces the Australian Taxation Office to spend millions on new offices in regional NSW.

The ATO has confirmed there has been no business case or cost-benefit analysis, as required by the Finance Department’s rules, for the plan to build a 6500-square-metre office block in downtown Gosford on the state’s central coast.

The Taxation Office has 6200 desks sitting empty in its buildings around Australia, is shedding up to 4700 jobs and is trying to get out of leases on office space equivalent to two-and-a-half times the size of the Melbourne Cricket Ground’s playing surface.

"It risks looking like naked pork-barrelling": Andrew Leigh. “It risks looking like naked pork-barrelling”: Andrew Leigh. Photo: Jeffrey Chan.

Finance Minister Mathias Cormann says the government is keeping an election promise by going through with the building but the opposition says spending tens of millions of dollars of taxpayers’ money without due process looks like “naked pork-barrelling”.

The Taxation Office has confirmed the project will go ahead, calling for expressions of interest from developers to build the building, but ATO bosses still cannot say what it will be used for.

But Taxation confirmed this week that neither the business case nor cost-benefit analysis, required by the Finance Department for large public service property procurements, was not undertaken for the Gosford project.

The agency plans to move 300 of its public servants into the building when it is completed in 2017 but it is unclear who will occupy the rest of the floors.

The ATO had previously said it had been making progress in reducing the amount of excess offices it rents from private landlords and had plans to offload about 50,000 square metres of space, about two-and-a-half times the playing surface of the Melbourne Cricket Ground.

Labor’s shadow assistant treasurer Andrew Leigh said on Thursday that it looked as if the Coalition was spending taxpayers’ money to make good on promises made before the 2013 election solely to win the federal seat of Robertson.

“Without a business case or any kind of cost-benefit analysis for this building, it risks looking like naked pork-barrelling,” Dr Leigh said.

“If the Abbott Government actually consulted with the tax office, the agency would rather keep some of the 4700 staff that are being forced out the door than spend money on a brand new building when it already has thousands of desks sitting idle.

“If Joe Hockey is so keen to make investments in the tax office, he should start by rethinking the retrenchment of 500 auditors, some of whom will doubtless now be employed to help companies minimise their tax bills.”

But Senator Cormann said the ATO was observing procurement rules by undertaking the expressions of interest process.

“The Government is delivering on its election commitment to open a new building on the New South Wales Central Coast, with the Australian Taxation Office leading this initiative,” Senator Cormann said.

“Submissions to the expression of interest will be evaluated in line with normal processes.

“That is, expressions of interest will be shortlisted and then a more detailed request for final proposals will occur later this year.

“This is normal practice to ensure the best possible value for taxpayers’ money.”

Hockey died and we don’t know where we buried him. Yet he’s been caught out again by John Howard

Treasurer Joe Hockey has been caught out – by John Howard no less.

In 1998 the Howard Government passed the Charter of Budget Honesty Act. It required the Department of Finance to publish a “Final Budget Outcome” by September 30 each year.

In any event, the 2013-14 Final Budget Outcome has just been published. Of course, treasurers can put whatever spin they want on the document. In Hockey’s opinion the document is “a report card on the previous Government’s irresponsible fiscal and economic management”.

Well, Hockey is entitled to his own opinions, but he is not entitled to his own facts. The facts are different. So different, indeed, that the aura that conservative governments are better economic managers is now exposed as myth.

In Opposition, the Liberals carried on mercilessly about Labor’s spending blowouts and rising government debt. But what about the facts? The last report under Labor in August 2013 showed projected year-end debt of $178.1 billion. It remained the same for the next four months – the first four months of Coalition Government.

Then, in December 2013, it rose to $191.52 billion and stayed at that till rising in May 2014 to $197.85 billion. And now in September it is $202.5 billion – up 14 per cent on Labor’s debt level.

So now you have it, the Coalition is as bad at running up debt as Labor.

Yet this government abolished the mining and carbon taxes. It is absurd that we allow mainly foreign-owned mining companies to dig up and take our minerals paying virtually no company tax and very little royalties.

Smart countries like Norway taxed their main resource – North Sea oil – at 78 per cent and built up a vast sovereign fund. The tax did not deter the miners.

. Moreover, spending on the military and security has ballooned. But the problem is not government spending, it is the failure to gather the revenue to match it.

$8.4 billion a year is lost in company tax through evasion and minimisation, mainly by saddling up Australian arms of multinational companies with large interest payments on loans that are used worldwide. These companies should pay full Australian tax on their Australian revenue.

One of the most effective ways of making big companies and high-wealth individuals pay at least some tax is the GST. If you want to buy a fur coat from DJs, you pay the GST.

Australian workers and consumers must stop fearing an increase in the GST, because an increased GST could give income tax relief. Australians on quite modest incomes are now facing significant tax increases as inflation pushes them into higher tax brackets.

We should at least index the brackets. A far better solution – as a reader of this column has suggested – would be not to have the four big steps of tax brackets at $18,200, $37,000, $80,000 and $180,000.

It is manifestly unfair that the $1 earned after $37,000 (a very modest income) is taxed at 32.5 cents – the same rate as the $1 earned after $79,999 (a very comfortable income).

In these days of computerisation why not have a Cartesian scale? We could have the tax rate at zero for the marginal dollar after $18,200 gliding incrementally up to, say, 60 per cent on the marginal dollar after, say, $1 million. And then plateauing. That would be better than having these vicious steps.

And please ignore Hockey’s rubbish about the top 10 per cent of earners paying 46 per cent of total income taxes and the top 2 per cent of earners paying 26 per cent, whereas the bottom 20 per cent pay just 2.5 per cent.

The trouble with this is the definition of “earners”. These are ATO figures. The level of “earning” is based on DECLARED income. As the corporate figures suggest there must be a lot of individuals pulling in very, very large incomes but whose “declared” income is very modest indeed

It is indefensible that someone on just $37,000 will pay almost a third of the next dollar they earn in tax. So, let’s forget the hysteria about government spending and have a rational overhaul of revenue.

We are the labour of this country and pay 65% -70% directly and indirectly in Tax. Why is Capital allowed to avoid it?? Name and Shame

<i>Illustration: michaelmucci.com</i>

Tax office not doing punters any favours

Date
October 4, 2014 – 12:58AM
Michael West

Read more: http://www.smh.com.au/business/tax-office-not-doing-punters-any-favours-20141003-10px8i.html#ixzz3F9fmtUDk

Heartening to see somebody in Canberra looking after the broader interests of the nation as opposed to the distracting burqa fluff.

Greens leader Christine Milne managed to get two vital senate inquiries going: one into tax evasion by corporations and the other into the “gold plating” of electricity networks, which has been the main driver of rising energy bills.

Inquiry is into corporate tax “evasion” rather than “avoidance”. Avoidance is the legal one, evasion illegal.

The silence from the business lobby has been chilling. All taxpayer segments are being encouraged to deal with the ATO online and – if the ATO’s data analysis indicates that individuals and small business are compliant – they’ll rarely be bothered by the ATO in the future (a ‘light touch’ approach).”

Much is made of the “need to collaborate internationally” to pursue tax reform. No surprise there. They know the G20 efforts to curb tax avoidance should amount to nothing.

No surprise either that the ATO’s “new approach” is lauded by tax professionals.

Were there a peak body for Katie Perry fans, they might steal the institute’s motto nec timens nec favens (without fear or favour). Andrew Bolt stole this for the end of his Bolt Report

Avoidance only becomes evasion if the authorities drag you off to court and win. If they force a settlement, it is secret. So when a company pays little or no tax while claiming it obeys the law, it is likely that the law has simply not been tested.

It was terrific to see Wesfarmers’ chief executive Richard Goyder and Harvey Norman chairman Gerry Harvey speak on the subject this week.

“My personal view is that the tax issue will become a bigger one for companies, and will go directly to their reputation.  Norman already operates in Ireland and Singapore, it would be easy for him to dodge tax.

Others such as the head of Google Australia, Maile Carnegie, have decried the media “naming and shaming” corporations on tax. Sadly, naming and shaming is the only thing which works. Without naming and shaming, there would have been no parliamentary inquiry.

In the extraordinary lengths to which they go to avoid tax, aided and abetted by government, Facebook provides a classic case. Although it has a market value of $US200 billion ($228 billion) and sales of $US10 billion-plus, Facebook managed to win an exemption from the corporate regulator in order to class itself as – to quote the exemption, “a small pty company controlled by a foreign coy which is not part of large group”.

What part of $200 billion is not large? The point is that it did that to skive out of having to file consolidated financial statements in which it would have to provide greater disclosures on tax and transactions with its associates offshore.

The failure of transparency and proper disclosure had made it open season for big tax avoiders in this country. We don’t need G20. What we need is more corporate leadership in the mould of Goyder and Harvey and some spine from our political leaders.

The guy giving advice is good he knows the ATO from the inside. No queue necessary there’s 3000 of them

tax-avoidance

Mathias Cormann assures us that we have very strict tax avoidance laws.

These “strict” laws allow 75 individuals who made an average of $2.6 million each in 2011-12 to pay no tax at all – no income tax, no Medicare levy and no Medicare surcharge.

These “strict” laws allow almost a third of Australia’s largest companies to pay less than 10¢ in the dollar in corporate tax.

Ernst & Young is the auditor of Westfield Group, James Hardie and 21st Century Fox, all of which pay less than 1 per cent tax, according to the report, Who Pays for Our Common Wealth, produced by the Tax Justice Network and the union United Voice.

It is also the auditor of some of the US multinational tech companies accused of paying minimal tax in Australia, including Google, Apple, Amazon and Facebook.

Accounts show 21st Century Fox spent $US19 million on tax advice from E&Y in 2013.

The G20 assure us that they are talking about how to cut down on tax avoidance. A deal struck at the G20 summit in Cairns will see authorities in more than 40 countries sharing information — including bank balances and income — to identify companies that avoid tax.

But Australia will not begin swapping the financial details until September 2018, one year after countries including Britain, Germany, India, Ireland, The Netherlands and a handful of tax havens.

Why wait? We make our own laws, we could close the loopholes right now if we wanted to.  Instead, we are slashing staff at the Australian Tax Office by so much (4,700 over the next few years) that they will not have the personnel to pursue tax cheats.

“Morale is down and 3000 of our most senior staff have recently taken redundancy package,” said one former officer. “There was also an absurd clear out of senior transfer pricing staff about two years ago, so there is very little likelihood of the ATO ‘manning-up’ on multinationals any time soon. The general impression among senior ATO officers is that we are supposed to give the big firms what they want and to usher the revenue out the door. The News decision (not to appeal the $882 rebate to Rupert) is symptomatic of that and a lot of staff were pissed we caved on that case.”

With reports that one in three elderly Australians are living in poverty, despite being among the most highly educated senior citizens in the world, that 17% of our children live in poverty, that making unemployed people under 30 wait six months for income support and raising the eligibility age for the dole to 25 could breach human rights to social services and an adequate standard of living, I would suggest that if Tony Abbott wants to spend hundreds of billions on defence and border security he starts taxing his party donors, beginning with Rupert.

Hawala transfers are soooo much cheaper than banks. It’s why Bitcoin works

 

Daniel Flitton for the Age writes that tracking money when coming from various sources is exceptionally difficult. Charities were particularly vulnerable to exploitation by terrorist supporters.

“Money raised legitimately can be commingled with fund raise specifically to finance terrorism”

It might be used for  family support of terrorists who died. In other words for compassionate reasons. Very few have been discovered in Australia.  A more common form of money transfer was known as “hawala” where payments are made across the globe with little documentation but a lot of trust. This form of money transfer was exceptionally common place and not used only by Muslims. Money, is transferred around the world by Indian business men on trust unregulated yet guaranteed to reach the other end. A system that would collapse in western hands.

AUS-TRAC and ASIO would be simple minded to believe terrorist organizations used simple bank to bank transfers even via third parties to terrorists. Bitcoin is a headache for them as is TOR encryption so all they seem to be  doing is catching minnows Maybe that explains why it took 100 police to arrest one suspect.

The government says that 60 Australians are suspected of being in Syria/Iraq. It’s not known if they are fighters  some are believed to be in the refugee camps. It’s why the government has put the burden of proof on them when they come home or cancelling their passports before they do. Again this young man from Seabrook may not have been supporting a US terrorist fighter at all it all. It remains ‘alleged’ or ‘suspected’.

These terrorist groups have been established for over 10 years certainly wouldn’t consider crowd sourcing as the primary means of funding these sorts operations are more likely to be state criminally funded and  the source of those funds has always been difficult to stop.

Government was warned that the ATO was not up to catching corporate tax avoiders. Yet it’s cutting 3000 staff. But Hockey is touting the G20 will close International tax loopholes

Understaffed: An independent report has raised serious concerns about an exodus of experienced staff from the ATO, creating difficulties in dealing with corporate tax avoidance.

The ATO  is DEREGULATED  REVENUE is now INVISIBLE

http://media.smh.com.au/news/federal-politics/tax-attack-5830375.html

 

Bill Shorten accuses the government during Tuesday’s question time of going soft on corporate tax avoidance; All Tony Abbott could say is  Labor did nothing in government. Is that his justifcation. Staff will be need to be increased to supervise his welfare cuts.

The Abbott government was warned that the Australian Tax Office was ill-equipped to tackle a potential multibillion-dollar international tax dodge as it prepared to cut 3000 ATO staff.At a time when Treasurer Joe Hockey is touting Australia’s efforts in conjunction with the G20 to close international tax loopholes, the Tax Office no longer has a dedicated team to fight the problem.

The irony of it all the ATO’s most experienced staff in tracking international profits have moved to the big four accounting firms, where they now advise the nation’s biggest companies on how to minimise their tax. Furthermore they have left without passing on their knowledge, Good one Mr Abbott

Mr Hockey has been accused of

“hectoring the ATO” to clamp down on multinational profit shifting and tax avoidance.

“But at the same time he has gutted the workforce that would actually deliver on that. By cutting over 3,000 tax officers, the Abbott government has allowed decades’ worth of experience in this highly specialised area of tax law to just walk out the door,” he said.

Read more: http://www.smh.com.au/federal-politics/political-news/government-warned-that-ato-not-up-to-catching-tax-avoiders-20140930-10oa22.html#ixzz3EqBpwucC

How can this government be serious about corporate revenue collection if 3000 senior ATO wereforced to take redundancy packages

Illustration: John Spooner.
Date
September 30, 2014 – 12:15AM

After the G20 Corporations will go on their merry way transfer-pricing and their big-swinging tax lawyers and accountants will keep ripping out huge fees for the most slippery advice on how to skive out of paying tax (while sanctimoniously preaching to government about tax reform and the finer points of budget management).

“Morale is down and 3000 of our most senior ATO staff have recently taken redundancy package,” said one former officer. “There was also an absurd clear out of senior transfer pricing staff about two years ago, so there is very little likelihood of the ATO ‘manning-up’ on multinationals any time soon. Corporate lobbyists smuggly tell us is such a minimal issue amongst the top 200 companies.

“The big firms can afford to attract the best brains while the ATO has to get by on a few well-meaning but outgunned do-gooders,”

The sources grumbles that the focus in the ATO is now to to “facilitate business”.

“The general impression among senior ATO officers is that we are supposed to give the big firms what they want and to usher the revenue out the door. The News decision is symptomatic of that and a lot of staff were pissed we caved on that case.”

The source was referring to the decision by the ATO not to appeal a case against Rupert Murdoch’s News Corporation. News, an infamous tax minimiser, won an $880 million rebate last year for a transaction which harked back to 1989.

If it had the political will, the government could enact laws right away to remove the secrecy around tax.

“Lack of transparency of settled disputes with multinationals can, in my opinion, promote questionable back-room tax deals, if not corruption … where litigation is discouraged, settlement encouraged, a ‘light touch’ approach promulgated and where the appointment of senior executive staff (SES) to positions in a handful of large, multinational-specialist, tax advisory firms, and vice versa, has increasingly become a revolving door,” the source said.

This secrecy plays directly into the hands of the corporations dodging tax, not to mention their advisers at the big four accounting firms and their tax lawyers.

The government could move to make the tax laws and regulation more transparent tomorrow and the corporate regulator could insist on companies publishing general purpose financial statements. The tools are there to bring in billions in tax, all that is needed is some fair dinkum government.

 

The usual culprits top the list again this year: Rupert Murdoch’s Fox, Frank Lowy’s Westfield and the host of real estate trusts listed on the Australian Securities Exchange.

ATO needs to ‘man up’ on tax dodges

Date
September 29, 2014 – 7:12AM

The Age

The usual culprits top the list again this year: Rupert Murdoch’s Fox, Frank Lowy’s Westfield and the host of real estate trusts listed on the Australian Securities Exchange.

These are our thoroughbreds of tax avoidance; the nation’s chief “leaners”, as opposed to its “lifters”, the ordinary tax-paying Australians, small businesses and big retailers who fork out their fair share.

Those singled out in for special mention in the latest report from the Tax Justice Network will scream blue murder that they obey the law, that they have a duty to their shareholders to minimise tax. This much may be true. The one simple thing about corporate tax though, despite its impenetrable complexity, is that every year in a company’s financial statements there is a number showing exactly how much has been paid.
The two biggest miners, BHP and Rio Tinto, were nominated for failing to disclose all but a fraction of their tax haven subsidiaries.

The two biggest miners, BHP and Rio Tinto, were nominated for failing to disclose all but a fraction of their tax haven subsidiaries.

Or in the case of Rupert Murdoch’s media empire, how much it got back. This group has historically “leaked” very little in tax but last year it even won an $880 million rebate from the Australian Tax Office for a company restructure – where no money changed hands – back in 1989. It has now split into two entities, News Corp and Twenty-First Century Fox.

Fox, which led the pack for sheer numbers of tax haven subsidiaries, was also cited for the dubious honour of having the greatest negative impact on Australia’s tax base. With its effective tax rate of just one per cent – even before last year’s rebate – the Tax Justice Network estimates $1.6 billion in tax forgone.

Elsewhere, the word “aggressive” was used a number of times in respect of the tax practices of the world’s biggest shopping mall operator Westfield. Toll-road operator Transurban, Sydney Airport and many stapled trust structures spawned from the loins of the Macquarie Group were also among the nation’s top leaners.

They will argue it is up to their unit-holders, members in the trust that is, to pay income tax not them. Yet many of these are offshore or are trusts themselves which enjoy special tax relief.

The two biggest miners, BHP and Rio Tinto, were nominated for failing to disclose all but a fraction of their tax haven subsidiaries. These pay good deal more tax though than the third biggest miner, Glencore, whose coal holding company enjoyed an $8 million rebate last year.

The point is that while tax avoidance is rife among companies in the ASX Top 200, which are covered by the analysis, it is far worse among multinational companies who have their headquarters elsewhere.

 

The courage and the political will are not there yet. Public concern is on the rise, though. The result of concerted action is evident in the case of Macquarie, whose tricky tax structures once had it paying less than 10 per cent (the corporate tax rate is 30 per cent). Recently it has been paying 40 per cent, bringing in extra tax revenue of hundreds of millions of dollars – all thanks to the ATO manning up and having a crack.

Read more: http://www.smh.com.au/business/ato-needs-to-man-up-on-tax-dodges-20140928-10n7f7.html#ixzz3EeR7bSB9

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