ATO receives big boost from Budget
Deloitte Federal Budget media releaseDOWNLOAD
15 May 2013: The ATO is to receive an additional $254.8 million over the next four years to increase compliance crackdowns on profit shifting by multinationals, tax avoidance using trust structures, and to expand data matching using third party information.
The combined additional tax collections from these initiatives are estimated to be $1.566 billion, providing a combined return on investment of more than 610%.
The focus on multinationals is consistent with the Government’s broader focus on base erosion and profit shifting that is being tackled at the G20 and OECD level. It will be used to target erosion of the corporate tax base through the use of offshore marketing hubs and business restructures that shift revenue and tax into lower tax jurisdictions. This measure is forecast to increase tax revenue by $406 million over four years.
The ATO will also create a trusts taskforce to attack the use of egregious tax avoidance and evasion using tax structures, where these arrangements are used to conceal income, mischaracterise transactions and artificially reduce income and tax payments. The taskforce should generate additional tax collections of $379 million over four years.
The biggest bang for the investment buck will be achieved through data matching of third party data, an area that the ATO has already invested in heavily and reaped huge rewards. The ATO’s powerful data matching engine will be turbo-boosted to improve the pre-filling of tax returns and to improve the matching of transactions to the tax profile of millions of taxpayers.
The types of income that will have strengthened reporting systems in place includes taxable government grants, sales of houses and other real property, sale of shares and units in managed funds, partnership distributions, dividend payments, interest payments and income derived from options and warrants. The measures will also lead to new and strengthened reporting of the extensive amount of foreign and suspicious transactions reported to the ATO by the Australian Transaction Reports and Analysis Centre (AUSTRAC). These data matching initiatives are forecast to produce $610 million over four years, producing a return of $7.84 for every $1.00 invested in this initiative.
Ashley King, Tax Controversy Lead Partner at Deloitte, said: “These three initiatives continue a history of successful Government investment in ATO compliance activity, which famously commenced in 1996 with the creation of the High Wealth Individuals Taskforce and more recently led to the controversial cross-agency Wickenby Project, which has snared numerous high profile Australians who ventured to the wrong side of the tax planning track. We are now seeing a further shift to data analytics in the ATO, consistent with many sectors of the Australian and global economies.”