The problem cannot be dismissed as a creation of political imagination One

The problem cannot be dismissed as a creation of

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The problem cannot be dismissed as a creation of political imagination: One adviser in this study said he had a wealthy client who had not paid any tax since 1987. Certain sophisticated tax planning strategies appear to have been widespread. These include: (a) redefining income as capital by using multiple trust structures that conceal a common controlling mind; (b) creating artificial losses, for example by acquiring companies or trusts with accumulated losses; (c) disguising distributions to High Wealth Individuals (HWIs) and family members as loans and other non-taxable benefits; (d) using offshore trusts; (e) converting activities undertaken for private pleasure into tax losses (for example pleasure craft, horse breeding and racing); and (f) using charitable trusts to disguise benefits to HWIs and their families. Method A useful model for this research was presented with Roman Tomasic and Brendan Pentony’s 1990 study, ‘Defining Acceptable Tax Conduct: The Role of Professional Advisers in Tax Compliance’. It was decided to undertake a more
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246 Taxing Democracy focused investigation of advisers of HWIs and to limit the range of policy issues discussed with them. To define the topics, the author, together with Alice Dobes (an ATO evaluator from outside the Taskforce), first conducted interviews with most senior managers of the HWI Taskforce in Canberra, Sydney and Melbourne, mostly meeting them one or two at a time. This led to a decision to pursue fairly unstructured interviews with advisers of HWIs organised loosely around a set of questions prepared in advance. The questions were designed to address three issues: (a) the compliance problems common among HWIs; (b) to seek advisers’ criticisms of the taskforce; and (c) to harness their creativity in considering new and better ways of improving compliance and identifying deficiencies in the law. The objective then was to test their criticisms and ideas against the policy thinking we had secured from the taskforce managers, focus groups that Alice Dobes conducted with taskforce fieldwork staff subsequent to the adviser interviews, and against what we know from the research literature on compliance (not a lot for High Wealth Individuals). The Sample The sample was strategic rather than random, with 27 HWI advisers interviewed, mostly alone, for one to two hours in 1999. All interviews were conducted face-to- face with the exception of one which was conducted as a tele-conference. The strategic sample included: (a) individuals who senior taskforce management regarded as key HWI advisers; (b) advisers whose policy thinking might be sharper because they have a larger number of HWIs and/or many more contacts with the taskforce due to audit and information gathering activities resulting from higher risk ratings of their HWI clients; and (c) HWI advisers who were selected by professional bodies which were interviewed to represent the views of their membership.
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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