ATO keeps tracking of tax advisers secret

Secrecy provisions contained in tax laws have allowed the ATO to bar the ­release of certain documents.

Information about departures of tax partners was ­refused during a routine freedom-of-information request to the ATO.

Secrecy provisions contained in tax laws have allowed the Australian Taxation Office to bar the ­release of documents identifying senior partners in major tax ­advisory firms that have been targeted for marketing overly ­aggressive tax minimisation plans to corporate clients and rich individuals.

As part of its multinational tax avoidance program, the ATO has received notification from multinational firms PwC, KPMG, ­Deloitte and Ernst & Young alerting the agency when senior tax partners have left their ­respective business to “explore external ­opportunities” in order to keep track of advisers suspected of breaching “promoter” penalty provisions in the Taxation ­Administration Act 1953.

According to sources familiar with the process, the giant firms will email details of these departures to the ATO, which tracks the growth and decline of the “marketing” arms of the big firms responsible for pushing questionable tax strategies and products on to clients.

ATO second commissioner Jeremy Hirschhorn recently gave a series of speeches to the big four accounting firms, warning them that aggressive tax-minimisation strategies created for large companies by “clever” partners were eroding the integrity of the tax system.

However, information about departures of tax partners was ­refused during a routine Freedom of Information request because it would “be a breach of the tax ­secrecy provision” in the Taxation Act.

This secrecy prevents The Australian from telling its readers how widespread the problem of aggressive tax planning is at the major accounting firms, or where those partners have been rehired or gone on to work.

Appearing before a Senate ­estimates committee last week, ATO commissioner Chris Jordan criticised media ­organisations for including an ­assertion about the tax office as part of a front-page Your Right To Know campaign, which had suggested the ATO could take money out of personal bank accounts without telling taxpayers it was doing so.

“Wow, imagine if that was true,” Mr Jordan said. “I mean, go for your life on a right-to-know campaign. But please, if you are seeking the truth, please try to use it yourself at least insofar as it ­relates to the ATO.”

His remarks were criticised by several senators for using the cover of parliamentary privilege to attack former ATO workers Richard Boyle and Ron Shamir.

While the ATO is fighting to salvage its reputation against criticism by former employees, it is also ramping up its war against multinational tax avoidance.

Although the vast majority of tax advisers are good, as are the majority of large companies compliant with the tax code, there are pockets of bad behaviour within the large multinational professional advisory firms.

The structure of the big four advisory firms, which have a ­series of overlapping partnerships, offers ­individual advisers a significant degree of freedom in the way they operate.