At a Senate Economics Legislation Committee hearing on 10 February 2016, the Commissioner delivered his opening remarks highlighting the ATO’s efforts to tackle tax avoidance by large corporates. Mr Jordan said the majority of large corporates, especially Australian owned companies, pay the right amount of tax; however, he said there was a minority of large corporates who try to avoid their obligations. Mr Jordan said the ATO currently has over 70 audits and 220 reviews of large businesses in play. He added the ATO has 162 active Advance Pricing Arrangements (APAs) with an additional 115 in progress and another 42 in early stage development.
In December 2015, the ATO informed 6 large corporates that they had been placed in the ATO’s highest risk quadrant (Q1). The ATO has also written to, or will be writing to, companies that it has audited to tell them to “get their house in order”. “There will be more put on notice in the coming months as we work our way through the pool of taxpayers who have an ‘operate here and bill overseas’ business model. Where these companies do not voluntarily comply with the new law, we will be commencing immediate reviews and audits. These are non-negotiable,” said the Commissioner.
The Commissioner said the ATO will always look to work co-operatively with multinationals and the large market; however, he said the “excuses we sometimes hear from these companies are, frankly, over the top”. The Commissioner said: “How is it possible that companies known for their new-age technology and innovative products and services fail to be able to furnish us with basic reports showing their business structures, their profits, and how much tax they have paid and where? Their clear tactic is to delay and obstruct. They game the system. They even have the gall to complain that we are uncooperative and unreasonable, simply because we do not agree with them or their advisers on what are, at times, quite outlandish claims.”
Mr Jordan said these companies “play games”, “string us along”, and “believe we can be stooged”. However, he said “enough is enough and no more of this”. The Commissioner said the ATO was “ruling the line under these protracted negotiations, proceeding immediately to raise assessments and creating liabilities in these cases, potentially taking them all the way to the court if necessary.” The Commissioner further added the ATO “will not settle a dispute at any price”. In this regard, Mr Jordan noted the ATO has “an independent assurer, a former Federal Court judge, who is assisting us and designing and testing our settlements through an independent assurance process”.
[Committee Hansard starting at p46] [LTN 31, 17/2/16]