Audit shows Tax Avoidance Taskforce just a cover up for ATO cuts, Labor says

By Shannon Jenkins

Thursday December 19, 2019

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Labor has called out the Australian Taxation Office over a recently audited taskforce that they claim doesn’t appear to exist.

The ATO received $679 million in 2016 over four years to “enhance its compliance activities” with a Tax Avoidance Taskforce. Despite this, there is no actual business unit within the ATO for the taskforce, national auditor-general Grant Hehir said in his latest report.

He noted that while the ATO had recruited staff for the taskforce, there was an “overall reduction in business-as-usual staffing in the relevant business lines”.

The taskforce was initially forecast to raise an extra $3.7 billion in taxes by focusing on multinational companies, large groups and high-wealth individuals. Since its establishment, overall revenue raised by the relevant business service lines increased considerably. The ATO reported that the taskforce alone had raised $5.5 billion in its first two years. Hehir described this as “questionable”.

While there had been a significant increase in compliance activity over the period, the ATO failed to provide an accurate indication of taskforce revenue, Hehir said.

“Because the ATO had not implemented a methodology to clearly identify revenue arising from task force activities, it is not clear exactly how much of this increased revenue is a direct result of the task force,” he wrote.

Labor MP Stephen Jones noted the audit report came out days after reports showed that one-third of all large companies do not pay tax. He claimed the taskforce did not exist, and was just a cover up for cuts to baseline staff.

“This is despite finding $24 million to spend on an advertising campaign about tax integrity last year,” he said.

“Scott Morrison needs to spend less time on ad campaigns and more time ensuring big companies pay their fair share of tax.”

Hehir recommended the ATO document the source and basis of each assumption used in its resourcing and revenues models, and that it develop a framework to support accurate monitoring of actual costs and revenues of compliance measures, consistent with the measure’s proposals. The ATO agreed.

However, it disagreed with the recommendation that it document how it would monitor and report resourcing and revenue associated with the funding measure, and the pre-existing levels of related resourcing and revenue.

The ATO said the report at times did not reflect the ATO’s position.

“This is very misleading to a reader who does not have the full context of the specific issues raised and gives the impression the ATO has made certain decisions without careful consideration,” it said in its response.

“The ATO’s view is that our approach for developing Budget funding proposals is in line with Departments of Finance and Treasury requirements.”

It argued that it has always been clear that the taskforce was not a separate program, but a “combination of effort across various business areas of the ATO to tackle tax avoidance”.

“This initiative enhanced and extended existing compliance activities targeting large multinationals and high wealth individuals,” it said. “The collective and integrated approach taken by the ATO is validated by the outstanding success of the initiative.”

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