Tax Commissioner Chris Jordan threatens companies with court

Tax Commissioner Chris Jordan has vowed that the Australian Taxation Office is prepared to take more companies to court in the coming year, rather than settling cases with the top end of town.

The tax office struck deals worth almost $3 billion with 81 large businesses rather than heading for court last financial year.

But Mr Jordan said they were going to change their strategy going forward.

The ATO would now move fast to claw back revenue, emboldened by recent wins against Chevron (now under appeal) and Orica.

Tax Commissioner Chris Jordan says sometimes, when businesses are not doing well, they want to blame the ATO.Credit: Dominic Lorrimer

It was "ruling the line" under "protracted negotiations" It would instead proceed "immediately to raise assessments and create liabilities" which meant "taking them [companies] all the way to court if necessary".

"Some critics will tell you that settlements are a bad thing, but these cases are extraordinarily complex, risky, expensive to run and take years to resolve," he said.

But the "ATO will not settle a dispute at any price". It had an independent assurer, a former Federal Court judge, Garry Downes, who had assisted the ATO in designing and testing settlements.

Mr Jordan said the ATO was considering having internal examination of settlements now be headed by an expert panel.

The ATO would also be prepared to hit companies with tax bills right away, rather than wait.

Mr Jordan - who has final sign off over all settlements - said past practice was to wait for for every bit of information the ATO's lawyers had insisted on getting from companies before going to court. Much of this information related to foreign-headquartered companies with global tax operations, which made it difficult for the ATO to access such information.

But information is not always the barrier. Sometimes the ATO locks in deals early. Second Commissioner Andrew Mills confirmed that the majority of settlements (66 per cent) happened before pre-audit stage, that is before the companies were even issued with tax bills.

Resetting risk

The ATO, which has come under political pressure after Fairfax Media reports the ATO had moved most companies out of the top-risk rating, leaving News Corp as the only one, was now reviewing company ratings.

Mr Jordan said the agency had already issued warning letters to 60 companies and moved another five companies into its "higher-risk, high-consquence" risk rating.

He said its criteria for who to go after was now a little stronger. Previously companies came off the top rating for being transparent.

Now there there was a "recalibration" and companies would have to be matching their words with actions.

At the same time more companies had come forward to discuss their offshore financing arrangements with the ATO.

Mr Jordan said where companies do not voluntarily comply with the the federal government's tougher anti-avoidance laws, "we will be commencing immediate reviews and audits – these are non-negotiable".

Companies with rolled up loans and intra-company financing arrangements would be "aggressively pursued".

As would those that had "pushed the envelope on reasonableness – they play games, they string us along, they believe we can be stooged", he said.

Mr Jordan also confirmed that previous evidence he had given to Senate estimates saying the ATO had consulted with the Australian Hotels Association on ATO guidelines on sharing economy services such as Uber and Airbnb was incorrect. In fact, it had not consulted with that body and others in the development of its guidance, he said.