The ATO is currently investigating a series of leads following the release of the Paradise Papers, the largest document leak in history which uncovers the workings of, and investors in, international tax havens.
Mid-tiers like BDO expect taxpayers and accountants alike will feel the consequences of this, as the ATO directs resources to the investigation.
The ATO suggested in its annual report, released last week, that its debt-collection activities were hampered by the imperatives of other compliance investigations.
“Taxpayers under examination by the ATO already feel frustrated with how long it takes for the review of their voluntary disclosures and additional information requests,” BDO Australia tax partner Carlo Moretti told Accountants Daily.
“Already there are often extended delays to draft and issue an ATO position paper, followed by attempts to negotiate a fair and reasonable settlement, and failing that, a negotiated settlement or engagement in mediation and objection disputes,” he said.
“There are many layers of ‘independent checks and balances’ within the ATO that taxpayers do not see, which means the whole tax examination process can go on for years and years. Hence we would expect the Paradise Papers scandal will put more pressure on ATO resources,” he said.
However the Institute of Public Accountants’ senior tax adviser, Tony Greco, believes the ATO will cope with the additional workload given its budget for addressing international tax avoidance. For 2017 in particular, the government made this issue a headline item. You can read more about this here.
Mr Greco stressed that, while the tax office is not offering amnesty as it did with the Panama Papers, voluntary disclosure gives accountants and their clients the best chance at a favourable outcome.
“Your risk of being detected is reasonably high. Like with an audit, you are much more likely to get a softer penalty if you come clean before you are investigated,” Mr Greco told Accountants Daily.
“If you wait until after it begins, you’re in trouble, and it’s too late to try and soften the outcome,” he said.