The Commissioner and 14 other ATO officers appeared at a Senate Economics Legislation Committee, Estimates, hearing on 25 October 2017. Their portion of the hearing commences at p47 of the Transcript and runs through to p74.
The topics covered in the hearing were many.
- The ATO has resumed its ‘fix the irritants’ regime, visiting tax agents to see how things are working for them. [p47]
- Operation Elbrus (the Adam Cranston PAYGw fraud costing the ATO over $100m). This involves not only prosecuting the culprits and recovering assets but also involves the ATO reviewing its systems for fraud or misconduct within its own office (after the Adam’s father: Michael resigned and has been charged for improperly accessing ATO information to help his son during ATO’s audit and investigation phase). [p48, p65]
- The effect of the Multilateral Anti-Avoidance Legislation (MAAL) and Diverted Profits Tax in prompting multinationals to book more profits in Australia. [p48, p53, p69, p74]
- eCommerce multinationals being reviewed by six countries at the same time. [p49]
- The Panama Papers – of 1,400 Australians named in the papers, the ATO have identified 1,200 of them (back to TFN’s) and 600 of those have already made disclosures (and remitted funds) under Project DO-IT (Disclose Offshore Income Today). There are several criminal investigations also. [p49-50]
- The ATO’s estimates of the SGC gap. “The baseline, if you like, for our estimate for the amount of SG that, in theory, should be paid was in the order of $54 billion dollars.” [p51]
- The ATO’s settlements processes and the degree of confidence they have in them. [p55-p56]
- The ATO renegotiating its 2011 Enterprise Agreement. [p58]
- The ATO’s focus on small businesses in the cash economy. [p63]
- Tobacco excise avoidance in shisha shops. [p63]
- The ATO’s commitment to enhancing digital capability both of their interface with their client base and around analytics. [p67]
- The ATO’s digital outages. [p67]
- Reasonable Travel Allowances for the trucking industry. [p70]
- ‘Bucket companies’ and their association with discretionary trusts. [p71]
- The government announcement in the MYEFO of 2016-17 of the tax office being able to report to credit agencies unpaid tax debts greater than $10,000. This was due to start on 1 July 2017 and there isn’t even draft legislation. [p73]
- the Commissioner was asked to respond to calls for making Country-by-country (CbC) reports public. He was asked whether releasing those reports to the public would be of help to the ATO. (CbC reports are a key feature of the BEPS regime under Action 13.) [p74]
- The extent of deductions available to taxpayers for ‘managing their tax affairs’ (s25-5 of the ITAA97), deductions for interest based penalties (Div 20, ITAA97) and the cost of appealing tax objection decisions. [p74]
Reverting to item 16, relating to CbC reports, Mr Jordan said if the reports were required to be made public, the ATO “wouldn’t have any reports to release, because no-one would give us any”. The arrangement tax authorities, including the ATO, have through the OECD is encapsulated in a multilateral agreement that Australia has signed. That agreement is based on the information that is exchanged. The information is to be kept within the confines of the relevant tax authorities, the Commissioner said. “People call for this to be made public – no-one would give us anything, so there’d be nothing to make public. We’ve signed up to an international agreement, as with [other countries], to say that this will occur as long as the information is only provided to tax authorities.”
The Commissioner was asked what he considered was the value to the ATO and to the government of receiving that information. He replied: “It’s of enormous value! … our people think it is of enormous benefit to get that level of detail, which we’ve never had before, in a proactive way. We might get this sort of stuff after lengthy audits, many information requests and all that sort of thing, but this is transformational in our international tax work.”
Jeremy Hirschhorn, ATO Deputy Commissioner, Public Groups advised that the ATO had now received about 300 CbC local files, and had received its first (this is several months early) full CbC file. “It is exceptional information and exceptional transparency. In the discussion about tax transparency, it’s very important to distinguish between information that the tax office has -transparency of taxpayers to the tax office – and transparency that taxpayers have to the community. What we’d say is: when we have the information we can do our job. Transparency to the public is a good thing, but, around country-by-country reporting, as the Commissioner said, with the international consensus to gain that information, it would be a shame to kill the golden goose.”
The Commissioner strongly agreed with a comment by Senator Bushby that the ATO protects the privacy of taxpayers, whilst acknowledging the need for taxpayers to be fully transparent with the ATO, because in the absence of respect for that privacy, “you might not get the information you need” to make accurate assessments.
[APH website – Estimates Transcript 25.10.17; FJM; LTN 208, 31/10/17; TM Oct 2017]