Asking the question and getting them to focus their mind on where everything is

Asking the question and getting them to focus their

This preview shows page 259 - 261 out of 311 pages.

advise clients to be careful. Asking the question and getting them to focus their mind on where everything is had an impact. In some cases this impact was bringing into the system business that was offshore, sometimes openly in a way that would be brought to the attention of the ATO, sometimes indirectly, in a way intended to make it difficult for the ATO to notice. Several advisers mentioned instances of voluntary disclosure of large amounts of income prompted not by audit, but simply by the fact of having to fill out the expanded returns. One adviser was of the view that this aspect of effectiveness would be severely compromised if the expanded return was not universal for wealthy people with complex affairs: Corporate Australia would say you really should go at it hell for leather as soon as they are dropped off. That’s what happened with the Large Case Program. The Large Case Program should never have been stopped. Corporate Australia learned the lessons from it; the ATO walked away from those lessons. For this adviser, an even more important point was: The more information he’s [the Commissioner’s] got, the less aggressive they will be in their tax planning.
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250 Taxing Democracy What this adviser was saying here was that notifying X in 1998 reduces the taxpayer’s degrees of freedom to reconfigure his 1999 affairs in such a way that not-X appears to be the case in 1998. ‘Changes each year will be noticed.’ So HWIs must keep their affairs consistent with the underlying truths of earlier declarations. Most advisers thought it would return more revenue for the ATO to shift its resources to the cash economy; some favoured targeting corporations in high risk industries rather than targeting individuals simply because they were wealthy. One argued very forcefully that the best returns would be achieved with low HWIs or sub-HWIs rather than high HWIs. Forget Kerry Packer and Rupert Murdoch. They are far too big. Their advice is too good. Go after some middle HWIs or lower. Their accountants are small fry, many of them. A widely held view of the HWI advisers was that a life course of HWIs could be defined. HWIs were most aggressive when they were making their first million, before they became HWIs. They continued to be aggressive while they were building their empires. Then they often wanted to avoid trouble and to pay their fair share once they had made it. Unfortunately, the HWI program is seen as targeting a lot of people who are in this latter quiescent stage, while the real returns are among the younger wealth-builders. One adviser classified HWIs as ‘the meek, the bold and the normal’. The meek, on this analysis, would be found disproportionately among older HWIs, the bold among wealth-builders and the normal among mid-career HWIs. Another view was that the very wealthy, and very aggressive, are hard targets.
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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