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The objective of this audit is to assess the effectiveness of the Australian Taxation Office’s (ATO) and Treasury’s management of compliance with foreign investment obligations for residential real estate.
This audit would examine the effectiveness of the Australian Taxation Office’s (ATO’s) administration of penalties and interest charges, including the correctness of decisions regarding the imposition and remission of penalties and interest.
A range of penalties and interest charges can be applied by the ATO, with these penalties and charges intended to encourage taxpayers to take reasonable care in complying with their tax obligations. Interest charges are intended to ensure that taxpayers who underpay their tax for a period do not receive an advantage over those who have paid their tax on time, and to compensate the community for the impact of late payments. The tax law provides the ATO with the discretionary power to remit (partially or in full) interest charges and penalties in certain circumstances. While the prospect of remission is not to be used as an inducement to finalise a dispute, remission may form a component of a settlement.
In 2015–16, the ATO reported that, in relation to penalties and interest, it imposed $2.8 billion, remitted $1.2 billion, and collected $2.3 billion. Interest charges accounted for a larger proportion of total impositions, remissions and collections than penalties.
This audit would examine the effectiveness of the Australian Taxation Office’s (ATO’s) arrangements to deter, detect and deal with aggressive tax planning.
Tax planning or tax effective investing involves taxpayers operating within the taxation law to arrange their financial affairs to keep their tax to a minimum. However, some taxpayers plan their tax affairs outside of the taxation law. This behaviour is referred to as aggressive tax planning and the ATO aims to deter, detect and deal with these taxpayers. One element of the ATO’s activities to address aggressive tax planning is the Domestic Promoter Initiative, which targets Australia-based promoters of tax schemes.
This audit would examine whether the Australian Taxation Office’s (ATO’s) Tax Avoidance Taskforce is meeting the revenue estimates and staffing requirements that were stated in the 2016–17 Budget.
The ATO will receive $679 million over four years through the 2016–17 Budget to establish a Tax Avoidance Taskforce. The aim of this funding is to enhance the ATO’s current compliance activities targeting large multinationals, private groups and high-wealth individuals, and to extend these activities to 30 June 2020. The taskforce is expected to recover $3.7 billion in tax liabilities over four years, and also to deter taxpayers from attempting to avoid and evade their tax obligations. The taskforce was established against the backdrop of the ‘Panama Papers’, which relate to the leaking of client records from a Panamanian law firm.
This audit would examine the Australian Securities and Investments Commission’s (ASIC’s) and the Australian Taxation Office’s (ATO’s) regulation of illegal phoenix activity.
Phoenix activity refers to the evasion of tax and other liabilities, such as employee entitlements, through the deliberate, systematic and sometimes cyclical liquidation of related corporate trading entities. This generally occurs through an indebted company transferring its assets into a new company to avoid paying creditors, tax or employee entitlements. Those assets are then used by the new company to continue the business activities of the indebted company. In 2012, a Fair Work Ombudsman report noted that there is a significant lack of data collection in relation to phoenix activity, and estimated the total impact of phoenix activity to be between $1.78 billion and $3.19 billion each year.
ASIC and the ATO collaborate with other entities (including the Australian Federal Police, the Australian Criminal Intelligence Commission and Fair Work Ombudsman) through the Inter-Agency Phoenix Forum to share intelligence and identify, design and implement cross-entity strategies to reduce and deter phoenix activity.
This audit would examine whether the Tourist Refund Scheme (TRS) is being effectively administered.
The TRS enables a traveller to claim a refund, subject to certain conditions, of the goods and services tax and wine equalisation tax that has been paid on goods purchased in Australia. The TRS operates at Australian international airports and international cruise terminals.
The scheme is operated by the Department of Immigration and Border Protection under a memorandum of understanding with the Australian Taxation Office. There is also a contractual arrangement in place between the department and an external provider (responsible for dispersing individual payments to claimants each day, for later reimbursement by the department). In 2015–16, more than 96 per cent of the 765 503 applications received were approved, to a value of $194.4 million.
The audit objective was to assess the effectiveness of the Australian Taxation Office's processes for estimating and monitoring the costs, savings and benefits associated with the Reinventing the ATO program.