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  • Feature: Tax Avoidance Taskforce

    Tackling tax avoidance

    The Tax Avoidance Taskforce was established on 1 July 2016 to increase existing efforts targeted at ensuring multinational enterprises, and large public and private groups (and associated individuals) operating in Australia, pay the right amount of tax in Australia.

    The Tax Avoidance Taskforce is a broad program of work and integrates a large number of our activities across the ATO, as well as focusing on new areas of work. A key outcome is to improve community confidence in the tax system, by showing that multinational companies, large public and private groups and wealthy Australians are paying the right amount of tax in Australia.

    New legislation, which has strengthened our compliance framework and the additional resources for the taskforce, has enabled greater scrutiny over this group of taxpayers and more resources to investigate and challenge aggressive tax avoidance arrangements. The taskforce will also ensure we have the systems to support this work by delivering contemporary data, analytics, risk and intelligence capabilities. This will improve how we identify and manage tax avoidance risks into the future.

    We have already seen success through our focus on the e-commerce sector and digital economy. Our work in this area has seen a significant increase in the profits declared and tax paid in Australia. In 2016–17, ten cases were finalised, raising $1 billion in liabilities and over $600 million in tax collections. For one taxpayer, there was a five-fold increase in the amount of tax paid.

    New law implementation

    Our work in these areas has been bolstered by the introduction of several new laws.

    • Multinational anti-avoidance law
      Many taxpayers are actively considering their positions and transitioning to compliant and commercially realistic tax structures in response to the multinational anti-avoidance law (MAAL). At 30 June 2017, 18 companies had restructured, which resulted in the return of more than $6.5 billion in sales to the Australian tax base.
    • Diverted profits tax
      The diverted profits tax applies from 1 July 2017. It ensures the tax paid by significant global entities properly reflects the economic substance of their activities in Australia, and prevents diverting profits offshore. It also encourages these entities to provide enough information to resolve tax disputes in a timely manner. We are looking at those companies that may find themselves subject to the diverted profits tax and are actively engaging with them to ensure there is no delay and ambiguity regarding our expectations.

    Engagement and assurance

    Through our tax performance programs for the ‘Top 1,000’ public groups and ‘Top 320’ private groups, we engage, and consult with taxpayers from the earliest possible point to ensure they are paying the right amount of tax or identifying areas of non-compliance. These programs encourage behavioural change by working closely with taxpayers to treat risks of tax avoidance. We are doing this work to provide the Australian community with the confidence that we are doing everything we can to ensure that multinationals, public and private groups and high wealth individuals are paying the right amount of tax in Australia.

    In 2016–17, our engagement with taxpayers under the Top 1,000 program has already resulted in 12 voluntary disclosures, with a tax impact of over $24 million. The Top 320 program has provided confidence on over $2.3 billion of previously reported tax in this market and $13 million in direct liabilities raised.

    Compliance programs

    The Tax Avoidance Taskforce also includes compliance programs that identify and treat international risks (particularly profit shifting), and risks associated with private groups and wealthy Australians, including high wealth individuals, trusts and promoters. The compliance programs are intensive and treat instances where there is substantial risk that taxpayers have avoided tax. We are following up this work by issuing guidance products that highlight high-risk behaviours and demonstrate how taxpayers can become more compliant.

    At 30 June 2017, the private groups and wealthy Australians programs (including high wealth individuals, trust and promotors) had over 520 taxpayers under audit or review. This work raised $834 million in liabilities and $466 million in cash collections in 2016–17.

    End of Tax avaoidance taskforce feature

     

      Last modified: 30 Oct 2017QC 53659