The Australian Tax Office (ATO) is punishing some tax cheats, but still has to catch the big players, reports Alan Austin.
FAILED VICTORIAN BUSINESSMAN Linden Phillips was sentenced last month to seven and a half years in prison for unsuccessfully trying to dud the tax office of $835,000 in fraudulent refunds of goods and services tax (GST).
A few days earlier, Justin McCormick copped a year in jail after conviction for dishonestly getting less than $110,000 from the tax office. McCormick, like Phillips, had registered a fake Australian business number and claimed GST refunds on purchases never made.
Another three losers were recently jailed after Operation Elbrus – a partnership between the Australian Federal Police and the ATO – busted their tax fraud and money laundering syndicate. Adam Cranston and Jason Onley were both sentenced in August to 15 years’ imprisonment, with a non-parole period of ten years. This follows Dev Menon copping a non-parole sentence of nine years, in July.
Another collaboration between the Australian Border Force (ABF) and the ATO jailed three young Chinese nationals for grift in the NSW building industry. A 22-year-old was sentenced to one year, a 27-year-old received a sentence of 15 months, and a 30-year-old went in for three years and a month.
Just last week, Wollongong businesswoman Rachel Saville was jailed for 20 months after pleading guilty to four counts of obtaining benefit by deception. She illegally collected $73,650 in GST refunds and tried to obtain another $192,983. Her appeal against the severity of the sentence was dismissed.
All these ATO operations – code-named Protego-Cassowary, Underpitch, Junglevine, Elbrus – have been highly successful. Operation Protego, initiated in response to widespread GST fraud, has alone prosecuted more than 56,000 individuals.
Kudos to the ATO for these successes. Let’s hope they have a salutary effect on others contemplating similar dodges. The message should be clear: the cassowaries will get you.
Impact on revenue
The economic data confirms the Tax Office is succeeding in increasing taxes collected from the corporate sector. As we saw in September, corporations contribute to the tax take mainly through company income tax, fringe benefits tax, superannuation fund taxes and the petroleum resource rent tax.
The total of these ranged between 24% and 27% of total taxes collected during the previous Rudd and Gillard Labor period. This then declined sharply as the Coalition allowed rampant corporate tax evasion, falling to just 20.7% in 2015-16. The Albanese Government has now restored this to a much healthier 27.9%.
Bigger fish to fry
The reality remains, however, that most Australians jailed have been poor working crooks, not well-skilled or experienced at criminality and not at all rich. The successful tax cheats, in contrast, live in huge mansions, wear expensive suits, are highly remunerated by multinational corporations and pay expensive lawyers to keep them out of prison.
The ATO’s Serious Financial Crime Taskforce raided the Australian-American company Scale Facilitation in June while investigating an alleged $150 million tax fraud. That company had reportedly paid millions of dollars to Price Waterhouse Coopers (PwC) for advice on how its Australian and UK businesses could evade tax.
Earlier this year, a federal parliamentary committee heard testimony from ATO commissioner Chris Jordan that PwC was behind 15 schemes designed to help multinationals avoid complying with applicable tax laws.
Jordan accused PwC of frustrating its investigations into these types of schemes – which, in total, put at risk $180 million in tax revenue each year – via “false claims” of legal privilege.
The commissioner named three PwC clients that the ATO had taken to court. They were Glencore, AB InBev and the Brazilian meat processing company JBS. All are multinational corporations with annual revenue above U.S. $50 billion (A$79 billion).
Over a decade, $180 million a year is a lot of money. Nearly two billion dollars. But no one has been jailed. Maybe Rachel Saville will reflect on that during her incarceration for grifting $73,650.
The consequences for PwC so far of the shocking revelations in the parliamentary inquiry have been demotions, removal or early retirement for some executives and repaying some of their ill-gotten gains.
Progress in other countries
Unfortunately, the experience abroad confirms high profile business people routinely get off extremely lightly.
British executive Bernie Ecclestone, once chief of the global Formula One organisation, pleaded guilty to misleading Britain's tax authority about assets worth more than 400 million pounds (A$492 million). He agreed to pay 652.6 million pounds to cover tax, interest and penalties for 18 tax years between 1994 and 2022. No jail time.
Longtime Trump executive Allen Weisselberg was convicted of organising decades of tax evasion by the Trump Organisation amounting to multiple millions of dollars. He was sentenced to five months in jail after a nifty plea deal.
In his judgment, Judge Juan Manuel Merchan said:
“I believe a stiffer sentence is warranted, having heard the evidence.”
The charges, if proven, normally require 15 years. Weisselberg got out after 14 weeks.
Also in America, former health services executive Joseph Nocito was sentenced last month to one year and one day in prison for conspiring to defraud the United States of multiple millions. That’s not long in jail – around nine months with good behaviour – for a 16 million dollar heist.
Tax evasion is a lucrative multinational industry requiring global cooperation to combat it. The cheats are still winning easily. Getting them to pay their fair share will greatly improve the well-being of millions of other taxpayers. Stiffer penalties for the big-money players would seem an essential next move.
Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.
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