Project Wickenby

Project Wickenby terms of reference

Purpose

1. These terms of reference clarify the objective and broad approaches of Project Wickenby with reference to the commitments and undertakings to government. They are designed to complement existing Memoranda of Understanding and other administrative arrangements between relevant agencies.

Background

2. In February 2006, the Australian Government approved additional funding of $308.8 million for a joint operation addressing the promotion of and involvement in tailored international tax schemes. The project now referred to as Project Wickenby is being undertaken by the ATO, the Australian Securities & Investments Commission (ASIC), the Australian Crime Commission (ACC), the Commonwealth Director of Public Prosecutions, the Australian Federal Police (AFP), AUSTRAC, Attorney-General's Department with the support of the Australian Government Solicitor. The funding commenced in February 2006 to allow the project to run through to June 2010. Additional funding totalling $198.9 million has since been provided through to 2014-15.
3. Project Wickenby will address a significant threat to the integrity of the Australian taxation system. Investigations and audit activity as at 2005 identified extensive Australian participation in the arrangements, which are promoted and implemented by offshore providers and implemented by domestic promoters. The arrangements are tailored to individual circumstances and rely on falsity, international complexity and confidentiality to create false deductions or conceal income.

Objective and outcomes

4. The overall objective of Project Wickenby is to make Australia unattractive for tax fraud and evasion, as both promoters and potential participants perceive the risk/benefit ratio as weighing heavily against them. To achieve this objective, four primary goals have been identified:
   a. Reduce international tax avoidance and evasion on the Australian taxation system
   b. Enhance strategies and capabilities of Australian and international agencies to collectively deter detect and deal with international tax evasion
   c. Improve community confidence in Australian regulatory systems, particularly confidence that the Australian Government addresses serious non-compliance with taxation laws
   d. Reform administrative practice, policy and legislation.

Scope

5. The scope of Project Wickenby extends to addressing tax mischief associated with the initial identified promoter and other identified promoters of similar arrangements, within the context of the Australian taxation system. Remedies to be applied in addressing the tax mischief include criminal sanctions such as prosecutions (money laundering or obtaining a financial advantage by deception) and proceeds of crime action. Civil action includes tax audits, assessment and Tax Administration Act action.
6. Where agencies identify practices and issues that affect the revenue systems of other jurisdictions (domestic and international), liaison and cooperation will occur within the context of agreed legal and administrative arrangements.
7. In the course of their investigations, agencies may identify practices that contravene laws other than taxation. For example, ASIC may identify and action structures contravening the Corporations Act 2001 that are directly, indirectly, or not at all associated with the tax mischief. The extent to which these are addressed under the umbrella of Project Wickenby will be considered on a case-by-case basis taking into consideration the objectives of Wickenby, interdependencies and any other factors deemed relevant.

Strategic approach

8. The strategic focus is to maximise the incentive for voluntary disclosure and establish a strong deterrent to future promotion and participation. The immediate focus will be to take decisive action against involvement with the initial promoter, before leveraging off this capability to address involvement with other promoters of similar arrangements. Continued progression of criminal cases already with the ACC, and deploying multi-agency capabilities to address other initial promoter cases involving serious tax avoidance and evasion, will send a strong signal to the community regarding the government's intentions.
9. Project Wickenby's strategy takes into account the ATO's compliance model by taking firm action against those setting out to avoid their responsibilities. The strategy recognises full voluntary disclosures should be encouraged, while behaviours involving avoidance, evasion and serious fraud must be treated firmly but fairly.
10. Project Wickenby agencies have a substantial range of powers to assist in the investigation and prosecution of conduct associated with international tax mischief. Available methods include:
• letters
• notices
• access visits
• search warrants
• examinations
• audits
• proceeds of crime recovery
• taxation assessments
• action for breaches of taxation and corporation laws
• criminal prosecutions of serious and summary matters.
11. Participating agencies will use the full range of available approaches and remedies to address the international tax mischief. A differentiated strategy will be used with tougher actions and penalties applying to those more egregious cases. The choice of approaches will take into account relevant factors, including:
    a. levels of available information
    b. encouraging voluntary disclosure
    c. the degree and type of mischief encountered
    d. cost-effectiveness, including expeditious treatment where practical
    e. the potential leverage.

Agency roles

12. Project Wickenby is a joint project involving the ATO, the Australian Crime Commission, Australian Federal Police, Australian Securities & Investments Commission, Commonwealth Director of Public Prosecutions with the support of the Australian Transaction Reports and Analysis Centre (AUSTRAC), the Attorney-General's Department and the Australian Government Solicitor. The Commissioner of Taxation is the administrator of the Australian Government's taxation laws. Therefore, the ATO is the lead agency for the overall project.
13. The ATO will obtain information, conduct analysis, investigations and audits, while supporting prosecutions of criminal and civil matters arising from the initial promoter and other promoters. An initial risk assessment of the other international promoters will guide the selection of promoters and/or individuals for further investigation and/or review, and subsequently the involvements of multiple agencies where warranted.
14. The role of each agency is recognised and, subject to each agency's statutory powers and functions, includes but is not limited to:
    a. The ACC conducts criminal investigations and manages ensuing litigation. Additionally the ACC provides the deployment of an additional examinations team to assist AFP and the ATO by leveraging the use of coercive powers to accelerate the dismantling of organised syndicates. The ACC is also collecting and analysing intelligence that will improve the knowledge and understanding of how offshore organised tax fraud schemes operate and how these activities can be counteracted.
    b. The AFP conducts criminal investigations including other high risk international promoter schemes referred by the ATO. The AFP's focus includes key organisers and facilitators of tax fraud, as well as higher risk taxpayers involved in these schemes.
    c. The CDPP conducts prosecutions resulting from Project Wickenby and is involved in cases, where appropriate, as early as possible. Prosecutorial activity includes summary offences, proceeds of crime actions and complex criminal prosecutions.
    d. ASIC reviews international structures to advise on the application of corporations legislation, such as substantial shareholding provisions, market manipulation, takeover provisions or directors' duties. Subject to restrictions on dissemination of information, ASIC may take its own enforcement/regulatory action.
    e. The Australian Government Solicitor provides high level advice in relation to legal risks and potential civil proceedings taken by or against the Commonwealth or any joint agency. Where the Australian Government Solicitor is the legal services provider for such civil proceedings or for any of the joint agencies, it manages and coordinates those proceedings in line with Project Wickenby strategic objectives.
    f. AUSTRAC provides online access to its data holdings to the ATO, AFP, ACC and ASIC under the terms of the memorandum of understanding between AUSTRAC and these agencies. AUSTRAC has recently been funded to provide analytical support.
    g. The Attorney-General's Department manages mutual assistance requests for formal assistance from other national governments on criminal investigations and prosecutions.

Cross-agency arrangements

15. Project Wickenby Cross-Agency Advisory Committee - The ability of the Australian Government to address this attack on the revenue system is highly dependent on all the agencies having the collective capability to respond and collaborate. In order to achieve a whole-of-government approach, a Project Wickenby Cross-agency Advisory Committee has been established, that meets monthly to:
    a. Identify and advise the CEOs of each agency on strategic risks, approaches, cases and other matters relevant to Project Wickenby.
    b. Share knowledge on methods, and develop and propose cross-agency approaches, including international liaison.
    c. Assist and oversee the development and maintenance of cross-agency plans and reports for Project Wickenby.
    d. Identify and advise the relevant person/body of legislative and other impediments to Project Wickenby.
    e. Identify and facilitate improvements in cross-agency working arrangements and relationships.
    f. Assist respective agencies in providing reports and advice to government on Project Wickenby, including assist with any reviews of expenditure that are required by government.
16. The ATO, as lead agency, will have primary carriage of reporting to government on Project Wickenby's overall progress, recognising that each agency will also have requirements to report to their own key stakeholders.
17. The Project Wickenby Cross-agency Advisory Committee includes senior representatives of each agency and is chaired by an officer nominated by the Commissioner of Taxation. The Committee operates in accordance with statutory frameworks, including information sharing, secrecy and privacy provisions. Administrative support is provided by the ATO.
18. Project Wickenby Chief Executive Officers - The Project Wickenby CEO meeting - comprised of CEOs from ACC, AFP, ASIC, AUSTRAC, CDPP and the ATO - meets every six months to review implementation progress and provide high-level governance oversight to the project.
19. Other cross-agency cooperative arrangements on needs basis - A variety of other cooperative arrangements are in existence or will be established as required.

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