ATO cracks down on taxpayers earning over $5 million

The Australian Taxation Office has managed to identify $275 million in tax liabilities while conducting audits of the country’s most wealthy individuals, following a crackdown on taxpayers earning over $5 million.

Those figures were revealed yesterday at the Joint Committee of Public Accounts and Audit hearing by tax commissioner Michael D’Ascenzo, who also said the ATO will continue in its scrutiny of trusts and offshore income.

D’Ascenzo once again emphasised the ATO’s current amnesty offer, saying taxpayers earning undisclosed income overseas are being encouraged to reveal those figures to the ATO or risk paying penalties of up to 90% of monies earned.

But he also said as part of the office’s crackdown on wealth, it has now identified another 1,096 wealthy individuals after examining personal and corporate dealings. He said the ATO intends to conduct 120 audits and 420 risk reviews during the current financial year.

“That’s why you see a huge increase from under a thousand when we first started, to closer to 2,700 under our current processes,” D’Ascenzo told the Joint Committee of Public Accounts and Audit.

Additionally, second commissioner of taxation Bruce Quigley told the hearing that the signing of a tax agreement in Vanuatu will allow the office to track down overseas havens. “We are getting much more information exchanged and we are able then to build up profiles of where assets and incomes are apparently being concealed.”

The ATO also said the taskforce is currently searching for illegal overseas schemes, has performed 665 audits and 26 investigations. Quigley said the amnesty program, which ends on June 30, should “get a rush at the end, that’s certainly the experience of overseas jurisdictions under similar programs”.

While D’Ascenzo and Quigley were questioned about the ATO’s delay in sending out tax returns due to an IT bungle, the former defended the program and said it was “working very, very well”.

Officials also confirmed it will continue with a draft ruling which affect family trusts, and could impose a tax on those trusts used by families. Industry experts have pointed out several unforeseen consequences of the ruling, however, such as imposing an extra tax on farms.