admin | February 16, 2012
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Project WickenBy: Agency Roles

Author    :    Frank Egan B.A., LL.B., A.C.L.A, F.T.I.A.
Date    :    14 February 2012

The different agencies that comprise Project Wickenby have different roles to play in pursuing tax offenders who participate and promote abusive international taxation schemes.  Generally the ATO will try to address the problem themselves as much as the law permits.  But there are instances where the case may not be resolved without the assistance of other government agencies.

Tax Debt will be recovered in accordance with the ATO’s compliance model which includes risk assessments and action to be taken in conjunction with the severity of the case.  In addition, information gathering, preliminary investigations and audits will be handled and conducted by the ATO.  Should the ATO determine in their analysis that further investigation and/or review are warranted, then other agencies in the project may be involved.  Despite the involvement of other agencies, the ATO will act as the lead agency for the overall project as the Commissioner of Taxation is the administrator of the taxation laws of the Commonwealth.

Agency Roles in Project Wickenby

ASIC (Australian Securities and Investments Commission)

ASIC’s main role is to advise on how corporate legislation applies to entities and promoters which may be involved in the creation, administration or operation of illegal international tax schemes regardless of the affected revenue system (foreign or domestic).

ACC (Australian Crime Commission)

It is the ACC ‘s role to conduct criminal investigations and analyse data which may explain how organized offshore tax exploitation schemes operate enabling Project Wickenby to counter these abusive activities effectively.

CDPP (The Commonwealth Director of Public Prosecutions)

Prosecuting summary offences, proceeds of crime and other tax evasion-related matters falls to the CDPP.

The AFP (Australian Federal Police)

The AFP conducts criminal investigations primarily into high risk offshore taxation schemes. Cases are referred to the AFP by the ATO based on their risk-management system and/or intelligence obtained from other agencies involved with the Project.

AUSTRAC (Australian Transaction Reports and Analysis Centre)

AUSTRAC’s primary role is to provide Project Wickenby with additional data by giving on-line access to any of the agencies involved with the Project (ATO, AFP, ACC, ASIC) together with analytical support.

AGS (Australian Government Solicitor)

The Australian government Solicitor provides high level advice in relation to legal risks and potential civil proceedings taken by or against the Commonwealth or any joint agency.

AGD (Attorney-General’s Department)

The AGD manages mutual assistance requests for formal assistance from other national governments on criminal investigations and prosecutions.

In addition to the specific roles of these agencies Project Wickenby has an advisory committee comprised of representatives drawn from these.  The advisory committee meets on a monthly basis to share information, assess and develop methods and identify the type of tax crime emanating from various international tax schemes.

Conclusion

Any taxpayer who has come to the attention of any of these agencies or any taskforce including Project Wickenby should call LAC Lawyers now for professional advice and assistance as we are regularly engaged by clients to assist them with these matters.

Category: Debt, Tax, Taxation | Tags: , , , , , , , , , , , , , , , , , ,
admin | February 9, 2012
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The Purpose of Taxation

The purpose of taxation is pretty simple: it provides the government the finances needed for it to function property and effectively by undertaking projects that would benefit the community in general. For any country in the world, taxes are its biggest source revenue and without, progress and advancement as a nation is practically impossible.

Construction of public works

One of the main purposes of taxation in Australia is the provision of projects that are for the consumption of the public, also known as public works.

Public works include the construction and maintenance of:

  • roads, highways, bridges and other types of thoroughfare
  • government agency buildings and facilities
  • schools and other academic institutions
  • hospitals and other medical institutions(e.g. research facilities)
  • houses and any other form of lodging provided to the following:
  1. destitute
  2. homeless
  3. aged or dying
  • recreational centres(e.g. arenas, courts, stadiums, etc.)

Charity and redistribution

Taxes also allow the government to help out those who are in need, especially those who have been affected by natural disasters; something Australia has been all too familiar with given the number of  natural catastrophes that have occurred in the past couple of years. Outreach programs undertaken by the government together with other concerned citizens provide people who have been affected with essential provisions such as food, water, clothes and shelter; not to mention the reconstruction of the community in general to enable those citizens to start their lives anew.

Another key feature of taxes in Australia is redistribution. Generally, wealthy entities in Australia are taxed at a relatively higher rate when compared to the vast majority of citizens. The revenue collected from these entities is then used to fund programs and services that is in the best interests of the majority.

For example, wealthy entities have their assessable income taxed by an additional 1% for  Medicare, Australia’s universal healthy care system.

Armed forces and security

A country without armed forces is akin to a lion without claws and teeth – vulnerable, defenceless and insecure. This is the reason as to why it is still necessary for the Australian government to allocate tax-generated resources to maintain well-armed and well-trained forces to not only protect the citizens from outside threat but more importantly, to prevent chaos and disorder from ensuing within its borders and to provide peace of mind to all of its citizens.

If you have queries about the purpose of taxation and how taxation in general applies, it is advisable to avail of the services of a tax lawyer for expert legal assistance.

Category: Tax | Tags: , , , , , , , , ,
admin | February 6, 2012
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Property Taxes in Australia

image source:life123

As with property acquisitions the world over, taxes on real estate properties are administered by the Australian government. The amount of property taxes to be paid by an entity(individual, company, trust) or simply known as “land rates” will be determined by a local council in respect of where the acquired property is located.

Local council and their land valuers also determine the frequency of payment to be made by an entity and if it includes payment for utilities such as water rates or anything similar for that matter, all depending on the practises for that area and zoning laws.

Factors

The amount of property tax to be required from a taxpayer will depend on the following factors:

  • applicable zoning laws
  • proximity to transportation
  • landmark status
  • demand and supply for the property
  • the general environment of where the property is situated
  • use of the property(commercial, residential, mixed-use)

Other taxes associated with property

In addition to property taxes, an entity who wishes to acquire property or properties in Australia may have to the following amounts:

  • goods and services tax (GST) – a 10% value added tax applied on the supply of goods and services
  • capital gains tax (CGT)- an amount payable if a CGT event occurs in respect of the acquired property(e.g. disposal of the property that resulted to capital gains)
  • land tax – an annual state tax
  • stamp duty – a form of tax administered on the vast majority of transactions that are done within or is in relation to Australia
  • tax on rental income – any profit or loss made by an entity from leasing a property must be included in their annual tax returns

 

Category: Tax | Tags: , , , , , , ,
admin | February 1, 2012
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Defining the Cash Economy

Cash economy is a word often encountered when reading newspapers, watching news on TV or when browsing the Internet. In spite of this, there are still a number of taxpayers are still unaware of what it means, and more importantly, the risks it posses to the Australian community.

To put it simply, cash economy occurs when transactions between a business and another entity(individual or another business) go unrecorded and are not declared to the ATO. Thus, risking Commonwealth revenue and placing compliant taxpayers at a disadvantage.

Characteristics of the Cash Economy

  • There are a variety of ways by which businesses engage in the cash economy but there are certain characteristics which clearly identify an entity’s involvement in the illegal activity. The following are traits or characteristics commonly found in a business participating in the cash economy(but not limited to):
  • off-the-book activities
  • wages paid in cash without any tax being withheld to be paid to the ATO(cash-in-hand payments)
  • the business is operational and is not not registered in the Australian Business Register(ABR) or;
  • the business is registered but refuses to lodge tax returns, activity statements or any other business document required by the ATO for taxation or;
  • the lodged returns are false or misleading

Role of other entities

While businesses deserve the brunt of the blame for the existence of cash economy, individuals   who knowingly participate in a business’ fraudulent activities by continuously availing of services or purchasing goods deserve to take some heat as well as they too imperil Australia’s biggest and most crucial revenue stream.

Solutions

The best way to ensure that you’re business operations are within the boundaries of the law is to get sound legal advice from tax professionals. Should you have a serious legal problem, find a good taxation lawyer now for expert legal assistance.

Category: Tax | Tags: , , , , , , ,
admin | January 23, 2012
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Benefits of Having a Tax Lawyer

Taxation law is about as complicated as they come, and for good reason. Resources derived from taxes and other tax-related liabilities are Australia’s largest revenue stream and without it, effective community governance and public works would not be possible.

That said, it is up to the ATO to ensure compliance from every taxpayer. However, therein lies the dilemma as the Commonwealth’s taxation laws are much more complex than what is originally perceived by most taxpayers. Safe to say, such a situation necessitates the help from a professional to gain a better understanding and a taxpayer will not a get a better advice than with a tax lawyer.

Chief among the benefits of having a tax lawyer is giving counsel to ensure that government-mandated requirements are met. Ask any doctor and they will say that there is no better cure to a disease than prevention. The same statement could be applied for matters of taxation as it is much easier to comply properly and timely as opposed to having to address a tax-related problem which does not only involve having to pay substantial amounts, in the form of charges and penalties, but may also involve prosecution if the entity’s case is serious enough.

Tax lawyers also have the capability to address tax offences and crimes should an entity find oneself in such a situation. Tax lawyers can effectively communicate with the ATO or any other government agency and in the process, come up with a resolution to uphold a taxpayer’s best interests without having to circumvent legislation which includes representation for trials and other judicial processes should it be required.

 

Category: Tax | Tags: , , , , , , ,
admin | January 12, 2012
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Tax Debts: Liquidation

When the ATO and Commissioner of Taxation decide to impose measures upon a company taxpayer with a tax debt, the most extreme sanction available is that of liquidation. As can be imagined, this harsh measure is not imposed lightly.

When it is imposed

First, if a tax debt exists, the Commissioner will usually request that the debtor propose, or adhere to a proposal, to repay the debt in a way acceptable to the ATO. If the debtor fails to obey this request, the Commissioner engages in legal recovery proceedings.

Only if the debt remains unpaid even after these legal proceedings will the Commissioner and ATO even consider imposing liquidation upon the debtor.

When the debtor company is placed into liquidation, its assets pass to the liquidator. The liquidator will then realise these assets and use the proceeds to deal with the company’s debts, giving appropriate priority to the tax debt that caused the issue.

Factors considered by the Commissioner

The Commissioner’s options short of liquidation include entering an arrangement with the debtor. The ATO regards this as a better result than liquidation, since the taxpayer’s tax debt would be settled more rapidly and thoroughly.

If the debtor is solvent the Commissioner will never seek liquidation. However, the taxpayer has the onus of proving solvency. Mere surplus of assets over liabilities will not suffice; rather, the taxpayer is expected to present clear evidence that the tax debts can be paid off by their due dates, as well as showing that all its other debts are likely to be paid off.

The Commissioner’s options when considering liquidation also include the issuing of director penalty notices before seeking liquidation, but only if the debt is a withholding tax amount. Such notices permit entry into a payment arrangement. Another possibility is deciding to liquidate the debtor company if it has also been trading insolvent, but only if insolvent trading is apparent.

Note that our companion article Bankruptcy and liquidation factors looks more closely at the factors considered when the Commissioner is deciding whether to liquidate. Further, our article Tax debt recovery and company arrangements in lieu of liquidation covers possible company arrangements if liquidation is imposed.

Category: Debt, Tax |
admin | January 12, 2012
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Company Tax Debt and Recovery

Company tax debts come into existence in a number of ways. Normally they are the function of the incapacity to pay for any of a number of reasons. In all such cases company directors assume personal liability where nothing is done to address the company’s taxation debt particularly after a director’s penalty notice has been served on them and the 21 day grace period has expired without action. In addition current amendments mentioned in the last budget clearly indicate that a stricter attitude is being taken to company taxation liabilities which clearly focuses on preventing directors from escaping personal liability. The ATO can now persue company directors in these circumstances by the removal of the 21 day grace period for certain unpaid company liabilities which remain unreported after 3 months of becoming due.

As we have indicated on a number of prior occasions directors of companies are becoming more and more accountable for the taxation liabilities of companies which they represent. In other words, taxation liabilities are now being successfully transferred to individual directors or their associates. This may have some unwarranted consequences where a person is convinced to take up a directorship by another person who is an undischarged bankrupt so that the business can continue to operate.

Where this occurs the person who becomes a director may be subject to undue influence by the proposing party which could manifest itself in any number of ways with respect to the company’s taxation affairs. e.g. non payment of taxes, non payment of group tax, not meeting BAS obligations, not remitting taxes and often using these funds for private purposes.

Irrespective of the circumstances or whether or not the individual concerned is subject to undue influence that person whether a husband, wife, relative, friend or business associate will be the one who is liable for the taxation debts of the company where action is taken by the ATO to recover them.   If you become a director of a company in these circumstances the only person who has anything to lose is you and you need to be completely aware that this could expose you to making good the company’s tax debts although there are limited exceptions.

This problem has been encountered in a number of major company collapses involving everything from forestry schemes to the financial services sector to mining companies. This problem has also been encountered with private companies where particular individuals are married or are in a bona fide domestic relationship (defacto relationship) and have been pressured to become company directors by the one who is ineligible.

In some of these situations one party may have money and the other does not and where the one who does not have money tires of the relationship the other is at obvious risk where the company has outstanding creditors including the ATO.

Category: Debt, Tax |