In February 2006 the Australian Government approved a joint operation to address the promotion of and involvement in tailored international tax schemes. Project Wickenby is being undertaken by a cross-agency task force led by the Australian Taxation Office (ATO) working with the Australian Securities and Investments Commission (ASIC), the Australian Crime Commission (ACC), the Commonwealth Director of Public Prosecutions (CDPP), the Australian Federal Police (AFP), the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Attorney General’s Department with the support of the Australian Government Solicitor (AGS).
The objective of Project Wickenby is to make Australia unattractive for tax fraud and evasion by making both promoters and potential participants aware the tax benefits are outweighed by the risk of prosecution/penalties.
Activities include intelligence sharing, tax audits, criminal investigations, prosecutions, capability development, education and law reform. Specifically:
- civil investigations by both the ATO and ASIC;
- criminal investigations by the ACC, AFP, ASIC and the ATO;
- administrative activities including audits, banning from the financial services industry and using data from AUSTRAC to track the movement of money in and out of Australia;
- prosecutions by the Attorney General’s Department, the CDPP and the AGS, and
- proceeds of crime action, including action to restrain property and seek forfeiture.
Project Wickenby addresses a significant threat to the integrity of the Australian taxation system, having identified extensive Australian participation in arrangements which are promoted and implemented by offshore and domestic providers and rely on falsity, international complexity and confidentiality.
Two key features of the arrangements under investigation are:
- concealing income or gains and/or creating false or fraudulent tax deductions; and
- returning funds to Australian taxpayers in a deceitful manner as untaxed funds, including money laundering.
Are you at risk?
Arrangements which have been discovered by investigations to date include:
- false or inflated invoices being provided to Australian businesses to claim tax deductions;
- sham loans to make investments and claim deductions for interest;
- asset ownership and management whereby Australian assets are transferred to an international entity which acts on the wishes of the Australian owner. The transfer is a sham and is used to evade tax or deprive other family members or creditors of the assets;
- share acquisitions whereby securities in public companies are transferred to a foreign entity with beneficial ownership remaining with the Australian taxpayer. This beneficial ownership is concealed to prevent authorities linking the taxpayer to the transaction and to shelter the taxpayer’s profits from tax in Australia;
- debit and credit card accounts held offshore in the taxpayer’s name or in false names. The funds are withdrawn in cash from Australian automatic teller machines;
- gift or inheritance funds are returned to Australia from an alleged overseas relative;
- rental schemes whereby Australian taxpayers ‘lease’ their holiday homes to a promoter. The sham leases return the taxpayer’s funds from offshore or allow tax deductions; and
- back-to-back loans whereby an Australian taxpayer with funds offshore accesses the money by ‘borrowing’ it through a promoter. The taxpayer uses the funds for working capital and claims the ‘interest’ on the sham loan as a tax deduction and is returned offshore.
Making a voluntary disclosure
In our experience, cases are only given favourable consideration when taxpayers contact the ATO before they are the subject of a review or audit.
We can assist in making such disclosure about unreported income from offshore accounts or other activities. Similarly, we specialise in advising and assisting clients who are the subject of an ATO review or audit. If you have any queries please contact Partner, Tony Chong on (08) 9288 6843 / tony.chong@lavanlegal.com.au.
