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Australian Tax Commissioner Chris Jordan is expected to be grilled about Australia’s pursuit of individuals and corporations identified in the Panama Papers.
Mr Jordan is due to appear before a special hearing of the Senate economics committee on corporate tax avoidance in Canberra on Thursday.
The Senate committee is expected to ask Mr Jordan if his office has sufficient resources to investigate those identified and if the existing international tax agreements on structuring and profit shifting to prevent or counter tax evasion and avoidance are sufficient to protect Australia’s tax revenues.
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Last Wednesday in Paris, representatives of 28 countries, including Australia, met to coordinate an investigation into tax evasion exposed in data leaked from Panamanian law firm Mossack Fonseca.
The ATO will investigate more than 800 Australians listed on Panamanian law firm Mossack Fonseca’s leaked files. Photo: Getty
About 800 Australians have been identified in confidential emails and documentation now searchable by accredited investigative journalists and taxation authorities.
Participating countries in the OECD’s Joint International Tax Shelter Information and Collaboration network (JITSIC) have agreed to share files and resources to forensically sift the Panama Papers for admissible evidence for further investigation and for preparation of briefs for prosecution or tax recovery with penalty demands.
A communiqué issued after the Paris meeting said the participating countries would be taking collaborative action to use “existing legal instruments to maximum effect”.
The network may establish specialist task forces to build investigative momentum.
“Taxpayers that may be non-compliant are encouraged to come forward and make voluntary disclosures,” an ATO spokesman said.
With the Turnbull government’s announcement on Wednesday of $120 million of additional funds for ASIC to enhance its consumer protection systems for the banking industry’s customers, political pressure will be applied to similarly reverse recent budget cuts to the ATO’s operations.
In a submission posted online by the ATO, the agency said “recent staff redundancies have been managed to ensure there is no material impact on our frontline expertise and capability”.
Scott Morrison is under pressure over multinational tax avoidance.
The submission said globalisation and expansion of e-commerce digital platforms had increased cross border trade with tax revenue risk for Australia through malpractices such as “transfer mispricing”; “thin capitalisation” or excessive debt adding to tax deductions; global supply chains for profit shifting; and “stateless” or “untaxed income” arising from complex financial structures.
The ATO said 45.3 per cent of large corporate entities operating in Australia are classified as foreign headquartered.
All corporates with an annual turnover of more than $2 million paid $66.9 billion in tax in 2012-13, which represented 28.3 per cent of $236.6 billion in total income tax revenue.
In a risk management chart the ATO estimated that while 70 per cent were voluntarily compliant, 30 per cent were considered high risk, requiring active monitoring and engagement by 2700 specialist staff to secure compliance by foreign owned corporations and high wealth individuals.
Quentin Dempster is political editor of The New Daily. He has more than 40 years’ experience in print and television (The Sun Herald, The Sydney Morning Herald, ABC TV). The author of three critically acclaimed books and a documentary on institutionalised corruption, he also has a Walkley Award and an Order of Australia for an ‘outstanding contribution to journalism’.
Disclaimer: Quentin has been invited by the national integrity commission inquiry to appear as a witness.