Moving millions of dollars from Australia to New Zealand - Does the ATO ignore suspicious dealings

 A Kiwi used a strange process to move over $65 million from Australia to New Zealand.

The Australian Taxation Office has wide-ranging data gathering and analysis capabilities. It is inconceivable that it did not detect this case and cannot detect many cases like the one described here. 

Records available in the New Zealand company office show: 

1. $11 million was transferred between a set of New Zealand companies created a few days before, and removed soon after, where one person controlled all the companies used: 

2. $54 million was transferred between a set of New Zealand companies created a few days before, and removed soon after, where the same person controlled all the companies used: 

The destination of the first transfer, of $11 million, is mentioned again in an Annual Report of the company named Stockton Assets Limited: 

The source of the $millions

Companies in Australia are identified as shareholders in Priority Investments Limited, the New Zealand company name used in the transfer of the $millions: 

Australian company office records point to two significant pieces of information about these two companies: 

1. The person who controlled the New Zealand companies that received the funds is the same person who controlled these Australian companies, and

2. Rocksprings Enterprises Limited, the New Zealand company that received the funds in New Zealand - as a loan - was the ultimate owner of the two Australian companies that was the source of the money sent from Australia to New Zealand.

A List of Source Documents and Entities Involved

The documents are available for browsing at google drive => See the list of documents here

The Panama Papers in the ICIJ database - a sample of information available

Offshore Leaks Database

The International Consortium of Investigative Journalists is a global network of more than 190 investigative journalists in more than 65 countries who collaborate on in-depth investigative stories.

The ICIJ database contains information on almost 320,000 offshore entities that are part of the Panama Papers and the Offshore Leaks investigations. The data covers nearly 40 years up to the end of 2015 and links to people and companies in more than 200 countries and territories.

Note this ICIJ database disclaimer from which the information below was extracted:

DISCLAIMER

There are legitimate uses for offshore companies and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly. Many people and entities have the same or similar names. We suggest you confirm the identities of any individuals or entities located in the database based on addresses or other identifiable information.

@RyleGerard Exploring #PanamaPapers, stumbled upon many #Firepower characters of your book https://t.co/ptDr95IZEx https://t.co/V2cGlVDfJC

— Askgerbil Now (@Askgerbil) July 3, 2016

Smoking out Firepower: kidnap, extortion and money long gone https://t.co/dfYY27eYOl via @smh #TaxReform #PanamaPapers #auspol

— Askgerbil Now (@Askgerbil) July 4, 2016

Panama Papers - Search results on Firepower ENTITY

If you search the ICIJ database with a string like:

John Smith

it will return lists every of object containing "John" or "Smith" as well as "John Smith".

Entering the search as follows produces what may be intended:

John AND Smith

results  in every object containing names such as "John Smith", "Mr John Smith", "Smith John" and even "John Robert Smith", but none that contain only "John" or "Smith". It also returns both uppercase and lowercase values.

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The ICIJ Offshore Leaks Database search page is at https://offshoreleaks.icij.org/

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The table below is a very small extract from the ICIJ database to introduce the type of information to explore. It is an opportunity to put a toe in the wading pool before diving in the deep end of the pool.

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Global agreements for closing tax avoidance schemes. Same structures hide proceeds of crime and corruption. #auspol https://t.co/Vl682Lmkuf

— Askgerbil Now (@Askgerbil) July 3, 2016

LNP 'fix' for a revenue problem it says doesn't exist

Scott Morrison delivered his first and perhaps final budget as Australian Treasurer in the last days of the Abbott/Turnbull Government.

• The 2016-17 Budget was presented by the Treasurer, Scott Morrison in the House of Representatives on Tuesday, 3 May 2016.
  
• The 44th Parliament was dissolved a few days later on Monday, 9 May 2016 at the request of PM Malcolm Turnbull.

Australian Treasurer, Scott Morrison

Scott Morrison consistently says the Government doesn't have a revenue problem.

"Mr Morrison rejected suggestions there was a problem with money coming in, saying revenue as a share of the economy would be higher than the long-run average next financial year." (SBS News, 8 April 2016)

The budget summary in his budget does in fact show revenue as a share of the economy being higher than the long-run average next financial year.

The same summary however shows tax revenue as a share of the economy being higher than the long-run average not just next financial year but in every following financial year. The share actually increases in every financial year to 2019-20, remaining well above the long-run average.

Large companies, economic growth and tax reform

You might have missed it but 579 large companies paid no tax in 2013-14 but the Turnbull Government's priority is jacking up the GST #auspol

— Wayne Swan (@SwannyQLD) January 6, 2016

ABC Radio AM
Small businesses frustrated large companies 'fiddling the system', pay no tax

Naomi Woodley reported this story on Saturday, December 19, 2015 08:10:00

NICK GRIMM: A leading small business group has taken aim at the big end of town, saying too many large companies aren't paying their fair share of tax.

The Tax Office this week released a report showing almost 600 public companies didn't pay any tax in 2013-14, including 60 per cent of those in the energy and resources sector.

The Council of Small Business says Australia has a good tax system and it accepts there are legitimate reasons why companies may not pay tax.

But the Council's chief executive, Peter Strong, has told our reporter, Naomi Woodley, that too many companies are "fiddling" the system, damaging confidence and the budget.


(Audio player added with code generated at "How to add a music player in Blogspot". Thanks Amanda.)

A novel approach to tax reform - Social Capital Royalty

The report from the Tax office summarised below shows most large corporations make little taxable income and many pay little or no tax.

They can be classified as being poor, fair and good contributors to taxable income and tax payable.

Those that are poor performers may be fiddling their books or simply are not very profitable. In either case imposing a "Social Capital Royalty" on these leaners can boost investment and economic growth.

This royalty can be avoided simply by lifting profitability and taxable income into the "fair" category. Corporations liable to pay the "Social Capital Royalty" will be motivated to change accounting practices or to invest to improve performance. Failing to do either will encourage their elimination by more innovative business competitors.

This is a relatively efficient mechanism. It provides business with motivation to improve performance rather than relying on compliance and enforcement activity by the Tax Office to weed out accounting fiddles.

The "Social Capital Royalty" should be seen as the minimum or "flag fall" liability by a corporation for the opportunity to operate a business in Australia. The amount of "Social Capital Royalty" liability by each corporation should ensure some minimum proportion, say 2% of total income, is collected by the Tax Office, firstly as tax payable with a variable royalty amount to make up any shortfall.

All of the additional revenue raised from the "Social Capital Royalty" can be distributed as a "Good Economic Performance Bonus" to corporations with taxable income of at least 5% of total income and tax payable of at least 2% of their total income.

Businesses in the "fair" category that do not have to pay any "Social Capital Royalty" can become eligible to receive a "Good Economic Performance Bonus" by investing to  lift their competitiveness and profitability.

This approach to tax reform gives an incentive to businesses that perform poorly to invest to raise productivity and profitability. It also encourages and rewards those businesses that pay their fair share of taxes.

Summary of the Tax Office report

The "Corporate tax transparency report"released in December 2015 covers 1,539 public companies that had a total income of $100 million or more in the 2013-14 financial year.

1,249 of the companies had a total income between $100 million and $1 billion each and the remaining 290 companies had a total income exceeding $1 billion each.

In each of these 2 groups a significant number of companies had taxable incomes between nil and 5 percent of their total income.

Of the companies with taxable incomes of more than 5 percent of their total income a significant number had a tax payable between nil and 2 percent of their total income.

The table below shows that 740 (48.1%) of the companies receive 14.0% of total income and paid just 1.6% of the tax payable by the 1,539 companies.

Only 82 (5.3%) of the companies receive 27.5% of total income and paid 68.9% of the tax payable.

Income tax information for 2013-14

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Companies with Total Income from $100 million to $1 billion
	Taxable Income from nil to 5% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		740	227,411,885,976	2,635,600,521	627,167,780	48.1%	14.0%	1.6%
	Taxable Income 5% or more of Total Income and Tax Payable from nil to 2% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		154	50,309,170,667	4,861,416,908	599,193,549	10.0%	3.1%	1.5%
	Taxable Income 5% or more of Total Income and Tax Payable 2% or more of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		355	105,485,898,123	19,323,412,036	5,167,853,388	23.1%	6.5%	13.0%
	Sum of Companies with Total Income from $100 million to $1 billion
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		1249	383,206,954,766	26,820,429,465	6,394,214,717	81.2%	23.5%	16.0%
Companies with Total Income of $1 billion or more
	Taxable Income from nil to 5% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		159	479,744,441,621	7,271,212,018	1,388,426,103	10.3%	29.4%	3.5%
	Taxable Income 5% or more of Total Income and Tax Payable from nil to 2% of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		49	317,549,625,271	34,371,492,696	4,621,252,061	3.2%	19.5%	11.6%
	Taxable Income 5% or more of Total Income and Tax Payable 2% or more of Total Income
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		82	448,522,165,053	101,443,717,535	27,458,923,189	5.3%	27.5%	68.9%
	Sum of Companies with Total Income of $1 billion or more
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		290	1,245,816,231,945	143,086,422,249	33,468,601,353	18.8%	76.5%	84.0%
Sum of All Companies above
		Nbr	Total Income	Taxable Income	Tax Payable	% of Sum of Nbr of Companies	% of Sum of Total Income	% of Sum of Tax Payable
		1539	1,629,023,186,711	169,906,851,714	39,862,816,070	100.0%	100.0%	100.0%