Companies seeking to leverage existing tax legislation to lower their tax bill are playing games and the ATO says it will not take any more.
Commissioner of Taxation, Chris Jordan, told a Senate Estimates Committee hearing earlier this year that the ATO has had enough of the failure of big companies to cooperate on issues related to their tax obligations.
Jordan said that he and his colleagues at the ATO know there are a minority of companies that game the system, and the tax collector is gearing up to get tougher on what they see as unco-operative corporates.
“I have said many times that the majority of large corporates, especially Australian-owned companies, pay the right amount of tax in Australia and are open and transparent in their dealings with us,” he said. “There are however a minority of large corporates that try to avoid their obligations, and we do act on this behaviour.”
Evidence from the ATO reveals that $2.5 billion was raised from the completion of 50 audits and 250 reviews. There are more than 70 audits and 220 reviews of large businesses under way at the current time.
“We have 162 active advanced pricing arrangements (APAs) in place, with an additional 115 in progress and another 42 in early engagement stage. These APAs give certainty that revenue is being accounted for and that we have predictability about pricing structures,” Jordan said.
The ATO envisages having to take some companies through the litigation process in order to ensure they pay the right amount of take under our laws.
It is a sign that Commissioner Jordan and his colleagues are losing patience with certain Australian companies. “They play games. They string us along. They believe we can be stooged,” he said. “However, enough is enough and no more of this. We will be reasonable with those that genuinely co-operate, but we will now take a much harder stance on those who do not.”
“We will not be rolling over and giving further extensions of time. We are ruling the line under these protracted negotiations, proceeding immediately to raise assessments and creating liabilities in these cases, potentially taking them all the way to the court if necessary.”