The Australian National Audit Office (ANAO) has released its performance audit report on the Tax Avoidance Taskforce.
In the 2016–17 Budget, the Australian Taxation Office (ATO) was provided $679 million over four years from 1 July 2016 to enhance its compliance activities through the establishment and operation of the Taskforce.
The objective of the audit was to assess the ATO’s effectiveness in meeting its revenue and resourcing commitments for the Taskforce. The high level criteria were:
- Has the ATO resourced the Tax Avoidance Taskforce in accordance with Budget estimates?
- Has the Tax Avoidance Taskforce performed in accordance with Budget estimates?
ANAO’s findings
While there has been a significant increase in compliance revenue over the life of the Taskforce, it is not clear the extent to which this is a result of Budget measure resources provided for the Taskforce. This is because the ATO’s approach of attributing revenue using a percentage of total resourcing did not necessarily provide an accurate indication of Taskforce revenue. The ATO also had not implemented a methodology that accurately monitored Taskforce resourcing. The ATO therefore cannot conclusively demonstrate that the Tax Avoidance Taskforce has met the revenue and resourcing commitments set out in the 2016–17 Budget.
The ATO had not implemented a methodology to clearly demonstrate that the Taskforce had been resourced in accordance with Budget estimates. The ATO recruited staff for the Taskforce broadly in line with Budget estimates. At the same time, there was an overall reduction in business-as-usual staffing in the relevant business lines.
There has been a significant increase in revenue raised by the ATO’s relevant business lines since the commencement of the Taskforce. With the assistance of Taskforce funding, the business lines have increased both the liabilities raised and cash collected from their compliance work. However, because the ATO had not implemented a methodology to clearly identify revenue arising from Taskforce activities, it is not clear exactly how much of this increased revenue is a direct result of the Taskforce. The Taskforce has provided benefits in addition to the revenue raised.
ATO’s response
The Australian Taxation Office (ATO) welcomes the release of the Australian National Audit Office’s (ANAO) performance audit: Tax Avoidance Taskforce – Meeting Budget Commitments, which has found that there has been a significant increase in compliance revenue since the commencement of the taskforce.
While there are some conclusions in the report the ATO feels require additional context in relation to the specific issues raised, the overall finding is that the determination, commitment and passion of the ATO’s workforce has been successful to address corporate tax avoidance.
The audit focused on whether the Taskforce has been resourced in accordance with Budget estimates. The ANAO expressed a preference for a distinct separation of Taskforce funded positions and case work from existing ATO funded positions and case work.
The ATO’s view is that it would be counter-productive to set up two organisations doing the same work. Our approach has been to fully integrate taskforce funding into existing ATO programs. This reflects the design of the taskforce to expand upon existing programs and undertake new work programs rather than operate as a distinct, separate program within the ATO. It also provides the flexibility to allocate resources in response to changes in the taxpayer landscape.
The ATO has carefully considered how to incorporate this large budget measure to deliver the best return on investment to the government and the Australian public. We estimate the taskforce has generated around $7.9 billion in tax liabilities and $4.4 billion in cash collections so far.
Importantly, the success of the taskforce is prompting large multinationals, public and private groups to proactively manage and prevent tax risks in their business by adopting robust tax governance arrangements through early and open engagement with the ATO.
The success of the Taskforce is the result of a combined effort across various business areas of the ATO to tackle tax avoidance. This funding has enhanced and extended existing compliance activities targeting large multinationals and high wealth individuals. The collective and integrated approach taken by the ATO is validated by the outstanding success of the initiative.
We have agreed to some of the ANAO’s recommendations and will further examine their conclusions with the aim of incorporating the suggestions, we believe appropriate, into future improvements to our programs.
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