Last month, the Australian Taxation Office (ATO) undertook action against 19 multinational corporations implicated for tax avoidance after 13.4 million records from Bermudan law firm Appleby were leaked to the international press (dubbed the “Paradise Papers”). And later in November, it was revealed that the ATO’s action on multinational tax avoidance had already recovered $5 billion in unpaid taxes in just 16 months, with billions more still to come.
Today, The Australian reports that the ATO has reached settlements with 12 multinational companies in regard to some $75 billion in related party debt. ATO Deputy Commissioner Jeremy Hirschhorn says the term of the settlements provide for future tax revenues, as well as resolving past disputes, and that the ATO is now working with an additional 60 taxpayers that have another $120 billion in related-party debt:
Importantly for budget revenue flows, the settlements would lock in a flow of tax money in the future from the companies in question, as well as dealing with historical disputes, Deputy Commissioner Jeremy Hirschhorn told The Australian.
It builds on the ATO’s landmark Full Federal Court win in April against Chevron’s Australian arm over multi-billion-dollar borrowings from offshore associates, used to fund the company’s share of the Gorgon gas project off the coast of Western Australia.
Now, the ATO’s latest compliance review focuses on 60 of the “biggest and riskiest” taxpayers with large borrowings from offshore associates, representing $120bn of the $420bn in related party debt on issue across the economy.
“Since the court decision we’ve been really working hard with a lot of the companies with bigger inbound loans. We’ve been doing a compliance focus,” Mr Hirschhorn said. “Twelve of those taxpayers, representing about $75bn of that debt, have either settled or are about to settle in accordance with the risk ratings of the PCG,” he said…
With billions poured into big projects that take years to come on stream, the ATO doesn’t expect tax revenue immediately — it could take up to five years after a project is operational to see any money flow to the government, Mr Hirschhorn said.
However, he said the settlements struck so far locked in reductions in debt levels into the future “as projects become income producing”…
I’m not sure how much Budget revenue is involved with these settlements, but it certainly sounds promising.
