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The ATO will get Visa holders’ information from the Department of Immigration and Border Protection for the 2017-18, 2018-19 and 2019-20 financial years.
The data provided will be:
- Address history for visa applicants and sponsors
- Contact history for visa applicants and sponsors
- All visa grants
- Visa grant status by point in time
- Migration agents (visa application preparer who assisted or facilitated the processing of the visa)
- Address history for migration agents
- Contact history for migration agents
- All international travel movements undertaken by visa holders (arrivals and departures)
- Sponsor details
- Education providers (educational institution where a student visa holder intends to undertake their study)
- Visa subclass name.
See further: Commonwealth Government Gazette C2017G01373 18 December 2017
The International Consortium of Investigative Journalists has added information from a further 4 secrecy jurisdictions that were included in the Paradise Papers investigation, bringing the total to 55 jurisdictions searchable on the the Offshore Leaks database.
The added countries are: Barbados, the Bahamas, Aruba and Nevis.
The European Commission has published a list of 17 non-cooperative tax jurisdictions agreed by Finance Ministers of the EU Member States.
Korea (Republic of)
Trinidad and Tobago
United Arab Emirates
See: European Commission – Press release
Fair Taxation: EU publishes list of non-cooperative tax jurisdictions
Brussels, 5 December 2017
As part of a wide-ranging crackdown on multinational tax avoidance, the Australian Federal Government and the Australian Tax Office have introduced significant reforms to the country’s transfer pricing regulations.
The Treasury Laws (Combating Multinational Tax Avoidance) Act 2017 (Cth) introduces specific measures which are part of a continuing reform effort directed at the transfer pricing regime.
This Jones Day White Paper provides an overview of Australia’s transfer pricing laws, reviews recent key developments, and devotes considerable attention to defining and explaining the newly enacted Diverted Profits Tax.
The Treasurer has released draft legislation to address hybrid mismatch arrangements which exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.
For example, where an instrument is treated as debt in Australia (with tax deductible interest) but treated as equity in a foreign jurisdiction (with no tax payable as the holder is entitled to an exemption).
A mismatch can also occur where a deduction is available for the same payment in two or more jurisdictions.
The ATO advises that work on the Panama Papers has resulted in more than $50 million in liabilities raised and omitted income associated with additional disclosures in excess of more than $40 million.
Conducting business audits by reviewing electronic information is intended to minimise disruption of the targeted business’s operations, and enable cost-savings by lowering the need to retrieve paper copies of transactions or reports. Digital data analysis processes are faster than the manual methods.
The draft Treasury Laws Amendment (Whistleblowers) Bill 2017 is the result of government’s 2016 budget commitment to expand introduce protections for the corporate and financial sectors, and introduces a new whistleblower protection regime to protect those who expose tax misconduct.
The Tax Office has published behaviours and characteristics which “may attract our attention”. The list is comprehensive and includes information by tax type and other issues.
The existing program will be extended to include details of ride-sourcing providers and the payments they have received for years up to 2018-19. See C2017G00611
The Tax Office has issued a warning about stapled investment structures, due to their effect of converting trading income to passive flow-through trust income.
This is typically achieved by separating an asset trust from a single operating entity, and having income in the form of rent, royalties or interest flow through from the remaining operating entity to the asset trust, which in turn flows income through to lower-taxed entities.
Tax Alert TA 2017/1 Re-characterisation of income from trading businesses provides examples of offending arrangements.
The alert also points out that stapled structures in use over many years, with arms-length asset trust income, are not of concern by reason only of the stapled structure.
The government has introduced legislation to parliament for a diverted profits tax. The tax will apply to the amount of diverted profits of entities with a global turnover of $100 billion or more at a rate of 40%, targets , and includes a 20% tax diversion trigger. It is intended to commence 1 July 2017.
Read more here: Google Tax Is On The Way
The Tax Office has issued a reminder of current data matching programs, drawing on the following data:
- the total amount of credit and debit card payments received by businesses
- online sellers who have sold at least $12,000 worth of goods or services
- payments made to ride-sourcing drivers from accounts held by the ‘ride-sourcing facilitator’
See further details at
See also other Data-matching programs
The Tax Office has issued transfer pricing guidance applicable to the centralised operating (“hub”) models of procurement, marketing, sales and distribution functions.
Apart from offshore marketing hubs, the policies outlined in Practical Compliance Guideline PCG 2017/1 take effect from 1 January 2017 and apply to existing and newly created hubs. For marketing hubs, the guidance only takes effect for tax years commencing on or after 1 January 2017.
The Guidance document sets out bases of risk analysis (general indicators and principles), and the implications for arrangements which are self-assessed to be outside the “green zone”.
Draft legislation has been released targeting entities with annual global income of $1 billion or more which obtain a tax benefit from shifting profits to offshore associates.
The draft legislation can be reviewed on the Treasury website here.
24/11/2016 – More than 100 jurisdictions have concluded negotiations on a multilateral instrument that will swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. See OECD treaties
The ATO is continuing its program of data matching credit card information from a number the major card platforms. See Notice of a data matching program – Credit and debit card 2015-16 and 2016-17
The ATO is conducting a data matching program of share transactions from the ASX, Computershare and similar sources. See Notice of a data matching program – Share transactions – 2016-17 and 2017-18
The ATO is conducting a data matching program of online trading information of sellers with annual trading activity of $12,000 or more from the records of eBay Australia. See Notice of a data matching program – Online selling 2015-16, 2016-17 and 2017‑18
The ATO has updated its practice statement for guidance on the application of the anti-avoidance rules – see PS LA 2005/24
The ATO is reviewing cross-border round robin type arrangements that involve funds flows overseas which come back to Australia in a way which generates Australian tax deductions without corresponding taxable income. See Taxpayer Alert TA 2016/10
The ATO is investigating the use of interposed partnership entities inserted in front of foreign entities which were originally making supplies to Australian customers and Australian customers. See Taxpayer Alert TA 2016/11
The ATO has released two new taxpayer alerts today warning against international profit shifting by multinational companies. See media release.
Mentions for the Big Four: KPMG, Deloittes, PWC and EY and their clients get mentions in this article describing an Australian “insider’s” writings about multinationals’ tax avoidance
The 2016 Budget contains tax integrity measures based on the OECD Base Erosion and Profit Shifting Project. They are:
- eliminating hybrid mismatch arrangements and
- updating transfer pricing rules.
The Parliamentary Library has published an analysis as part of its Budget Review series.
A new boost to transparency in international tax matters: 6 new countries sign agreement enabling automatic sharing of country-by-country reporting. Canada, Iceland, India, Israel, New Zealand and the People’s Republic of China signed up on 12 May 2016.
April 2016: Taxpayer Alerts have been released concerning new or emerging tax avoidance arrangements:
- Taxpayer Alert – Arrangements in response to the Multinational Anti-Avoidance Law (MAAL)
- Taxpayer Alert – Cross-border leasing arrangements involving mobile assets
- Taxpayer Alert – Related party foreign currency denominated finance with related party cross-country interest rate swaps
- Taxpayer Alert – Thin capitalisation and inappropriate recognition and revaluation of internally generated intangible assets
On 4 April 2016, Jeremy Hirschhorn (Deputy Commissioner, Public Groups at the Australian Taxation Office) participated in a panel discussion on the ATO’s current areas of focus for large businesses. See here.
“Australian corporate and individual taxpayers should be scrutinising their own offshore affairs and be able to effectively respond to regulatory scrutiny through strategic and measured means.” – an article from the Tax Chat Blog
The Government has announced its intention to introduce a diverted profits tax (DPT) (popularly known as a ‘Google tax’) from 1 July 2017. This will apply where companies shift profits offshore to reduce tax, and will apply to companies with global revenue of $1 billion or more. The proposed penalty tax rate is 40 percent.
For an analysis of these measures see Parliament’s Budget review 2016-17 article here
The Government will establish a new Tax Avoidance Taskforce to crack-down on multinational tax avoidance and secure revenue for the Australian community. See media release
The budget contains a number of anti-avoidance measures: commentary
The Tax Office is looking into a number of entities in northern NSW and southern QLD believed to be claiming not-for-profit status, through which contractor or business income is being streamed. See Taxpayer Alert TA 2016/5
The ATO has warned multinationals and large companies operating in Australia to ensure they pay the right amount of tax on their Australian income, and issued four taxpayer Alerts relating to particular areas of concern.
ATO media release: ATO warns against profit-shifting arrangements
The data matching programs have been updated for specialised (electronic) payments and contractor payments. An updated list of data-matching protocols with links to further information can be reviewed here.
(4 April 2016)
The Tax Office has identified over 800 individuals and linked more than 120 of them to an offshore service provider in Hong Kong.
See ATO Statement: ATO statement regarding release of taxpayer data
The Tax Office has completed a pilot trial of the 'effective taxes borne' methodology - used in the assessment of the tax performance of multinationals.
The ATO advises that future use of the methodology will be made where there is a perceived lack of transparency in dealings with the tax office, and/or where tell-tale structures are in use, such as a marketing hub.
See further: Findings from our 'Effective Taxes Borne' pilot
The Government has announced new national interest requirements on foreign investment applications which are aimed at ensuring multinational companies investing in Australia pay tax on what they earn in Australia. The rules also require companies to report tax-related information to the FIRB on an annual basis, and enable additional conditions to be set where a “significant tax risk” is identified. The rules take effect immediately. The Treasurer’s media release and the Standard conditions can be reviewed here.
The Tax Office is reviewing the use of offshore entities to source goods on behalf of Australian resident multi-national enterprises, with concerns relating to the controlled foreign company (CFC) and transfer pricing rules, and the Part IVA anti-avoidance rules.
See Taxpayer Alert TA 2015/5
The Tax Office has advised it has visited seven adviser firms linked to offshore arrangements and contacted more than 100 parents who had school fees paid from overseas bank accounts.
See the full text (media release 8 Dec 2015) here: Tax Office chasing up advisers who facilitate offshore tax evasion
The Tax Laws Amendment (Combating Multinational Tax Avoidance) Act 2015 implements measures to combat multinational tax avoidance, and has been passed by parliament (3 December 2015).
The law will cover all multinationals operating in Australia with global revenues above $1 billion.
- anti-avoidance law aimed at multinational entities which take steps to avoid the attribution of business profits to Australia
- doubling penalties on tax avoidance or profit shifting schemes
- implementation of Action 13 of the G20 and OECD’s Action Plan on Base Erosion Profit Shifting (“BEPS”) dealing with transfer pricing and Country-by-Country reporting
- The Law Companion Guideline for schemes that limit a taxable presence in Australia (from large business bulletins)
- For progress of the Bill through parliament, see Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015
The Tax Laws Amendment (Implementation of the Common Reporting Standard) Bill 2015 (enacted since 18 Mar 2016) requires financial institutions in Australia to report information to the Commissioner of Taxation about financial accounts held by foreign tax residents. In turn, the Commissioner will provide this information to the foreign residents’ tax authorities, and in parallel, will receive information on Australian tax residents with financial accounts held overseas.
The Common Reporting Standard is an international framework developed by the OECD and non-OECD G20 countries at the request of the G20 to tackle and deter cross-border tax evasion.
The Australian Taxation Office, and federal, state and territory police forces are targeting outlaw motorcycle gangs for failing to lodge tax returns, pay taxes and to fully disclose their taxable income. See the media release
The ATO is required to publish tax, MRRT and PRRT payable information about corporate tax entities with a total income of $100 million or more. The scheme starts with the 2013-14 financial year.
Australian-owned private companies are exempt if they:
- are an Australian resident private company
- are not the wholly-owned subsidiary of a foreign corporate group; and
- do not have a level of foreign shareholding greater than 50%
See Tax Transparency
A speech by Kasey Macfarlane, Assistant Commissioner, Australian tax Office on 14 September 2015 outlining stronger compliance actions in 2015-16 against defaulting super fund trustees. Concerns include related party transaction violations, non-rectified breaches identified in auditor’s contravention reports and pension rules conformance.
The Tax Office has released a draft update of PS LA 2005/24 which provides guidance for Tax officers administering Part IVA and other General Anti-Avoidance Rules. Comment on the draft statement is sought by 25 September 2015.
Tax Office website content with policy information details their approach to information gathering, including descriptions of the legal basis and limitations of their powers of enforcement, and statements of position regarding accountants’ and lawyers’ privileges.
The Tax Office has released details of arrangements designed to encourage taxpayers with undisclosed overseas interests to “come clean” by 19 December 2014 – on the basis of reduced exposure to penalties, prosecution and a 4-year limit on amendments.
See also ATO Releases Offshore Voluntary Disclosure Initiative 2014 (PWC Tax Talk).
The Tax Office’s ATO’s 2012-13 statement on its anti-Tax Avoidance activity (dead link) provides links to specific subject areas, with a clear hierarchy of tax avoidance priorities.
The tax schemes targeted are inevitably very complex, and involve many legal interpretations of meanings and definitions.
This is against a background of wider uncertainty of precisely what the tax law means. Some questions are not completely settled: Is the expectancy of a tax benefit sufficient to categorise a transaction as a tax scheme which the Commissioner can attack? How important is the commercial rationale for an arrangement which produces, or may produce a tax benefit? Does that depend on the relative size of the benefit?
Tax Planning For The Rest Of Us
In practice, arguments about legal definitions and boundaries are the concern of the relatively few, albeit possibly in relation to substantial sums of money.
For “the rest of us”, potential legal arguments with the Commissioner of Taxation and the associated pain and economic suffering are something to be avoided. Like having an argument with your spouse: you might win a battle, but there’s a high chance of losing the war.
The signals from the Tax Office in its 2012-13 statement
The details of various schemes are complex, but the language used by the Tax Office sends useful smoke signals. An overview of keywords from the ATO’s statement is instructive if your aim is to lead a quiet life.
Here are some choice phrases – “danger signals” – extracted from the “Tax Avoidance Focus” page:
“.. products that promise outcomes.. not available under the law”
Seems obvious – but in reality no help at all. The challenge for a taxpayer seeking to legally exploit the boundaries is that the Tax Office’s view of what is ‘available under the law’ is likely to be more restrictive than you were expecting.
“..implementation of .. Product Rulings in materially different ways..”
Another case of blurred boundaries. The Tax Office provide Product Rulings, but won’t be bound by them if, in their opinion, your circumstances are sufficiently different. What is sufficiently different in each case cannot always be known.
“..business structuring arrangements..”
A tax arrangement which involves the adoption or arrangement or use of specific legal structures is likely to draw attention – presumably based on the assumption that this is part of a deliberate tax strategy which wouldn’t otherwise have been implemented? That can’t always be a safe conclusion.
“..trust schemes, such as hybrid trust..”
Another kind of arrangement which involves the adoption or arrangement or use of specific legal structures, in this case trusts, the law surrounding which is extremely complex, and beyond a normal “person in the street” level of comprehension and presumably on that basis inviting attention.
“..uncommercial schemes.. and tax-driven employment arrangements..”
These are arrangements to take advantage of specific tax concessions, or avoid liabilities. The questions for the taxpayer are, what is “uncommercial” and what is “tax driven” – and how much weight do these definitions have? A business person basing a venture on an usual idea, taking a risk – could easily be seen as “uncommercial” by a remotely-based public servant.
“..history of being associated..”
The ATO use the word “history” a number of times. It is clear they will be proactively suspicious towards anyone, taxpayer or advisor, who has (in their view) been connected with a questionable tax matter at some time. That gun has a fairly broad barrel – so if you have a record, live in a bad neighbourhood or associate with those that do, you could expect attention.
“.. complex retail and wholesale financial products..”
Complexity is the enemy of us all. It prevents a certain understanding of the law by taxpayers and advisors, whether law-abiding or not, and the tax office enforcers. If “complexity” is a signal of tax avoidance, the vast spaghetti bowl of tax law itself is unfortunately the dominant contributor.
Unfortunately complexity is also often the hallmark of clever thinking designed to find a legal way through the tax law.
Is there room for common sense?
A common sense approach to tax planning is to try and avoid the triggers outlined by the Tax Office. Unfortunately in both complex and relatively routine commercial dealings this is not always straight-forward, and that provides the challenge for everyone involved – those administering the law, taxpayers and their advisors – and crucially for our politicians who have the power to put a stop to the self-perpetuating waste of time, effort and ingenuity that our tax system demands.
See also "Tax Planning"(ATO)
This page was last modified 2018-01-10