wanted peace of mind and a capacity to pass wealth on to their children without

Wanted peace of mind and a capacity to pass wealth on

This preview shows page 266 - 268 out of 311 pages.

wanted peace of mind and a capacity to pass wealth on to their children without undue complication, an amnesty based on agreement to pay back tax and interest (but no penalty) would bring a lot of offshore income into the system. A second adviser felt this would not generate enough incentive to bring in the huge offshore
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Through the Eyes of the Advisers 257 investments which he said he knew were out there. His policy suggestion was that as long as offshore funds were actually brought back for investment in Australia and future taxing on-shore, all back taxes and penalties should be waived. Only the removal of the threat of back taxes, he believed, would see the repatriation of worthwhile amounts of tax and capital: Half a dozen merchant bankers who were my clients would have been happy to bring money back into Australia if they did not have to pay back taxes...If you didn’t ask any questions, a huge amount of money would come. The third adviser who recommended an amnesty commended the experience of the ATO overseas controlled trusts amnesty of more than a decade ago. He said most of his clients with overseas controlled trusts came clean about them (on his advice) as a result of this amnesty. In practice, he negotiated on behalf of his clients for more than waiving of penalties – that is, for considerable waiving of back taxes as well: ‘My experience is that if the Commissioner will not negotiate, do deals, he will get less tax’. One of them suggested the ATO might also have to bluff HWIs into believing that there would be a major enforcement crackdown on offshore investments after the amnesty and that this was the once in a lifetime opportunity to avoid its fury. In summary, in this project we have found evidence of some movement of multi-million dollar offshore investments into the system, some known and some unknown to the ATO, simply as a result of the questions that have been asked about them in the HWI expanded tax returns. We suspect this movement has been more than sufficient on its own to pay the costs of the taskforce. We have found little basis for optimism that a crackdown on offshore strategies would generate a lot more revenue. However, an amnesty of say twelve months to encourage both bringing offshore tax into the system and capital back to Australia is a policy option, albeit one with risks and substantial administrative costs. It would need to be combined with a public commitment to enforcement for those who failed to avail themselves of this opportunity, even though the enforcement would not be very effective. In the world of tax motivation described by advisers, where both ‘inertia’ and ‘peace of mind’ are important, an amnesty might overcome the inertia of leaving tax-protected offshore investments be, by offering the taxpayer the peace of mind of a clean slate. This motivational account might be particularly appealing to older HWIs who want to leave their affairs in a tidier state for their children. The
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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