Australian Tax Office Cracks Down On Tax Minimisation Schemes

by Mary Swire, Tax-news.com, Hong Kong

13 April 2001

In a bid to crack down on the growing number of tax minimisation schemes, the Australian Taxation Office (ATO) is focusing its attention on areas, particularly in Western Australia, that have been targeted by the promoters of schemes which have so far persuaded around 60,000 Australians to invest their money resulting in a loss of AU$4.3 million in unpaid taxes.

Australia's Prime Minister, John Howard, has said that he sympathises with people who have invested (and lost) their money in the schemes and he is concerned that the promoters of the tax minimisation schemes have escaped prosecution.

The ATO's assistant commissioner for small businesses in Western Australia, Cherylee Field, told the Australian press that people are becoming increasingly confused over their rights in the tax schemes. She says the ATO has no plans to bring in the debt collectors but will appoint tax officers to towns throughout Western Australia where the schemes have been heavily promoted and subscribed to. Tax Commissioner Michael Carmody said he was very concerned about the level of misinformation circulating about the Tax Office's approaches to investors in these schemes. He claimed: 'These face to face visits aim to clear up confusion people are clearly experiencing about their rights and obligations under the tax law and the Tax Office's policies that apply to them. We want to ensure that investors resolve their issues as quickly and easily as possible.'

He added: 'In most of the schemes we have dealt with, the law provides for any automatic 50 per cent penalty plus interest to apply. We have offered greatly reduced penalties - usually down to 10 per cent - if investors voluntarily disclose details of the deductions they have claimed in relation to the scheme. We have also published guidelines on the basis on which we will settle cases. We are pursuing appropriate actions against promoters of schemes. The Tax Office's responsibility is to ensure the promoters meet their tax obligations. Where we find cases involving fraud, we refer them to the appropriate authorities and several cases are currently under investigation.'

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