Panama Hit List
Thursday, May 5, 2016
A Tax Office deal to protect the rich
article by : Damon Kitney – The Australian, April 30 2016
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A number of wealthy Australians named in the Panama Papers, which revealed how the world’s richest and most powerful people use offshore companies to hide their wealth, will not have their historical tax affairs investigated after striking deals with the Australian Taxation Office.
Two years ago, the ATO’s Project Do It offered Australian taxpayers an unprecedented opportunity to come forward and disclose undeclared foreign income and gains on a confidential basis.
In return the ATO agreed that taxpayers making disclosures would only be assessed for the previous four years, only be liable for a maximum shortfall penalty of 10 per cent, and would not be referred for criminal investigation.
The leading tax adviser to the nation’s wealthiest families and individuals, Arnold Bloch Leibler senior partner Mark Leibler, said the deal ensured those who came forward under Project Do It and were caught up in the Panama disclosures would now have significant legal protection.
The ATO is investigating more than 800 Australian residents in connection with the Panama Papers and previous leaks disclosing the offshore arrangements of Australian tax residents.
Eighty of those are identified in the Australian Crime Commission’s database for serious and organised crime. Those found to have been involved in serious non-tax crime are not covered by the ATO’s legal protection awarded under Project Do It.
Mr Leibler, who was one of the key architects of the project in liaison with the ATO and whose clients include many of the members of the BRW Rich List, said he had been in extensive dialogue with the tax office since the Panama leaks this month.
“From the ATO’s perspective, my understanding is a limited number of people who settled under Project Do It have come up so far,’’ he said.
He warned the public against jumping to conclusions about those already named in the Panama Papers and those named in the future.
Next month the International Consortium of Investigative Journalists will publish the largest-ever release of information about secret offshore companies and the people behind them, based on the Panama Papers. It will include information about more than 200,000 companies, trusts, foundations and funds incorporated in 21 tax havens, from Hong Kong to Nevada in the US.
“You can’t draw conclusions about the conduct of taxpayers, people and companies merely because their names or their companies have been disclosed in the Panama Papers,” Mr Leibler said.
“Some of them undoubtedly will be criminals with tax only being a side issue. Others will have legitimately used nominee companies in order to avoid their activities becoming public. And others will have been involved in tax evasion.”
Last month Mr Leibler described data released by the ATO revealing the revenue, taxable income and tax payable for 321 private Australian resident companies as “outrageous’’ and “at best misleading’’.
Tax commissioner Chris Jordan, a former KPMG partner, also noted there were legitimate deductions that might lead to a company paying no tax in a given year. He also said the tax bill might fall to an associated entity.
“The only people that can make a judgment about whether a client is involved in tax avoidance or evasion is the ATO. They are the only organisation that have the tools to do that job,’’ Mr Leibler said, noting that his firm’s clients had not been using tax havens “for a long time”.
Mr Jordan is now spearheading a push by 28 countries to mount the most ambitious international investigation in history to hunt down tax evaders identified in the Panama Papers.
The ATO has also entered into more than 100 information exchange agreements with foreign tax agencies and is pushing for the global development of common reporting standards and procedures for the automatic exchange of information.
At the same time it has ramped up its compliance work to pursue taxpayers who do not declare offshore income, including establishing the Serious Financial Crime Taskforce, the successor to Project Wickenby.
“We are now heading towards a situation inexorably with the automatic exchange of information, with there being many signatories to the convention on mutual assistance in tax matters and with numerous tax information exchange agreements, whereby the ATO will be able to extract from overseas jurisdictions the same information they can extract in Australia from banks, accountants and other service providers,’’ Mr Leibler said.
“The good thing about the Panama Papers is that it has brought pressure on countries to bring about tax transparency when it comes to tax havens.”
He said it was now difficult to open a bank account in a tax haven without providing a compliance certificate.
“People are slowly beginning to understand that you can’t hide from the tax authorities,’’ he said.
“They are closing in.’’
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