Budget empowers ATO tax avoidance crackdown

The ATO has been given a revitalised arsenal in the government’s fight to target multinational tax avoidance, spearheaded by tougher laws and the establishment of an all-new taskforce.

As part of the 2016-17 budget, the establishment of a new Tax Avoidance Taskforce will lead the renewed crackdown on multinational tax avoidance, with the ATO providing an additional $679 million in funding over four years to strengthen its combative efforts.

The taskforce shall be a single, targeted program accountable to government, and will include approximately 1,300 jobs within the Tax Office, including 390 new specialised officers.

Likening the contents of the 2016-17 budget to Forrest Gump’s ‘box of chocolates’, Con Paoliello, Perth managing partner and national head of tax for RSM Australia, indicated that multinational corporations have received the raw end of the deal.

“Large multinational organisations have certainly been given the ‘carob chocolates’ in this budget,” said Mr Paoliello.

“As we have seen in recent years, they are an easy revenue target politically for federal governments, with different initiatives targeting multinationals to pay their ‘fair share’ of Australian tax.”

The newly proposed diverted profits tax (a 40 per cent tax applied to diverted profits to ensure large multinationals are paying sufficient tax) also drew some ire from Mr Paoliello, despite acknowledging that Australia now joins the UK as two of the only countries to take action outside of the BEPS action plan.

“The commercial reality of the proposed diverted profits tax is that these entities will inevitably pass on any additional costs to their Australian customers,” he said.

“Read that as your monthly Netflix subscription going up in the near future!”

Alongside the establishment of a new taskforce and tougher tax legislation, the government also unveiled new support and protection for whistleblowers in an attempt to encourage ongoing compliance.

Whistleblowers will have their identity protected, and will be protected from victimisation and civil and criminal action for disclosing information to the ATO, according to the budget.

Accountants themselves have recently come under the spotlight of whistleblowing scrutiny, with recent research indicating that the majority of accounting professionals are afraid to speak out on unethical behaviour within their practices, and are hesitant to report on illegal tax activities.

 

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