12 May 2009

ATO Strategic Compliance Package

The Rudd Government will provide $595.2 million over four years to help businesses remain viable in the face of the global recession, to tackle emerging revenue risks and promote community confidence in the tax system.

The Government is determined to keep taxpayers experiencing financial distress engaged with the tax system while addressing revenue risks which could emerge as Australia's economy recovers and returns to growth.

These measures are estimated to collect additional net revenue of $1,383.6 million through enhanced compliance.

The funding will support four key measures.

Supporting businesses and other taxpayers in financial distress

The ATO will invest $100.1 million over four years to support small businesses and other taxpayers experiencing difficulties meeting their tax liabilities as a result of the global recession.

Early and more tailored assistance improves the prospects of remaining viable. This includes early identification of those experiencing financial distress and providing flexible payment arrangements.

This early intervention will help viable but struggling businesses to stay in business and help support Australian jobs.

Maintaining the cross-agency approach to preventing abuse of tax havens (Project Wickenby)

The Government will provide $122 million over three years starting from 2010-11 to the multi-agency taskforce under Project Wickenby to continue the investigation and prosecution of tax haven abuse.

This extends the original Project Wickenby measure which has increased tax compliance by almost 60 per cent among the target population.

"This measure will complement international developments including recently announced G20 initiatives on tax havens and non-cooperative jurisdictions, particularly in relation to the international exchange of tax information," Mr Bowen said.

Agencies involved in Project Wickenby are the ATO, Australian Crime Commission, AFP, the Attorney-General's Department, the Australian Transaction Reports and Analysis Centre, ASIC and the Commonwealth Director of Public Prosecutions.

In addition, the ATO will continue to expand its scrutiny of international transactions by all businesses and individuals, including the use of offshore banking accounts.


Ensuring wealthy Australians and large and medium sized businesses continue to meet their tax obligations as Australia's economy recovers

The ATO will receive funding of $302.1 million over four years to ensure that, as Australia's economy recovers, wealthy Australians and large and medium sized businesses continue to meet their tax obligations. The ATO will focus on high income company executives and directors, and individuals with a net wealth between $5 - $30 million, who engage in tax minimisation strategies.

The ATO will address the risk that large and medium businesses seek to increase market share and profits through tax minimisation as the economy recovers.

The ATO will focus on cross-border financial arbitrage, profit shifting and the treatment of gains and losses as well as infrastructure and investment claims.

These are complex issues requiring the ATO to build additional capability. As an initial step the ATO will strengthen its information matching capability to identify unreported income and obligations by employers, investors and highly paid executives.

Promoting a level playing field for small business

The Government will provide $70.9 million over four years to the ATO to ensure a level playing field for small business by addressing the cash economy and unfair competitive practices.

In the current economic climate some businesses may engage in higher levels of risk taking which distort the market by creating unfair competitive advantages.

In addition, there is an increased risk that some employers will fail to withhold, report and remit employee entitlements.

The difference in totals and its components are due to rounding.