Tax compliance for High Wealth Individuals

We keep hearing that “the rich” don’t pay their fair share of tax. That somehow they are able to avoid paying too much in the way of taxation. That is why the ATO single them out for special attention. Well the Auditor-General has audited the ATOs High Wealth Individual audit program.

The ATO has also had a particularly extensive HWI active compliance focus, conducting audits and risk reviews of over 90 per cent of the population between 2009–10 and 2012–13 and collecting almost $852 million as a result of these compliance activities ($671 million from audits and $181 million from risk reviews).

Sounds like a lot of money – good thing the ATO is onto it. But then we read:

However, the results of these activities have not always been commensurate with the level of effort deployed by the ATO. Over the four‐year period, 90 per cent of the cash collected was from 12 per cent of the audits and five per cent of the comprehensive risk reviews undertaken by the ATO. The majority of these audits (70 per cent) and comprehensive risk reviews (84 per cent) did not have a financial outcome.

Looks like most HWI are compliant with the law of the land.

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17 Responses to Tax compliance for High Wealth Individuals

  1. Gab

    The majority of these audits (70 per cent) and comprehensive risk reviews (84 per cent) did not have a financial outcome.

    Then as a result the ATO should be relieved of between 70% and 84% of its staff as an efficiency dividend.

  2. Aw diddums. Those naughty rich people turned out to have better accountants than anyone thought. But it’s nice to know they’re keeping busy down at the ATO.

  3. Joe Goodacre

    Reduce the size of government to courts, police and military with a flat fee per citizen regardless of income – no job for the ATO.

  4. Bruce of Newcastle

    Sheep are not known for rebellion. Even the Guardian recognises that the top 20% of earners paid 61.3% of total tax. When will the sheep do a John Galt impersonation?

    Predators should remember they only survive because their prey does too.

  5. Rabz

    And how much taxpayers’ money was wasted by profligate labor/greenfilth squandermonkeys over that period of time, again? I note that the cost of the HWI audit program alone was $126 million during the period identified.

  6. Token

    …how much taxpayers’ money was wasted by profligate labor/greenfilth squandermonkeys over that period of time…

    Let’s face it, it was a high priced marketing campaign by the Liars Party & ATO to get as many customers as possible purchasing the services of the big accounting firms.

    Is it any wonder those organisations ensure their report recommend more government?

  7. 2dogs

    My understanding is that the tax plan de jour is to have a family member be a non-resident for tax purposes.

    The thin capitalisation rules are quite easy to work around in practice, and since Rudd reduced the tax on foreign interest to 10% in 2008, they can get pretty much take all of their Australian income out that way.

    Did the HWI approach keep missing the non resident? Was it always going to fail?

  8. Ant

    Seeing that the compassionate left are always droning on about the filthy rich not paying enough tax, going so far as to say that they themselves in a lot of cases would be just thrilled to pay more, the ATO should allow voluntary contributions via individual tax returns.

    The amount of those contributions and who made them should be made public.

    Nothing like making them put their mouth where their arse is.

  9. Squirrel

    In the halcyon days of yore, the ATO and DSS/Centrelink (or whatever name it answered to at the time) were often able to justify a staffing increase for “compliance” activities on the grounds that such activities would more than pay for the costs of the extra staff.

    In the case of the ATO, at least, the Auditor’s report would seem to cast some doubt on that easy assumption – which might help to explain reports of a few thousand being cut from the ATO army. It would be interesting to know if there has been any recent audit, or other relatively independent analysis, of the cost-effectiveness of Centrelink’s compliance activities

  10. motherhubbard'sdog

    @Gab

    Then as a result the ATO should be relieved of between 70% and 84% of its staff as an efficiency dividend.

    Only works if the ATO knows with 100% certainty which audits will be successful. Which they obviously don’t.

  11. Myrrdin Seren

    In a discussion last year with my former Chairman about how high-profile folk like the Obeid clan manage to seemingly fly under the ATO radar, the former Chairman indicated he was coming up to his fifth ATO audit.

    Not so many years ago his name came up in the media in relation to the collapse of a high profile margin lender and his efforts, among others, to recover their funds invested.

    Since that time, successive offices of the ATO had taken upon themselves to demand audits of his affairs, notwithstanding the efforts of the previous ATO regional investigations.

    Which suggests to me that HWI audits may be repeatedly churning over the same, essentially harmless individuals in the hope of shaking something lose.

    And seemingly avoiding folk like well-known Bra Boys or certain Russian emigres residing on the Gold Coast who have lifestyles unrelated to their obvious sources of income. Because you could lose your kneecaps asking people like that difficult questions – and the security issues around that need addressing. Remember, the Feds got Al Capone on tax evasion.

  12. .

    From stack’s link:

    The bizarre proposal, contained in a $200,000 taxpayer-funded study for the ATO, proposes to “enhance his personal profile” by paying a charity of Hogan’s choice instead of an appearance fee – and ensuring the money did not end up in an overseas tax jurisdiction.

    What the actual fuck?

    Holy crap. I need to get back into consulting. Marketing is sort of like economics and my friend just finished their Ph D in that field.

    Other than that, this is an absolute disgrace. How dare the ATO harass taxpayers with these profligate waste.

  13. Rova

    Just curious… At what point does one become a member of this exclusive group called “the rich”?

  14. .

    When Treasury decides, Rova…

  15. ar

    Looks like most HWI are compliant with the law of the land

    Shh… they’ll be on to mid-wealth individuals next…

  16. Tim

    “mid-wealth individuals”

    I believe the term you are looking for is “Wealthy Australians”. That is the next category down from HWI.

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