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ATO Rules for the Rich: Summary

September 2018

The story of Project Do It 

Project Do It could be viewed as arguably the greatest tax scandal in Australia’s history. It was initiated and organised by the Australian Taxation Office.

Project Do It gave massive tax advantages to Australian high- wealth individuals who had hidden money in secret overseas (mostly Swiss) bank accounts. They were tax evaders. Yet these people were about to be caught when the ATO stepped in to ‘protect’ them under the Project Do It tax amnesty. 

The loss of tax revenue was likely in the order of $2.2 billion, maybe more. 

The top ATO tax official who organised Project Do It, Deputy-Commissioner Michael Cranston, is now facing charges in an unrelated alleged $160 million tax fraud involving his son.

This report calls for the highest level of independent investigation into the ATO to determine whether the ATO operates within the law and whether the ATO suffers from systemic internal corruption. Project Do It is the starting point for that investigation.

The matters discussed here are the honestly held opinions of the author based on publicly available information. The matters are expressed as opinion not fact. The opinions relate to a matter of significant public interest.

Basic facts

  • In July 2013, the Swiss and Australian governments signed an agreement in which Switzerland agreed to release details of Australians with secret Swiss bank accounts. 
  • In November 2013, the ATO announced a generous tax amnesty for people with secret overseas bank accounts. 
  • By 2015–16 some $6.5 billion of hidden money in secret overseas bank accounts was declared under the amnesty.
  • $260 million of tax was raised under the amnesty.
  • Without the amnesty, the tax raised would have been somewhere between $1.2 billion and $4.3 billion.
  • If the US Internal Revenue Service’s (IRS) amnesty standards had been applied, the tax raised would have been around $2.3 billion.
  • The ATO was well aware of illegal overseas tax evasion:
  • In 2005 a woman was convicted in NSW for illicit offshore tax evasion.
  • In 2009 the US FBI and IRS convicted a group for fake charity and offshore back-to-back loans tax evasion. The IRS and ATO share such information.
  • In 2016 an Australian ATO-funded court ruling proved that high-wealth individuals have for a long time been moving money overseas, with the money then going to secret overseas bank accounts and finally being ‘loaned’ back to the same individuals in Australia. In other words, that such individuals had allegedly been involved in illegal money laundering.
  • Since the late 1980s the ATO had been well aware of these alleged ‘tax scams.
  • Nonetheless, the ATO proceeded with Project Do It. The ATO promised to (and did) protect tax evaders from big tax bills and from facing ATO investigation/prosecution for fraud or evasion.
  • In the USA, the Internal Revenue Service has jailed many people for this type of  ‘charity’ tax scam. Yet the ATO does not appear to have prosecuted or jailed one person for similar scams.
  • There are major questions that have to be answered—not only about Project Do It, but about the very integrity and legality of the operations of the ATO as well.

ATO Rules for the Rich

  • The publicly available report is here
  • Losses calculation is here (SEA member access)
  • Source references are here (SEA member access)

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