Simply put, the Australian multi-agency Tax Avoidance Taskforce has the role of ensuring multinationals and large businesses pay the right tax.
It can sometimes take decades to induce multinationals and foreign-owned businesses to admit additional tax liability and legal battles have been known to go all the way to the High Court – repeatedly in the case of at least one corporation.
However there are now runs on the board.
In November 2018 ATO persistence saw the nominally Australian-based multinational BHP Group Ltd settle their longstanding transfer pricing dispute over the amount of Australian tax payable as a result of BHP’s Australian commodities sales through its Singapore marketing business. The agreed amount was calculated as approx. AU$529 million in additional taxes for the income years 2003 to 2018.
In December 2019 the ATO announced that it had managed to retrieve an extra $481.5 million in taxes from Google Australia after an audit investigated its tax practices between 2008 and 2018 and, that it joined the likes of Microsoft, Apple and Facebook who have all publicly stated that they have settled their tax affairs with the ATO and we welcome their transparency. This result brings the increased collections made against taxpayers in the ecommerce industry to around $1.25 billion cash.
Apple Australia reportedly owed $28.5 million in back taxes when it received the ATO bill in 2012.
While Microsoft in Australia is said to have paid AU$39 million during the 2017 financial year to settle its outstanding tax bill.
U.S. multinational Facebook Inc. was obliged to meet a bill of AU$31.3 million in additional taxes reaching as far back as 2009 according to one media report.
In October 2021 U.S. based ResMed Inc. annnounced it had settled its tax dispute with the ATO for the equivalent of US$381.7 million and locked in future tax certainty.
Then came this announcement concerning a mining corporation which asserts that half its assets are situated in Australia…...
Australian Taxation Office (ATO), media release, 20 July 2022:
The Australian Taxation Office (ATO) can confirm a settlement has been reached with Rio Tinto Ltd (Rio). The settlement brings an end to all tax disputes including long standing disputes in relation to Rio’s Singapore marketing hub. The settlement brings Rio’s total payment in relation to the disputes to almost $1 billion.
Deputy Commissioner Rebecca Saint said that the settlement represented one of the largest settlements in Australia’s tax history.
“This settlement is a very good outcome for the Australian tax system,” Ms Saint said.
“Even prior to this settlement, Rio has been one of Australia’s largest payers of income tax for many years, with a strong track record of engaging with the ATO in relation to its tax affairs, albeit with some areas of dispute.
“Rio have announced that the settlement agreed to has secured approximately $1 billion for the Australian community for past years, over and above their tax returns originally filed. Perhaps more importantly, the settlement locks in future tax outcomes, providing certainty going forward.
“This means that additional profits from the sale of Rio’s Australian owned commodities will be taxed in Australia in the years to come.
“The resolution of these matters means that ordinary Australians can have confidence that even the biggest companies are held to account to pay their tax due,” Ms Saint said.
“This result was delivered through the expertise of the ATO’s Tax Avoidance Taskforce. Many ATO staff have worked for the best part of a decade on these audits to deliver an outcome for the Australian community that strengthens the tax system.”
The compliance programs funded by the Tax Avoidance Taskforce, together with robust tax laws provide an important foundation for the ATO to be able to scrutinise activities to address multinational tax avoidance, often involving investigations over many years.
“This settlement reinforces the importance of Australia’s world leading anti-transfer mispricing rules and a tax administrator properly resourced with the capabilities to deal with this type of dispute. The complexity of properly understanding the global affairs of multinationals, and the true drivers of profitability, can take years of rigorous investigation. This is the case even when the multinational is fully engaged, shares information and is motivated to resolve the issue, such as with this settlement.”
The broader impact of the Taskforce in the market has been to reduce the proliferation of profit shifting and transfer mispricing. ATO intervention has resulted in taxpayers shifting their tax position and increasing their revenues being taxable in Australia.
The Tax Avoidance Taskforce has a focus on the energy and resources sector, including commodity exports and marketing hub arrangements.
“The Rio settlement follows the announcement by BHP in November 2018 that they had settled their marketing hub dispute with the ATO. These announcements provide confidence that Australia’s largest iron ore exporters are meeting their income tax obligations and that profit is being retained in Australia,” Ms Saint said.
As of 30 April 2022, the Tax Avoidance Taskforce has helped the ATO raise $26.3 billion in tax liabilities and collect $14.9 billion in cash.
“Australia has one of the best tax performance rates in the world overall, but in particular in the large market. The success of the Tax Avoidance Taskforce has helped us ensure that compliance rates in the large market have reached 92% of tax paid voluntarily, and 96% after compliance activities.” Ms Saint said.
Background
Details of the settlement are covered by confidentiality provisions and the tax secrecy requirements of the taxation law. However, all our large corporate settlements are reviewed by former Federal Court judges to ensure a fair and reasonable outcome for the Australian community.
ATO settlement practices are subject to significant external scrutiny, with the Australian National Audit Office (ANAO) finding that our practices are effective. The ANAO also indicated we have more transparency over large market settlements than any other jurisdiction.
The efforts of the Taskforce have seen several significant taxpayers publicly state that they have settled their affairs with the ATO, promoting unprecedented transparency. This includes the likes of Google, BHP, Apple, ResMed, and Microsoft.
