Tax Avoidance Taskforce highlights 2019–20

Overview

The Tax Avoidance Taskforce (Taskforce) continues to investigate and challenge the most aggressive tax avoidance arrangements. Now in its fifth year since establishment, the Taskforce has intensified its efforts against promoters of tax avoidance and has successfully prosecuted them. It has also focused on obtaining assurance and justified trust that private groups and high wealth individuals have good tax governance processes in place and pay the right amount of tax.

This has been a successful year in dealing with those who deliberately entered into abusive trust arrangements and holding their advisors to account for their role in facilitating these arrangements.

The taskforce has helped the ATO raise over $4.5 billion in liabilities and collect $2.5 billion in cash in the 2020–21 financial year. The taskforce has surpassed its commitment to government each year since it began. Since 1 July 2016 the ATO has:

• raised $22.9 billion in liabilities against public groups, multinationals, wealthy individuals and associated private groups (including trusts and promoters)
• collected over $15.9 billion in cash.

As a result of taskforce assurance engagements and audit activity, multinationals, large corporations and wealthy individuals are now more tax compliant. This has prompted companies to commit to long-term behavioural change, including restructuring, changing their business practices, and settling long-standing disputes with us after we have engaged with them.

We continue to encourage and support private, public and multinational entities to engage with us early and to effectively manage tax risk.

Highlights for 2020–21

Highlights of the Tax Avoidance Taskforce contribution for 2020–21 include:

• Our compliance activities generated over $3 billion in tax liabilities and $1.25 billion in audit yield from large public groups and multinational corporations, wealthy individuals and private groups.
• We engaged with over 468 Top 500 taxpayers and their associated entities, raising $308.1 million in liabilities and collecting $113.6 million in cash, and tax assured over $1 billion in tax paid. We also published our first Top 500 findings report highlighting the outcome of our engagements in relation to this important group of taxpayers whose behaviours can have broader impact across the system.
• We engaged with over 930 of the Top 1,000 large public groups under the tax performance program (SAR) and generated $125.1 million voluntary disclosures and tax loss reductions of more than $264.3 million since the program began in July 2016. This program ceased in December 2020 and was replaced with combined assurance review (CAR).
• In September 2020, we launched the Top 1000 combined assurance review (CAR) This is an integrated product covering both income tax and GST. We started around 130 CARs.
• The Next 5000 program has engaged with 910 taxpayers and their associated entities, raising $223.6 million in liabilities and collecting $184.2 million in cash.
• The first Diverted Profits Tax (DPT) assessment was issued in December 2020.
• The Medium and Emerging program has engaged with 1,978 taxpayers and their associated entities, raising $229.2 million in liabilities and collecting $142.43 million in cash.
• Our International risk program has conducted 325 activities with privately owned wealth groups and non-resident taxpayers on international related matters, raising $266.4 million in liabilities and collecting $232.8 million in cash.
• We continue to identify and address taxpayers deliberately entering abusive trust arrangements. The current coverage of both the GreensillExternal Link and MartinExternal Link matters highlights where we seek to prevent the exploitation of tax loopholes by high next wealth individuals and groups.
• Information obtained in audits resulted in de-registration of two tax agents for their role in structuring contrived trust arrangements for their clients to gain an unlawful tax advantage.
• An audit unravelling a large-scale complex tax avoidance scheme involving foreign workers for abattoirs designed to hide beneficial ownership using multi-tier companies and trusts reached the High Court. The High Court case (Deputy Commissioner of Taxation v Shi [2021] HCA 22) concerns the ATO initiated actions for the recovery of tax debt.
• We achieved favourable promoter penalty outcomes in two Federal Court applications following investigations by Promoters and Tax Exploitation Program – Bogiatto and Rowntree. The Bogiatto penalty of $22.68 million was the highest ever imposed under the promoter penalty legislation. The Rowntree case which involved a lawyer, accountant and financial planner were ordered to pay $9.4 million for promoting a tax avoidance scheme.
• 88 audits covering 79 multinational corporations are underway in addition to Multinational anti-Avoidance Law and DPT.
• We have continued to publish numerous guidance materials, Taxpayer Alerts and Memorandums of Understanding to ensure taxpayers pay their fair share of tax in Australia.
• We’ve advanced our data & analytics (D&A) capabilities and delivered a number of technology improvements to expand our understanding of our clients, as well as create insights of potential risks to support the Taskforce.

Our focus in 2021–22

During 2021–22, our focus will continue to be specialist large market advisors who promote and run tax avoidance schemes, and engage in uncooperative, misleading and obstructive behaviour. This includes the misuse of legal professional privilege (LPP) during our reviews and audits. We are developing best practice guidance to establish best practice when making LPP claims in a tax dispute.

We will continue to engage with the Top 500 and Next 5000 taxpayers and their associated entities under our engagement and streamlined assurance programs, while using our growing data holdings to identify and treat tax avoidance behaviours.

Through our Medium and Emerging and International programs, we use our growing data holdings to identify and treat tax avoidance behaviours. We also use this data to improve our system design to ensure leveraged approaches are applied across this population, which continues to reduce risk.

The Top 1000 Combined Assurance Review program commenced in late September 2020 and builds on the Top 1000 tax performance program. Work will start with the reviews and associated engagements with respect of those taxpayers that obtained overall low assurance.

Our continued focus on taxpayers who use complex trust structures and distribution flows designed to exploit the use of trusts will be firmly in our sights.

We are sharpening our focus on the small number of wealthy individuals (and their private groups) who continue to engage in deliberate tax avoidance behaviours, working with our partner agencies to remove and disrupt harmful practices.

We will continue to advance our D&A capabilities and use of cutting-edge technology to improve the way we analyse and use data to support the Taskforce. Further improvements to data accessibility and risk detection services will enhance our ability to target our engagement and assurance work. This program of work will continue over the next 2 years, with technology and analytics enhancements that continue to manage, interrogate and provide insights from our extensive data resources.