Treasurer Josh Frydenberg has handed down the Federal Budget for 2019-2020, and among its announcements is a big boost in funding to combat tax avoidance schemes as part of an expansion of the Tax Avoidance Taskforce.
Established in 2016, the Tax Avoidance Taskforce investigates and challenges aspects of aggressive tax avoidance strategy, like profit shifting. The ATO works with partner agencies to ensure the fairness of the tax system, and that the tax being paid is accurate and correct.
With an additional $1 billion in funding over four years announced, this tax integrity measure allows the ATO to increase its scrutiny of specialist tax advisers, as well as intermediaries that promote tax avoidance schemes like illegal phoenix activity.
It is believed that by closing such gaps up to $3.6 billion in extra revenue could be generated over the four years of funding.
Back to black
There will also be more concentrated targeting of activity within the black economy, as the involvement of unethical advisors and pre-insolvency advisors has naturally been a source of ongoing concern.
Further action in this matter should assist in promoting a level playing field for SMEs. To date, cracking down on the black economy combined with legislative reform has seen $12.9 billion in tax revenue clawed back since 2016.
Unpaid tax and superannuation liability recovery
Lastly, the ATO is set to receive an additional $42.1 million over four years to assist with the recovery of unpaid tax and superannuation liabilities, with superannuation compliance and recovery of unpaid superannuation tipped to increase significantly in the years to come.
This, combined with the recent tightening of the superannuation lockdown DPN provisions, will support the ATO’s recovery efforts from big business and high-net worth individuals – but these measures are not expected to extend to small businesses.
These budget announcements further indicate that the Government is serious about maintaining the integrity of the nation’s tax system, and ensuring that the ethicality of specialist advisors can be held to account.