The Australian Taxation Office has told a US senate committee investigating the use of tax havens by wealthy entrepreneurs that the use of offshore tax havens is increasing, with small business people now involved in shipping money offshore.
The Australian Taxation Office has told a US senate committee investigating the use of tax havens by wealthy entrepreneurs that the use of offshore tax havens is increasing, with small business people now involved in shipping money offshore.
The tax office says the amount sent to offshore tax havens totalled $16 billion in 2006-07, with about $18 billion coming back. While much of this was for legitimate commercial purposes, the tax office is concerned offshore tax evasion is on the rise.
The US Senate Committee on Homeland Security and Governmental Affairs is examining how wealthy individuals used LGT Group, a secretive Liechtenstein bank owned by UBS and the Liechtenstein royal family, to dodge tax obligations.
A report from the senate committee claimed that the billionaire Lowy family “used transfer companies and a foundation with a Delaware corporation to help… hide their beneficial interest in a foundation with $US68 million in assets”.
The Lowy family has denied the claims but admitted that its affairs are being audited by the Australian Taxation Office.
The tax office is auditing 20 Australian taxpayers who are clients of LGT and says it expects to raise more than $100 million in unpaid tax liabilities.
“Tax havens which operate on the basis of privacy or secrecy laws provide the opportunities for trust and asset management institutions, such as LGT, to establish tailored, confidential structure for taxpayers looking to take advantage of these laws to conceal their income from their tax administration,” the tax office said in its submission.
“Experience has shown that many taxpayers who use these tailored financial structures in tax havens are engaging in tax evasion.”
Sue Prestney, principal at MGI Boyd Accountants and an expert on SME tax issues, says business operators should stay well away from offshore tax havens. “Sometimes SME operators can be unsophisticated and predatory promoters of these offshore tax schemes can sometimes persuade them that they will be able to get away with it. But there is far more transparency than there used to be, and it just usually ends in tears.
“Besides, our tax system is not that bad,” she says.
Read more on tax evasion
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
