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  • ATO Commissioner statement regarding 'week of action'

    I am pleased to announce that we have made significant progress in dealing with those exposed in the Panama Papers who have tried to avoid their tax obligations. We have been clear in recent years that hiding income and assets offshore will not be tolerated and we are committed to ending this behaviour.

    This week of action further demonstrates our strong stance against tax crime, and the active collaboration between our domestic agencies in delivering a whole-of-government response.

    We anticipate that as information continues to be shared across government and with international partners, and as the community continues to provide us with intelligence, we will see further action in the coming months.

    We have a long history in dealing with those who try to exploit the tax and superannuation systems. The well-publicised Project Wickenby was a significant success, raising over $2 billion in liabilities and achieving 47 prosecutions.

    Following the success of Project Wickenby, the Government supported the establishment of the Serious Financial Crime Taskforce. The Taskforce has broadened the focus of Project Wickenby and reinforced the domestic agencies working together to detect and deal with serious financial crime. This week of action is a good example of how the Taskforce has been able to take swift, timely and decisive action in relation to the Panama Papers.

    Along with my role as the Commissioner of the Australian Tax Office, I am also the Chair of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC). In addition to our domestic collaboration, I recently called two urgent JITSIC meetings in Paris to enable countries to share their work to date, including common behaviours and structures used by those exposed in the Panama Papers.

    We recognise that offshore structures and trusts do have a genuine purpose for many individuals and corporations. However, having commenced the assessment of the data, we believe that some of these structures and trusts are being used to evade tax, avoid corporate responsibility, disguise and hide unexplained wealth, facilitate criminal activity and launder the proceeds of crime.

    For example, we have received data on Australians who have failed to disclose offshore bank accounts. In addition, we have obtained information on offshore service providers who have established entities for Australians in secrecy jurisdictions – the sole purpose of which is to conceal their interests and wealth.

    Last year, we ran our voluntary disclosure initiative Project Do-It as a “last chance” for Australians to clean up offshore affairs before we ramped up our enforcement actions. Over 5,800 Australians made the right decision to come forward and made disclosures to us raising over $260 million in collections and identifying in excess of $6.5 billion in assets previously undisclosed. A further $135 million in tax has since been voluntarily paid because the income is back in the system.

    While our week of action is responding to the Panama Papers, we are currently accessing 10 further data sets that have come to us from a variety of sources. Experience tells us that within this information we will find further examples of the use of these structures to attack the Australian tax system.

    Given our strong and trusted relationships with other countries, we have in the last four years managed over 2,500 exchanges of information that has resulted in

    $1 billion in tax liabilities being raised.

    Importantly, the sheer size of the information available to us for analysis should send a clear message to those who believe that their data is secure, hidden and beyond the reach of law enforcement and tax authorities – it is not.

    Tax fraud is not acceptable, and we will not only focus on those seeking to avoid their obligations, but also the advisors who facilitate this egregious behaviour. During the course of this week of action alone, we have focused on six accountants and up to 60 of their clients.

    It’s important to note that tax fraud won’t just result in the outstanding tax and penalties to be repaid – but may result in criminal charges. The impact of a criminal conviction can have lasting impacts on those involved including:

    • Removal as a trustee of a self-managed super fund and becoming a director of a company.
    • Restrictions on international travel.
    • Difficulties obtaining finance and insurance.

    As Minister O’Dwyer statedExternal Link, the SFCT has raised $130 million in liabilities and is currently progressing 19 joint operations. In just its first year, the taskforce has achieved four prosecutions:

    In the first case the individual used a scheme involving various offshore entities and trust to hide his income and then attempted to conceal the return of this income to Australia. He was convicted and sentenced to five years and nine months imprisonment, with non-parole period of two years.

    In the second case, the individual made more than 100 illegal trades and was sentenced to eight years and three months, with a non-parole period of five years and six months.

    In the third case, the individual established a web of offshore entities in Vanuatu to conceal $4.5 million in income from the ATO. He was convicted and sentenced to five years imprisonment with a non-parole period of two years.

    Finally, an individual was sentenced to two years jail for using offshore structures to hide funds.

    In addition, we saw a recent matter where an individual appealed their sentence for tax fraud. On appeal, the sentence was increased with the individual receiving a 14-year jail term.

    These results show that there are serious consequences of tax crime. I would encourage anyone who is involved in these types of behaviours to come forward - talk to us now because it is only a matter of time before you are caught. You cannot hide outside the system forever.

    Chris Jordan

    Commissioner of Taxation

    Australian Taxation Office

    Last modified: 06 Sep 2016QC 50047