Tax haven flows increase by 230 per cent

Australian transfers to and from tax havens increased by 230 per cent to $5.8 billion in the five years between 2001-02 and 2005-06, according to data contained in an Australian National Audit Office (ANAO) report published this week.

The report, examining the Australian Taxation Office’s (ATO’s) strategies for dealing with tax haven risk, concluded that the concealment of assets and income in offshore arrangements had presented significant challenges for the tax office, yet a key steering committee tasked with overseeing the arrangement had not yet met.

It said the inability of Australian authorities to easily access information beyond the nation’s jurisdiction presented difficulties in fully understanding the nature of taxpayers’ offshore transactions.

“This is compounded in countries where banking and legal frameworks ensure the information is not disclosed to third parties,” the ANAO report said.

It said that the ATO had adopted a risk management framework for its compliance program where risks were identified and assessed and in response treatment mitigation strategies were developed, implemented and evaluated.

The report said that within the ATO’s risk management model there were specific management arrangements to mitigate tax haven compliance risks comprised of a combination of oversight committees, intelligence areas and compliance staff from a number of operational areas undertaking specialist audit work.

However, it said that at a formal level, the key steering committee responsible for determining strategic direction had not yet met in accordance with its charter.