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ATO Offers Update On Taskforces

Friday, March 13, 2015

Set up just over eighteen months ago to examine taxpayers using trust structures to avoid or evade taxes, the Australian Tax Office's Trust Taskforce has reportedly already raised AUD350m (USD267.6m) in liabilities and AUD61.8m in collections.

The Taskforce comprises Australia's main law enforcement bodies and regulators, and its members have recently received new information sharing powers. Acting Deputy Commissioner Will Day said: "Information sharing makes it quicker and easier to identify and prosecute law-breakers by giving us a more complete profile of the individuals, businesses, and tax advisers [that] are at a higher risk of committing financial crime."

According to the ATO's latest figures, as of January 31, 2015, the Taskforce had finalized 21 audits and 397 reviews. Seven cases involving the serious exploitation of trusts have been escalated for possible law enforcement action and two taxpayers are currently before the courts on serious criminal charges in relation to Trust Taskforce-related matters.

The Taskforce is expected to raise AUD415m in liabilities and AUD165m in collections by the end of 2016.

Day said: "Although it has been up and running for over a year, the decision to prescribe the Taskforce means we can now share tax-related intelligence and data with more agencies. We know that most businesses and families who have trust arrangements in place use them legitimately and are doing the right thing. The Trust Taskforce is cracking down on those exploiting trusts to conceal their interests, mischaracterize transactions, and artificially deal with trust income to avoid paying their fair share of tax."

The ATO also heads up a Phoenix Taskforce, which has also been prescribed. Pheonix activity – where assets from an indebted company are transferred to a new company without the payment of existing debts – is estimated to cost the Australian economy AUD3.2bn a year.

Day said: "Businesses are not being paid for the products and services they supply and employees of phoenix operators are losing up to AUD655m in unpaid wages and entitlements such as [superannuation]. The work being done by the Phoenix Taskforce makes it harder for dishonest business operators to get away with closing down their businesses, escaping their taxes, and other creditors and then emerging with a similar business."