Williams R 1995 Behavioural Research Synopsis Australian Taxation Office

Williams r 1995 behavioural research synopsis

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Tax Administration’, Australian Taxation Office, Canberra. Williams, R. (1995), ‘Behavioural Research Synopsis’, Australian Taxation Office, Canberra. Wirth, A. (1998), ‘Public Perceptions and Expectations of the Australian Taxation System’, Australian Taxation Office, Canberra.
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PART III BEYOND THE COMPLIANCE MODEL
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Chapter 10 Tax Compliance by the Very Wealthy: Red Flags of Risk John Braithwaite, Yvonne Pittelkow and Robert Williams The issue of detection of tax evasion and avoidance is no small challenge for tax authorities. Oftentimes detection depends on extensive auditing. The ambiguity and difficulty of the task has led tax authorities to devise risk management strategies so that they can dedicate their limited resources to detection exercises that are likely to uncover instances of evasion or aggressive avoidance. The process of identifying a set of red flags that alerts tax officers to aggressive tax planning is the focus of attention in this chapter. We illustrate how a statistical methodology can be deployed with subjective estimates of risk made by expert analysts and more objective data in the form of dollars at risk. 1 The High Wealth Individuals (HWI) Taskforce In 1996, the Australian Taxation Office (ATO) established a High Wealth Individuals (HWI) Taskforce to enhance compliance management for HWIs. It did this in a way no other tax authority in the world has done before to our knowledge. Traditionally, tax authorities treat individual persons and corporate entities (partnerships, trusts, corporations) as separate taxpayers in their case management. The innovation of the HWI Taskforce was to treat the individual return of a HWI and the entities they control as a single case. In the first year of operation, 180 HWIs received a questionnaire about the groups of entities they controlled, or from which they received income. These were formalised in subsequent years into expanded returns, called Current Year Data Collection (CYDC) returns. In 1997 and 1998, 285 HWIs (142 rated as medium overall risk and 143 high overall risk) were required to complete expanded returns for their 2371 and 2599 associated companies, trusts, partnerships, or individuals. The level of these individuals’ wealth, and the amount of tax they paid, to qualify for this level of scrutiny is confidential. However, all those completing expanded returns are extremely wealthy. The HWI program seems to have increased the amount of tax paid by HWIs. In 1994 and 1995, the two years before the program was set up, private companies controlled by individuals in the program paid 17 per cent and 12 per cent less tax than non-HWI companies respectively. Afterward, HWI companies paid 23 per cent more than non-HWI companies in 1996 and 20 per cent more in 1997
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206 Taxing Democracy (Braithwaite, 2001, p. 13). It is believed that this is because HWIs are generally more cautious with their tax affairs when they are under the microscope of the HWI program: It’s the constant surveillance of being on the program that causes compliance...Part IVA is of indeterminate width. It might be applied more aggressively in future. So I advise clients to be careful.
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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