The Australian Taxation Office has reaffirmed its commitment to tracking down tax dodgers after reaching an agreement with other major economies that will help the Government track down offshore debt.
The agreement comes after months of debate regarding offshore debt and how much can be tracked down by the ATO, sparked by the sale of department store Myer by private equity group TPG and the subsequent court battle that saw the Tax Office blocked from serving a bill worth $738 million.
Institute of Chartered Accountants tax counsel Yasser El-Ansary says the agreement is an extension of the ATO's efforts to track down tax dodgers, which includes its Project Wickenby program, which focuses on high-net-worth individuals.
"In the end, what this is really about from a tax system perspective is just ensuring the amount of outstanding tax liabilities doesn't grow to a level where it becomes uncontrollable," El-Ansary told SmartCompany this morning.
The move also comes just weeks after the ATO started tracking down luxury boat owners in an attempt to capture high net-worth individuals who may be dodging tax.
The ATO has now signed the multilateral convention organised by the Organisation for Economic Co-Operation and Development, which means it can now request other countries chase debts that are owed to the Australian Government.
"We wouldn't do that for small debts; we wouldn't impose an unfair burden on them," D'Ascenzo told The Australian. "But here is another vehicle where we can follow up if the person has got the debts and got the assets offshore."
But D'Ascenzo also said the ATO has not abandoned its goal of chasing down TPG after the $2.3 billion Myer float.
"It is a collection issue; it is a question of trying to find somebody that takes responsibility for representing TPG and that is where it is," D'Ascenzo said.
"Without going into the case, the area of collection when parties are offshore is a vexed area and one that probably requires more work and exploration in terms of our practices but also the legislative platform."
The ATO was blocked by a court last year in attempting to slam the company with a huge tax bill. However, D'Ascenzo says the courts are still an option for large cases, although it wants to use alternatives as well.
"We are trying to use alternative dispute resolution processes quite significantly. It is one of those situations where if you can take the burden off the courts, that is probably a good thing for the courts to function well and sometimes matters do turn on their facts and their views of the facts and therefore ADR-type process can be very helpful in those areas," D'Ascenzo said.
El-Ansary says there is a tricky balance in ensuring flexibility for businesses that are doing it tough, and obtaining justified payments.
"But overall, when payments go offshore history suggests it becomes difficult for the ATO to collect those debts and when that happens, the community as a whole loses out."
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