Whilst it was a suspicious offshore transaction that drew the ATO’s attention to this individual, it did not form part of Project Wickenby. This is despite the money trail flowing thru an offshore tax haven.

Instead, it falls under the jurisdiction of the taskforce investigating “high networth individuals”. That is, individuals whose net wealth is over $30 million.

We can’t help but notice the competition within the ATO to get the high-profile cases. Fair enough since the budgets of government programs live and die by their results.

ROUND 2

Whilst the identity of this person is still a mystery, we do know that the assessment is in the process of being appealed.

All we know so far is that this person sold some substantial overseas assets and tried to hide the money in a tax haven. Presumably, this was done to avoid paying tax on the capital proceeds of the sale.

We can also extrapolate that this person has somehow managed to repatriate some of monies to Australia as this was what that attracted the ATO’s attention to begin with.

This person was incurring substantial business purchases without an explanation for the source of the funds.

Why the secrecy?

First and foremost, our legal system is based on the presumption of innocence and the burden of proof on the prosecution.

Secondly, the person involved is not a public listed company which would otherwise have been subject to public ASX disclosure rules.

Playing devil’s advocate….

Imagine if this offshore financial arrangement was found to be legitimate from an Australian tax law perspective. Moot point, I know…

But, if this person’s identity had been disclosed and he/she was innocent, it would have unfairly impacted on his/her reputation and business relationships.

The stigma of being a “tax dodge” will be with this person forever and may unfairly taint his personal and professional reputation.

Also, on a more immediate impact, an organisation facing a potential $242m tax bill will find it very hard to do business……

• Creditors will not provide the business with credit on purchases and will request only cash-up front payments;
• Customers will not engage in long-term contracts or may delay payment (hoping the biz will go bankrupt & not recover the debt);
• Staff may start leaving for a more stable position in other companies;
• Landlords may terminate lease agreements (if deemed credit risk) or ask for more collateral;
• Banks will tighten their credit requirements or even withdraw their funding; and
• Investors will take flight and request redemptions of their investments.

If the identity of the person is disclosed, the above may well happen to cause the business’s failure BEFORE the conclusion of the trial. In which case, it would have been a form of mob justice which is against our legal principles.

We will keep you updated on the developments of this case. And, it would be interesting to see whether this will ever be made public…!

Cheers!

Taxabull Team