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  • High Court judgement confirms blatant tax evasion

    Today Hua Wang Bank Berhad and Bywater Investments Limited’s appeal to the High Court was unanimously dismissed, confirming that the corporate entities were residents of Australia for tax purposes.

    Tax Commissioner Chris Jordan said the decision means that any parties who set up complex structures offshore with the clear intent to avoid paying tax in Australia, should take a hard look at what they are doing and whether they want to run the risk of being caught and seriously penalised.

    “The decision is not a one-off decision. We’ve fought this case already in the Federal Court. Today’s High Court decision affirms that we will maintain our resolve to pursue cases of blatant tax evasion - we can and will catch this type of contrived behaviour.

    “We will use all our available powers and resources to deal with such schemes and ensure all Australian residents pay the right amount of tax. 

    “This case has had a substantial litigation history – including 19 challenges to the evidence and procedure at the Federal Court, followed by an appeal to the Full Federal Court. This was not an easy process.

    “I have made it clear that the ATO will not shy away from difficult and complex cases, no matter how long they take to run, and no matter how many obstacles are put in our way.

    “We will not give up and will continue to challenge – through the courts if we need to – cases where we see corporate entities seeking to game the system. It is not fair to see this occur when other entities are working hard to engage with us and ensure their operations are above board, and most importantly they pay the right amount of tax they are obliged to under the law’.

    The court found that the company should not be regarded as residing outside Australia merely because it had established a board of directors abroad to act upon the dictates of an Australian resident.

    “The companies' officers were outside Australia, but they did no more than "rubber-stamp" the decisions made…in Australia,” Justice Gordon stated.

    “This result only strengthens our resolve. It shows that we are on the right track in pursuing these strategic cases to ensure the law is upheld and the integrity of our tax system is maintained,” the Commissioner said.

    Last modified: 16 Nov 2016QC 50529