We published the first version of this booklet in 2004. Since then tax havens have remained high on the global agenda and we have continued our work to counter abusive arrangements involving tax havens and lack of transparency – and will keep on doing so.
Australians who seek to conceal their tax obligations leave other Australians to bear a greater tax burden. There is no philosopher’s stone that, through alchemy, transforms Australian or foreign source income derived by an Australian resident into non-taxable income in Australia by the mere transmission through, or concealment in, a tax haven. Abusive arrangements of this kind, if left unchecked, undermine community confidence in our tax system as well as the system’s integrity.
Our work in this area is multi-faceted. We are working with other tax administrations on joint compliance approaches and sharing intelligence and information under our tax treaties. We are also working with international forums, such as the Organisation for Economic Co-operation and Development. Australia is negotiating with cooperative tax havens so we can exchange relevant information.
We have in place a compliance program to address promoters and participants in abusive arrangements using tax havens, often based on a multi-agency approach. For example, our joint investigations with other agencies, including the Australian Federal Police, the Australian Crime Commission, the Australian Securities and Investments Commission and the Australian Transaction Reports and Analysis Centre, signal that the Commonwealth will bring to bear its full arsenal of sanctions to counter tax evasion and fraud.
Project Wickenby is a prime example of this joint taskforce approach. Project Wickenby’s immediate focus is to take decisive action against identified promoters and their Australian associates and clients. Additional funding for Project Wickenby came with a clear message that participants and promoters shown to be involved can expect to have the full force of the law applied to them. As at 30 June 2007, the project had led to a number of arrests and charges arising from 19 criminal investigations. Over 100 civil investigations were being conducted and we had raised tax liabilities of about $51 million, as well as indirectly improving compliance levels.
We will also use other new approaches such as the promoter penalty legislation which provides substantial increased penalties – for a body corporate, up to $2.75 million or twice the profits from the scheme. This legislation is aimed at eliminating unscrupulous operators who peddle unsustainable arrangements to the detriment of both taxpayers and ethical advisers.
Another initiative is the pilot project we launched in July 2007, where the offshore branches or subsidiaries of some Australian banks are contacting their Australian customers with offshore accounts and providing them with information on our activities. We have given relevant taxpayers the opportunity to make voluntary disclosures to put their tax affairs in order. Where they fail to do so, the law imposes heavy penalties for evasion or fraudulent conduct which may include criminal prosecution and jail.
Our objective is to ensure there is a level playing field for tax-compliant taxpayers. We will do everything possible to make it easy for people to comply with the law and we will support those people who want to do the right thing – while ensuring there are real and tangible risks for those who don’t.
Although Project Wickenby and other activities have drawn the public’s attention to the risks associated with using abusive tax haven arrangements, we’re still concerned about those investors who are unwittingly lured into tax haven schemes and arrangements and who subsequently find they are potentially liable to pay bills for back taxes, penalties and interest. This publication will help these people make informed decisions and may persuade those thinking about venturing into such abusive arrangements to think better of it.
If you have any doubts about your potential Australian tax liability, you should seek independent professional advice and, where appropriate, please contact us to make a voluntary disclosure about your offshore financial arrangements. Penalties are substantially reduced for those who make voluntary disclosures, so this is an opportunity for everyone to get their tax affairs in order.
Michael D’Ascenzo
Commissioner of Taxation
Last Modified: Thursday, 8 October 2009
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