also general cynicism that the wash up to the Ralph Inquiry Ralph Report 1999

Also general cynicism that the wash up to the ralph

This preview shows page 266 - 267 out of 311 pages.

also general cynicism that the wash-up to the Ralph Inquiry (Ralph Report, 1999) that was developing such principle-based reforms would be any more simplifying than the results from two decades of pronouncements about such efforts. Three years on from the interviews this cynicism has been vindicated, as there has been little of the principle-based reform advocated by the Ralph process. Offshore Investment Advisers said that clients came to them requesting that they help set-up offshore investments, accounts and credit cards. But only two said they got into assisting HWIs with this. Two others said this was a reason why clients went elsewhere. A number of advisers felt that few HWIs avoided taxes by using offshore strategies such as tax havens. However three advisers felt offshore tax avoidance was the main risk to the revenue by HWIs and some others saw it as a significant risk. One of these made the point that a higher proportion of Australia’s most wealthy people are immigrants compared with most other countries, making offshore trusts a bigger issue for us. Three advisers also felt that a strategy of the aggressive HWI was to have conservative domestic tax planning arrangements managed by a reputable adviser from a Big Five or second-tier firm, and then to have another set of investments offshore which are not disclosed to their conservative adviser. This strategy implies securing a favourable risk assessment by the ATO on the basis of the conservative side of their dual strategy, thereby protecting the offshore side of the strategy from scrutiny. Even those who thought offshore tax avoidance was a major problem emphasised that not all HWIs could exploit it. Offshore strategies would be foolish for a HWI who was a resident of Australia and who ran no actual businesses offshore. In these circumstances, it is difficult to conceal the movement of funds as they leave the country. For HWIs who are non-residents or who have non-resident family members, funds can be passed to them and then shifted offshore to a destination unknown. The ATO only has direct access to the domestic tax affairs of non-residents. An Australian resident who is wealthy enough to actually run a business overseas also has a formidable capability for ‘bleeding some funds out’ into personal accounts protected by a tax haven. No adviser recommended targeting offshore investments as a sensible shift in enforcement strategy for the taskforce. For some, this was because they did not believe HWIs were using offshore accounts to avoid tax on any large scale. For others who believed HWIs were doing so in a massive way, the belief was that these arrangements would be impregnable or very hard to find: ‘You’d end up chasing a British Virgin Islands company where you can’t find out who their directors are under their law’. However, three advisers recommended an amnesty on bringing home or paying tax on offshore investments. One felt that, particularly with older HWIs who
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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