Archive for Fred Rollo

Australian Serious Tax Crime Conviction Rate Soars: Offshore Schemes Targeted

The Australian Taxation Office (ATO) has since July 2006 prosecuted 467 serious fraud tax evasion cases. The average conviction rate to September 2013 is 98%. Of these convictions, 75% have resulted in custodial sentences of more than 12 months. To date, the custodial sentence rate for the 2013-14 tax-year is 100%.

Reparation orders and fines have also been recorded in the majority of these cases, many initiated as part of the cross-agent taskforce Wickenby Project. This project focuses on arrangements the taskforce considers to involve offshore tax evasion utilising what the ATO refers to as “secrecy havens”. Read More

Written by | Posted in Australia/Oceania • International • OECD • Tax Fraud/Evasion/Crimes

Australian Taxation Office Plans To Outsource “Tax Audits” To Big 4 Accounting Firms

The Australian Financial Review’s Fleur Anderson reported today on an internal ATO memo to staff. The memo said “We are currently exploring a new initiative for undertaking assurance work through the External Compliance Assurance Process (ECAP) project…This approach will look at how we might use the capabilities of accounting professionals, who are registered company auditors, to conduct certain assurance reviews on our behalf.”

This is an interesting development, but the report does not indicate whether the ATO would engage and pay the external auditor, or that corporate taxpayers would be expected to do so as part of their tax risk mitigation processes.

If the ATO was to engage the corporation’s existing auditor, that would raise ethical Read More

Written by | Posted in Australia/Oceania • Corporate • Federal • International • Tax Controversy • Tax Policy • Tax Provision/Tax Reporting

Australian Tax Office increases pressure on South African émigré – Asks SA Revenue Service to ‘freeze’ his assets

TaxConnections Picture - South African MoneyIn a footnote to it’s recent A$21 million tax claim against businessman Mark Krok (see my earlier blog “South African Emigre’s Offshore Tax Plan Falls Foul of Australian Tax Office’s Aggressive Audit Approach“, the ATO has reportedly seized A$2.85 million from his accounts with Australia’s St George Bank.

Furthermore, it has requested that SARS freeze his shares in South African companies as well as his A$4 million house.

The request to SARS appears to have been made under Article 25A of South Africa’s double tax treaty with Australia which was updated by a Protocol in 2008. This Article provides for SARS to collect the Australian tax as if it was a South African revenue debt.

It should be noted that the Australian tax debt is disputed by Mr. Krok and his legal appeals against the underlying assessments are yet to be heard by the Australian Federal Court.

Written by | Posted in Africa • Australia/Oceania

Section 167 – The Australian Tax Office’s Weapon of Mass Reconstruction

TaxConnections Blogger The case of Mulherin v Commissioner of Taxation [2013] FCAFC 115 decided by the Full Federal Court last week confirms that section 167 of the Income Tax Assessment Act 1936 is a weapon of mass reconstruction in the hands of the Australian Taxation Office (“the ATO”).

Mr Mulherin was born in Australia but spent some years developing his professional activities overseas. Following his return to Australia early in the 1990s he caused a Leichtenstein Foundation to be established. He was effectively both the founder and principal beneficiary of this structure.

The ATO became aware of the existence of the Foundation and of Mr Mulherin via information provided to it by a former employee of LGT Bank in Leichtenstein (who had stolen client records of a subsidiary of the bank).

It transpired that the central management and control of the Foundation was at all relevant times in Australia. The ATO sought to treat the income of the Foundation as having been derived by Mr Mulherin as a resident of Australia. Read More

Written by | Posted in Australia/Oceania • Individual • International • Tax Controversy • Tax Risk Management

South African Emigre’s Offshore Tax Plan Falls Foul of Australian Tax Office’s Aggressive Audit Approach

TaxConnections Picture - South African MoneyThe Australian Tax Office (“ATO”) appears to be aggressively opposing a South African emigre’s appeal against his A$21 million income tax assessments. The case of Mark Krok v Commissioner of Taxation NSD572/2013 is listed for a Directions Hearing on 7 November in Australia’s Federal Court.

A report by Susannah Moran in today’s Australian newspaper – see http://www.theaustralian.com.au/business/ato-sets-sights-on-s-african-millions/story-e6frg8zx-1226750019299 – says that “The ATO has accused Mr. Krok of tax evasion and fraud, claiming he understated his income and failed to declare capital gains made on share sales during the six years he lived in Australia.”

It is suggested that in a 5-day hiatus between leaving South Africa and arriving in Australia, Mr Krok distributed all the assets of a trust established by his father and entered into an arrangement involving a BVI company owned by a Liechtenstein Foundation.

This case will be closely watched by international tax planners and their clients, particularly since the ATO apparently sought and received relevant from the South African Revenue Service in the course of their audit investigation.

Written by | Posted in Africa • Australia/Oceania • Caribbean • Individual • International • Tax Controversy • Tax Risk Management

Australian Tax Office Proposes “Push” Returns

Time for tax conceptIn a speech to the CPA Congress 
in Canberra on 17 October 2013, Tax Office (“ATO”) Second Commissioner Neil Olesen outlined plans for “push” tax returns for Australian individual taxpayers as from 2014. He said:

“The ATO has substantial amounts of information about taxpayers and for those with simple returns, we estimate that on current policy settings we could initially offer a ‘push’ tax return for as many as 1.4 million people, and in fact are aiming to do so next year (2014).

The key principle here is to use the information we already routinely receive about taxpayers affairs (for example, salary and wage income, bank interest, shares and dividends) to send the tax return to the taxpayer, rather than the current way where all we offer is a pre-fill service while still requiring the taxpayer to prepare and lodge a return each year.

In Australia there are some reasons why we could not offer this service widely (eg some complex deductions) but over time and with some careful and creative thinking we think we could effectively liberate around 4.5 million taxpayers from any significant response burden at tax time.”

Interestingly, the Australian Financial Review’s Agnes King reported on 22 October 2013 “Corner store tax agents are confident the federal government’s plans ­to supply 1.4 million people with pre-populated electronic tax returns to which they tick “yes” or “no” will not have a material impact on business.” Read More

Written by | Posted in Australia/Oceania • Individual • International

Australian Tax Court Uses Documents Improperly Obtained In Breach Of Exchange Of Tax Information Agreement

iStock_000024834312XSmallIn the Australian Federal Court on Tuesday (8 October) Justice Perram allowed the Australian Tax Office (“ATO”) to use documents obtained in apparent breach of the exchange of the Tax Information Agreement (“TIA”) between Australia and the Cayman Islands.

It appears that the Cayman Islands Tax Information Authority (“CITIA”) erroneously provided the ATO with information for tax years prior to the date set as operational for the agreement.

The Australian court’s decision has effectively validated an effective retrospective application of the Cayman’s TIA, at least in this case.

The judgement (in Hua Wang Bank Berhad v Commissioner of Taxation (No 7) [2013] FCA 1024) found that although the Caymans Grand Court had decided on 13 September 2013 that the CITIA decision on 23 February 2011 to provide the information to the ATO should be set aside and the documents should be returned; Read More

Written by | Posted in Australia/Oceania • IRS • Tax Provision/Tax Reporting
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