Aggressive tax planning
We have reviewed the conduct of around 500 entities either:
- potentially involved in arrangements that may contravene the promoter penalty laws, or
- potential participants involved in the arrangements.
These reviews raised liabilities of approximately $40 million.
Over the course of the year we sent letters to over 69,000 clients primarily to:
- participants in the managed investments scheme collapse
- participants in the stapled securities arrangements.
In addition, we offered enforceable voluntary undertakings to some entities involved in more complex or higher value arrangements. These always include an undertaking to cease marketing the arrangement in the future, and may include undertakings to internal governance or control processes for promoter penalty risks, and providing specific training for staff on promoter penalty issues.
Serious non-compliance, including Project Wickenby and prosecutions
- We completed almost 280 audits and over 660 reviews in 2010-11, raising approximately $360 million in liabilities.
- We completed around 110 investigations with around 50 briefs referred to the Commonwealth Director of Public Prosecutions and a further 17 briefs referred to our in-house prosecutions section for prosecution under the Taxation Administration Act 1953. We had around 47 prosecution cases brought before the courts. They were all successful.
- There were 40 custodial sentences with 30 people actually jailed as a result of this activity, the remaining 10 receiving suspended sentences. Included in these numbers were six prosecutions related to cash-economy matters. There are around a further 30 cash-economy cases in progress.
- We prosecuted around 1,000 individuals and over 200 companies for a variety of administrative offences including non-lodgment of returns and business activity statements, failure to comply with formal notices for information and making false or misleading statements. Some of these individuals and companies were subject to multiple convictions and bonds.
Project Wickenby
From inception in February 2006 to end of May 2011, Project Wickenby has:
- completed over 800 audits and 1,380 reviews, raising liabilities of over $1 billion
- resulted in 23 criminal investigations, with 62 people charged with indictable offences and 18 people convicted of serious offences
- collected over $563 million (including approximately $255 million in cash collections from active compliance, a compliance dividend of approximately $306 million and $2.1 million of other moneys recouped).
Analysis also shows around a 16% decrease in fund flows to 13 secrecy havens, demonstrating the broader impact of Project Wickenby. Trends also show declines in fund flows of 80% to Liechtenstein, 50% to Vanuatu and 22% to Switzerland.
Highly wealthy individuals and wealthy Australians
- We completed over 650 reviews and audits of highly wealthy individuals. We expect to raise over $800 million in liabilities by the end of 2010-11
- In addition, we completed over 600 reviews and audits of wealthy Australians. We also contacted over 2,000 of these individuals by phone or letter to clarify identified compliance anomalies. We expect to raise over $25 million in liabilities from these activities by the end of 2010-11.
Employer obligations
- Overall, we conducted around 29,100 reviews and audits of employers to ensure compliance with their pay as you go withholding, superannuation guarantee and fringe benefits tax obligations, raising revenue of over $700 million. We undertook this work across all market segments.
Annual compliance arrangements
- Currently, we have 16 annual compliance arrangements in place - five with government departments, the remainder with large business taxpayers.
- We had seven income tax related annual compliance arrangements in operation to provide large businesses with greater certainty about income tax risks. During the year we signed three new compliance arrangements, renewed one and are currently in negotiation with two taxpayers on renewal of existing arrangement. The revenue protected from these arrangements is in excess of $760 million on major transactions valued in excess of $30 billion being cooperatively risk assessed with large business.
- While there are relatively few annual arrangements, they are significant in terms of the coverage and impact they have on the economy. The value of turnover of public companies under an arrangement represents almost 11% of total turnover of all public companies.
Illegal early release of superannuation
- We audited over 920 individuals involved with illegal early release of superannuation benefits and 31 promoters, raising almost $14 million in liabilities. As our compliance activities have increased, the number of participants engaged in illegal early release has decreased over time.
- In acting against the more serious abuses of the superannuation system we had two civil penalty cases decided in the Federal Court. Convictions were recorded against trustees and fines totalling $27,500 were imposed. We also referred four illegal early-release cases for prosecution. Additionally we completed 138 prosecutions, resulting in 101 convictions and fines of approximately $202,849 relating to lodgment obligations of self-managed superannuation funds.
- As part of our focus on illegal early release we implemented real-time risk profiling of new self-managed superannuation fund registrations. To date we have stopped over 440 suspect funds from operating by withholding their details from Superfund Lookup.
- We also introduced a member-verification service, allowing Australian Prudential Regulation Authority funds to confirm whether an individual is a self-managed superannuation fund member before actioning a super rollover request. This service reduces fraud, limits the scope of illegal early-release schemes and increases the integrity of the rollover process.
Taxpayer assistance - guidance and advice
Each year we provide advice and guidance to taxpayers and others who ask for our assistance and views on the laws we administer. This year we have provided guidance and advice on around 30,400 occasion as follows.
|
|
Interpretative guidance - non-binding
|
Private written advice
|
Total
|
Individuals
|
6,100
|
3,200
|
9,300
|
Micro enterprises
|
8,200
|
3,600
|
11,800
|
Small-to-medium enterprises
|
1,700
|
600
|
2,300
|
Large businesses
|
600
|
400
|
1,000
|
Non-profit organisations
|
5,100
|
300
|
5,400
|
Government
|
400
|
200
|
600
|
Non-binding advice by phone - inbound calls
In addition, to mid-June, we had received around 8.8 million calls from people across all markets, with around 1.5 million callers requiring general non-binding advice.
Sections within Appendix
Last Modified: Friday, 1 July 2011