Last Friday Second Commissioner of Taxation Bruce Quigley gave a speech to the Tax Institute of Australia in Tasmania. He let a sizeable cat out of the bag, telling his audience that in one case a $242million dollar assessment was raised against a high wealth individual involved in Operation Wickenby.
The tax office refuses to identify the individual concerned, citing privacy and tax secrecy concerns. A spokesman for the Commonwealth Director of Public Prosecutions told Crikey they were unaware of the matter.
Crikey understands the case was settled by the ATO with the tax cheat concerned willing to cough up the money owed. The tax office has granted the cheat what I call a quasi indemnity from prosecution. This is because the ATO have settled the matter for a monetary amount without referral to the DPP. The DPP never got to look at the file and cannot judge the case in accordance with the prosecution policy of the Commonwealth.
We have been told by tax commissioner Michael D’Ascenzo that Wickenby involves some of the worst tax cheating he has seen. False documents, hidden bank accounts and international profit shifting are just some of the descriptions he has used to describe the transgressions against our country’s tax laws. So you can only imagine the sort of shenanigans this cheat was involved in to have to pay a $242million tax bill.
And what does Glenn Wheatley, the trophy boy for Operation Wickenby, think of all this? He was convicted in 2007 and sent to jail for 15 months for avoiding $318,092 in tax.
Let’s look at some recent tax office prosecutions. In May they prosecuted a Sydney woman and she was sentenced to seven years jail in the Sydney District Court for GST fraud of $506,511. In April a Southern Highlands man has today been sentenced to three years jail in the Downing Centre Court in Sydney for GST fraud totalling $227,660.58. Where is the consistency? Or is there a different rule for the rich and powerful in this country?
Last year I told Crikey readers that it was time to name and shame our worst tax cheats after details emerged on the ABC’s Four Corners program of tax cheating on a grand scale by Australia’s high-wealth population. Former Assistant Treasurer Chris Bowen said at the time:
I can see the attraction of naming and shaming. If the Commissioner came to me and said he wanted to do it, it’s something I’d be open to but at the end of the day it’s a matter for the Tax Commissioner as to whether to do that.
There is something wrong with the system when Wheatley and other prosecutions have the book thrown at them and a “high-wealth individual” who cheated $242million isn’t referred to the prosecutor. It’s time for new Assistant Treasurer Nick Sherry to have a look at the prosecution guidelines between the ATO and the DPP and fix them up. Sherry did not respond to questions put to him by Crikey.
On Friday Mr D’Ascenzo appears before Parliament’s Joint Committee of Public Accounts and Audit for the Biannual Public Hearing with the Commissioner of Taxation. Chair Sharon Grierson’s first question to him should be: why did you prosecute Glenn Wheatley for avoiding $318,092 in tax and not the cheat who avoided $242million? Let’s see.
One law for the poor, one for the rich and no law for the connected
Has anyone ever looked at the possibility of malice in these cases ? A former Commissioner, Trevor Boucher, introduced substantial rewards for tax officials, based on the money they brought in. If they were ever deprived of their bonuses, due to delays stretching over the fiscal year end or whatever, many of them used their powers to attack the taxpayer out of spite. In my own case, a tax official tried to make me and my wife bankrupt by including a huge amount of provisional tax, even though this would have evaporated within three months. The legal expenses to fight him off cost us our home. I later had some interesting correspondence with the Special Tax Advisor to the Ombudsman, Mr. Peter Haggstrom. He told me that we were but one of thousands and he was so angered that he was doing an “own motion” investigation of several hundred selected cases. He offered to send me a copy of his report when finished, but he left soon after (probably out of despair!) and the report never appeared. When I enquired about this, I was told that there was no report, but that the ATO had taken action to improve their processes in the light of Mr. Haggstrom’s investigations.
The disparity between the treatment of those who can cough up the money promptly compared with the avalanche of trouble tipped on those who can’t – and for comparatively small amounts, resonates eerily wiht our own experiences. Eighteen years later, I am still angry at the behaviour of the ATO, partly because at the same time, while they were attacking us for a $50,000 liability, a well-known lady pop singer of the day who owed $300,000+ was let off with a payment of about 20% of that amount. (I still have the newspaper clipping!). Its not the tax, its the unfairness that gripes.
Surely someone with the author’s background and experience can imagine the Commissioner’s answer which would, I guess, be along the lines of “A. I don’t decide on that sort of prosecution but, setting that aside, B. what should I rationally do when the taxpayer says – and I believe him – ‘I am not in Australia now and, rather than spend a day in gaol with a criminal conviction to my name I will go further than spend millions and several years in court defending myself – something I also want to avoid as I do gaol – I will happily live in Greece, Italy, Switzerland, Israel, Shanghai, Brazil, or wherever and, as well, you won’t get a cent out of me because anything I have in Australia is already mortgaged to a bank or otherwise untouchable by you to pay my tax debts’? “
Julius
For B: They should charge them, convict them in absentia and restrict their ability to travel and do business in the future.
I imagine many countries have restrictions on how convicted tax cheats can operate.
Surely this is better than taking the money and not charging as where is the deterrent for tax theft in the future if you can just threaten the law enforcers and do a deal?
Whilst I understand that pragmatism leads to out-of-court settlements, I am absolutely gobsmacked that such an egregious intention to avoid taxation is not punishable other than by payment of a financial obligation. It would seem that for the rich, coughing up their just deserts is seen to be sufficient punishment.
This disgusting individual should be outed for the low life that they are, living in Australia and taking all of its benefits whilst indulging in what can only be described as massive tax fraud. I can only hope that some investigative journalist can find out who this disgusting individual is and make sure that they receive the appropriate level of publicity commensurate with their disgusting behaviour.
Furthermore such a settlement process is only made feasible because the avenues of legal defence, aided and abetted by lawyers whose only interest is money, could drag out such a recovery case through the legal process over years. There is something seriously wrong with our judicial governance processes if this crime remains unpunished.