Taxman struggling to manage HWIs
High wealth individuals (HWIs) are using complex business arrangements and trusts to minimise their tax liabilities, an Australian National Audit Office (ANAO) report reveals.
The ANAO Report No 35 2013-14 Managing Compliance of HWIs found that despite placing a focus on the country's wealthiest people, the majority of audits and risk reviews carried out by the Australian Taxation Office (ATO) between 2009-10 and 2012-13, yielded no financial outcome.
"The ATO has effectively carried out a range of activities and engaged with HWI taxpayers and their representatives to reinforce their understanding of, and promote compliance with, tax obligations," the ANAO report said.
"The ATO has also had a particularly extensive HWI active compliance focus, conducting audits and risk reviews of over 90 per cent of the population between 2009—10 and 2012—13 and collecting almost $852 million as a result of these compliance activities ($671 million from audits and $181 million from risk reviews).
"However, the results of these activities have not always been commensurate with the level of effort deployed by the ATO. Over the four-year period, 90 per cent of the cash collected was from 12 per cent of the audits and five per cent of the comprehensive risk reviews undertaken by the ATO. The majority of these audits (70 per cent) and comprehensive risk reviews (84 per cent) did not have a financial outcome."
Despite the complexities of HWIs' business arrangements, the ANAO report revealed that the tax office has collected over $3 billion in additional revenue since 1996, with HWIs contributing $1.4 billion in tax revenue in the 2011-12 financial year.
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
