The Australian Tax Office (ATO) is working with the Federal Court in an effort to “fast-track” the resolution of strategically important tax cases, Tax Commissioner Chris Jordan said April 21 at a Senate committee hearing on multinational corporation tax avoidance.
Jordan said that while discussions are still ongoing, court officials are “very, very co-operative and interested in how we can appropriately . . . identify and work with them to get things up quicker.”
The objective, Jordan said, is to prioritize tax cases where ATO believes a principle needs to be settled so related cases can then be resolved more quickly.
Jordan said that an example of this type of precedent-setting case was the ATO’s successful challenge to US oil giant Chevron’s transfer pricing practices. The case cost Australia over $10 million, not including staff salaries, and took about 10 years, Jordan said. The case is currently on appeal.
Jordan expressed frustration with attorney tactics in tax disputes, where promises are made but not delivered upon and other “games” are played to cause delays.
He said that the ATO has decided to proceed with assessments in some cases where companies fail to produce needed information. The ATO will use its “best estimates” of the facts and then call upon the taxpayer to refute them, he said.
Jordan added that more tax assessments against major multinationals would be made within the coming weeks.
Jeremy Hirschhorn, ATO deputy commissioner of public groups, said that some multinationals have developed “very aggressive supply chains,” placing significant value in low tax jurisdictions. While Australia cannot tax value created outside its borders, the ATO will scrutinize the transfer pricing of such arrangements very carefully, he said.
Hirschhorn said the ATO is working with the Australian Accounting Standards Board and the Australian Securities and Investments Commission to see is if is possible to clarify the disclosure rules that apply when a public company becomes embroiled in a tax dispute with the ATO.
Clarity is needed regarding what stage a tax dispute must reach to require disclosure to shareholders and how the disclosures should be made, Hirschhorn said.
Jordan said that the lack of clear guidance has led to disparities on how tax disputes are handled in practice. He said that after the ATO makes an assessment, some companies will immediately issue a press release or ASX statement, while other companies make no disclosures at all.
Jordan added that he does not support a public register of taxpayer settlements with the ATO, as advocated by the Greens.
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