While ordinary taxpayers pay the price for tax evasion, millionaires have been given a free pass, in what a scathing new report is calling the “greatest tax scandal in Australia’s history.”
The ATO Rules for the Rich report, by Australia’s peak body for independent contractors, Self Employed Australia, accuses the Australian Tax Office (ATO) of double standard policies when it comes to penalising undeclared income.
Self Employed Australia said the ATO’s 2014 tax program, Project Do It, gave “massive tax advantages” to Australia’s richest through an “amnesty” if they declared previously undisclosed offshore income and assets, costing Australians up to $4.3 billion in missed revenue.
Executive director of Self Employed Australia, Ken Phillips accused the ATO of stepping in to protect Australia’s wealthiest from taxes, after they had “hidden” $6.5 billion in secret offshore accounts.
The project promised those with undeclared overseas income that if they came forward, it would only pursue the last four years of tax and impose 10 per cent tax penalties, with about 4.5 per cent interest on the penalties.
Those making disclosures were also reassured they would not be referred for criminal investigation.
“By comparison, in cases where self-employed, small business people have allegedly committed fraud by not declaring income, the ATO goes back as many years as it wants, imposes up to 90 per cent penalties, applies around 9 per cent interest,” Self Employed Australia said.
While the ATO said Project Do It led to $260 million collected in tax, Self Employed Australia argued that figure would have been a lot higher if the ATO had applied the same rules it did to every other Australian.
Phillips said the amnesty, applied if high-net worth individuals declared their offshore accounts, led to tax losses of around $2 billion, but potentially as high as $4.3 billion.
ATO deputy commissioner Will Day told Yahoo Finance the ATO takes tax fraud seriously, noting ATO action this year which led to two men receiving jail sentences of longer than 10 years each for their parts in a complex tax evasion case.
He also emphasised that “Project Do It” was not an amnesty.
“Rather it was a campaign that informed taxpayers with undisclosed income, capital gains and over claimed deductions to re-engage with the Australian tax system by making a voluntary disclosure,” he explained.
“Given increased international cooperation, increased information exchange and moves for greater global transparency, this was a ‘last chance’ for eligible taxpayers to come forward to make a disclosure.
“It did not target high wealth individuals, and the vast majority of people who made disclosures were not in this category.”
He said the program is also likely to continue to bring in money as those taxpayers engage with the Australian tax system.
Aussie taxpayers have ‘fewer rights than murderers’
However, the Australian Taxpayers’ Alliance director of policy, Satya Marar, disagreed, describing the project as “hypocritical and perverse.”
He pointed to the ATO’s ability to garnishee, or claim, bank accounts and property without a warrant, as the Australian Broadcasting Corporation reported earlier this year.
“Innocent taxpayers and small businesses are left with fewer rights than murderers, as the ATO is able to garnishee bank accounts and confiscate property without a warrant – all on the basis of a debt that it bears no legal burden of proving first,” Marar said.
“Innocent businesses are eviscerated due to basic errors. Those who are not extorted into paying by the threat of a legal battle they cannot afford are dragged through the court system for years, only to receive paltry, inadequate compensation when the ATO admits its mistakes.”