Footnotes

Chapter 1 - Managing Compliance Risks

[1]           Evidence, p.709.

[2]            Commissioner of Taxation, Annual Report 1999-2000, October 2000, p.71, reporting the results of the Small Business Schemes Evaluation Report, June 2000. See also ATO Additional Information 15 June 2001.

[3]            ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.5.

[4]            ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, pp.18-22.

[5]            ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.5.

[6]            ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.18.

[7]            ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.11.

[8]            See Attachment A to the Commissioner’s opening statement to the Committee.

[9]            ATO Additional Information 22 May 2001, see Attachment G.

[10]          ATO Additional Information 19 September 2001, p.3.

[11]          ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.24.

[12]          ATO Additional Information 19 September 2001, p.3.

[13]          Figures for 1990-91 to 1997-98 are based on ATO Submission No. 845B, Attachment 1. Figures for 1998-99 onwards are based on ATO Additional Information 19 September 2001, p.3.

[14]          ATO Additional Information  19 September 2001, p.3.

[15]          Evidence, p.795.

[16]          Evidence, p.798.

[17]          ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.35.

[18]          See the Commissioner’s statement to the Committee, Evidence, p.798.

[19]          See the discussion on information and intelligence collection in the section on risk management later in the Chapter.

[20]          See, for instance, ATO Additional Information 22 May 2001, pp.4-5.

[21]          Evidence, p.735.

[22]          Evidence, pp.707-708.

[23]          The ANAO framed its suggestion by referring to the ATO Compliance Model, which is discussed in Chapter 3.

[24]          See ATO Submission No. 845, Attachments A and B.

[25]          For example, Michael Carmody, Commissioner of Taxation, ‘Taxation...Current Issues and Future Directions’, Speech to the Australian Institute of Company Directors, Perth, 1 May 2001. See also Michael O’Neill, Assistant Commissioner of Taxation, ‘Taxes, Death & Civilisation: A look at year end “tax effective products”’, 15 May 2001, http://www.ato.gov.au/content.asp?doc=/content/corporate/sp200103.htm (6 June 2001).

[26]          Submission No. 851, p.16.

[27]          Senate Economics References Committee, Report on the Inquiry into the Operation of the Australian Taxation Office, March 2000, pp.36-37.

[28]          See National Tax Liaison Group, Minutes 9 March 2001 meeting, p.14.

[29]          Evidence, p.799.

[30]          ATO, ‘Early Warning – Taxpayer Alerts’, Media Release – Nat01/89, 20 December 2001.

[31]          See www.ato.gov.au.

[32]          Taxpayer Alert TA 2001/1, http://law.ato.gov.au/atolaw/view.htm?docid=TPA/TA20011/NAT/ATO/00001.

[33]          In addition to the ATO and Treasury, the NTLG comprises representatives from the Taxation Institute of Australia; Certified Practicing Accountants; Institute of Chartered Accountants of Australia; Association Of Taxation Management Accountants; National Institute of Accountants; National Tax and Accountants Association; Taxpayers Association; and the Law Council of Australia.

[34]          See National Tax Liaison Group, Minutes 9 March 2001 meeting, pp.12-15.

[35]          These principles were derived from the following ANAO reports: ANAO, Risk Management in ATO Small Business Income, Audit Report No.37 1997-98; ANAO, Risk Management of Individual Taxpayers Refunds, Audit Report No.27 1999-2000 and ANAO, Risk Management in Commercial Compliance: Australian Customs Service, Audit Report No.6 1997-98.

[36]          See the footnote above.

[37]          ANAO, Risk Management: Australian Taxation Office, Audit Report No.37 1996-97.

[38]          Evidence, p.705.

[39]          Evidence, p.704.

[40]          Evidence, p.706.

[41]          Evidence, p.708.

[42]          See Senate Economics References Committee, Report on the Inquiry into the Operation of the Australian Taxation Office, March 2000, pp.81-83.

[43]          SRA was the forerunner of the Strategic Intelligence and Analysis Unit.

[44]          SRA, ‘Limited Recourse Financing: Discussion Paper’, in ATO Additional Information 22 May 2001.

[45]          SRA, ‘Limited Recourse Financing: Discussion Paper’, p.8, italics in original.

[46]          It also led to improvements in data capture with 221D forms in order to provide the ATO with ‘early intelligence on schemes’. See ATO National Office Minute, 21 August 1997, in ATO Additional Information 22 May 2001.

[47]          As reported in ANAO, High Wealth Individuals Taskforce: ATO, Audit Report No. 46, 1999-2000, p.46.

[48]          Current Year Data Collection requires taxpayers involved in mass marketed schemes for two or more years to provide early lodgement of expanded responses to an ATO questionnaire. It captures both scheme participants and promoters.

[49]          High Risk Refund checking involves close scrutiny of large refund cases and more detailed investigation where suspect cases are detected. 

[50]          ATO Additional Information 15 June 2001, Small Business Schemes Evaluation Report, June 2000, p.34.

[51]          Evidence, p.799.

[52]          Evidence, p.2 and p.485.

Chapter 2 - Cultures and Compliance

[1]            Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), p.406.

[2]            Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), p.406. See also, Senate Economics References Committee, Inquiry into the Operation of the Australian Taxation Office, March 2000, p.11 and Appendix 3.

[3]            Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), p.410.

[4]           Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), pp.410-411.

[5]            Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), p.411.

[6]            Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), p.412.

[7]            Mr Peter and Mrs Linda Southern, Submission No. 415, p.1.

[8]            Mrs Geraldine and Mr Roger Farr, Submission No. 405, p.1.

[9]           Mr Michael McGinty, Submission No. 401, p.1.

[10]          In-camera evidence, p.15.

[11]          In-camera evidence, p.14. That many scheme participations were sold in terms of their tax benefits is also confirmed by the sales pitch to be used for selling at least one of the mass marketed schemes. See Evidence, pp.794-797.

[12]          Mr Michael McGinty, Submission No. 401, p.1.

[13]          Mrs Geraldine and Mr Roger Farr, Submission No. 405, p.1.

[14]          Mr Ian Parkinson, Submission No. 412, p.1.

[15]          Mr Peter and Mrs Linda Southern, Submission No. 415, p.1.

[16]          Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), pp.413-414.

[17]          Valerie Braithwaite and John Braithwaite, ‘An Evolving Compliance Model for Tax Enforcement’ in Crimes of Privilege: Readings in White-Collar Crime, eds. Neal Shover and John Paul Wright (New York: Oxford University Press, 2001), pp.412-413.

[18]          See the Commissioner’s speech, ‘A New Tax System – Changing Cultures’, 19 November 1998, Sydney, http://www.ato.gov.au/printcontent.asp?doc=/content/Corporate/sp9807.htm (25 June 2001); and, Assistant Commissioner Michael O’Neill’s speech, ‘Taxes, Death & Civilisation: a look at year end “tax effective products”’, 15 May 2001, Brisbane, http://www.ato.gov.au/content.asp?doc=/content/corporate/sp200103.htm (6 June 2001).

[19]          Michael O’Neill, ‘Taxes, Death & Civilisation: a look at year end “tax effective products”’, 15 May 2001, Brisbane, http://www.ato.gov.au/content.asp?doc=/content/corporate/sp200103.htm (6 June 2001), p.10.

[20]          Evidence, pp.798-799.

[21]          ‘A New Tax System – Changing Cultures’, 19 November 1998, Sydney, http://www.ato.gov.au/printcontent.asp?doc=/content/Corporate/sp9807.htm (25 June 2001), p.5.

[22]          National Tax Liaison Group, Minutes 9 March 2001 meeting, p.13, ATO Additional Information, 27 July 2001.

[23]          National Tax Liaison Group, Minutes 9 March 2001 meeting, p.14, ATO Additional Information, 27 July 2001.

[24]          National Tax Liaison Group, Minutes 9 March 2001 meeting, pp.14-15, ATO Additional Information, 27 July 2001.

[25]          National Tax Liaison Group, Minutes 9 March 2001 meeting,  p.14, ATO Additional Information, 27 July 2001.

[26]          National Tax Liaison Group, Minutes 9 March 2001 meeting,  p.13, ATO Additional Information, 27 July 2001.

[27]          National Tax Liaison Group, Minutes 9 March 2001 meeting,  p.13, ATO Additional Information, 27 July 2001.

[28]          Mr Robert O’Connor QC, Submission No. 891, pp.8-9.

[29]          Evidence, p.524.

[30]          Deloitte Touche Tohmatsu, Submission No. 894, p.3.

[31]          Deloitte Touche Tohmatsu, Submission No. 894, p.3.

[32]          ‘A New Tax System – Changing Cultures’, 19 November 1998, Sydney, http://www.ato.gov.au/printcontent.asp?doc=/content/Corporate/sp9807.htm (25 June 2001), p.5.

[33]          ‘Code of Professional Conduct’, Section B.1 in Deloitte Touche Tohmatsu, Submission No. 894, p.8.

[34]          ‘Code of Professional Conduct’, Section B.1 in Deloitte Touche Tohmatsu, Submission No. 894, p.8.

Chapter 3 - Self-Assessment, Certainty and Reasonably Arguable Positions

[1]           Evidence, p.225.

[2]            In-camera evidence, 21 August 2001, p.2.

[3]            Blake Dawson Waldron, Submission No. 852, p.3.

[4]            Blake Dawson Waldron, Submission No. 852, p.3; Evidence, pp.515-518.

[5]            Evidence, p.536.

[6]            Evidence, p.548.

[7]            Fletcher Securities, Submission No. 652A, p.5.

[8]            Fletcher Securities, Submission No. 652A, p.8.

[9]            Deloitte Touche Tohmatsu, Submission No. 894, p.2.

[10]          Deloitte Touche Tohmatsu, Submission No. 894, p.7.

[11]          Evidence, p.145.

[12]          Evidence, p.264.

[13]          See also Mr Ian Phillips’s witty summary of this change in his Submission No. 890, p.2.

[14]          Taxation Institute of Australia, Submission No. 898, p.2.

[15]          Australian National Audit Office, Risk Management: Australian Taxation Office, Audit Report No. 37 1996-97, p.9.

[16]          Michael O’Neill, ‘Taxes, Death & Civilisation: A look at year end “tax effective products”’, 15 May 2001, http://www.ato.gov.au/content.asp?doc=/content/corporate/sp200103.htm (6 June 2001), p.5.

[17]          Michael O’Neill, ‘Taxes, Death & Civilisation: A look at year end “tax effective products”’, 15 May 2001, http://www.ato.gov.au/content.asp?doc=/content/corporate/sp200103.htm (6 June 2001), p.5.

[18]          ATO Additional Information, 31 October 2001, p.5.

[19]          This was true not only of individuals, but of organisations with professional involvement in the financial area. See, for example, Van Eyk Capital, Submission No. 691, Appendix A, p.10; and, Financial Planning Association, Submission No. 705, p.3.

[20]          Mr Ian Phillips, Submission No. 890, p.3.

[21]          Mr Ian Phillips, Submission No. 890, p.3.

[22]          Taxation Institute of Australia, Submission No. 898, p.4.

[23]          Taxation Institute of Australia, Submission No. 898, p.5.

[24]          Taxation Institute of Australia, Submission No. 898, p.5.

[25]          Mr Ian Phillips, Submission No. 890, p.3.

[26]          Taxation Institute of Australia, Submission No. 898, p.5.

[27]          Taxation Institute of Australia, Submission No. 898, pp.5, 8.

[28]          ‘ATO Test Case Program’, http://www.ato.gov.au/printcontent.asp?doc=/content/Professionals/test_case_program... (10 October 2001), p.1.

[29]          Taxation Institute of Australia, Submission No. 898, p.9.

[30]          Taxation Institute of Australia, Submission No. 898, p.9.

[31]          Taxation Institute of Australia, Submission No. 898, p.8.

[32]          Deloitte Touche Tohmatsu, Submission No. 894, p.4.

[33]          Mr Robert O’Connor QC, Submission No. 891, p.7.

[34]          Evidence, p.517.

[35]          ‘ATO Test Case Program’, http://www.ato.gov.au/printcontent.asp?doc=/content/Professionals/test_case_program... (10 October 2001), p.1.

[36]          Evidence, p.679.

Chapter 4 - Investor Protection and Tax Effective Schemes

[1]            The ATO has advised the Committee that it is currently consulting with community, industry and professional bodies on its proposed promoter penalties. ATO Additional Information, 31 October 2001, p.2.

[2]            ASIC, Submission No. 853, p.3. The Managed Investments Act is inserted as Chapter 5C of the Corporations Law.

[3]            The Hon. Peter Costello MP, ‘Managed Investments Bill 1997: Explanatory Memorandum’, pp.4-5.

[4]            ASIC, Submission No. 853, p.9.

[5]            Evidence, pp.755-756.

[6]            ASIC, Submission No. 853, p.3.

[7]            ASIC, Submission No. 853, p.4.

[8]            ASIC, Submission No. 853, p.4.

[9]            ASIC, Additional Information, 14 September 2001, p.2.

[10]          ASIC, Additional Information, 14 September 2001, pp.2-3.

[11]          ASIC, Additional Information, 14 September 2001, p.3.

[12]          ASIC, Additional Information, 14 September 2001, p.3.

[13]          Trade Practices (Industry Codes – Franchising) Regulations 1998, Section 5.

[14]          ASIC, Submission No. 853, p.5.

[15]          Freehills, Submission No. 669, pp.1-2.

[16]          Freehills, Submission No. 669, p.2.

[17]          Freehills, Submission No. 669, p.2.

[18]          Freehills, Submission No. 669, p.2.

[19]          Evidence, p.765.

[20]          ASIC, Submission No. 853, p.6.

[21]          ASIC, Submission No. 853, p.7.

[22]          ASIC, Submission No. 853, p.5.

[23]          Evidence, p.745.

[24]          Evidence, p.746.

[25]          Evidence, p.761.

[26]          ASIC, Submission No. 853, p.7.

[27]          There was a transition period between July 1998 and July 2000 designed to give scheme operators time to meet the competency requirements for obtaining an adviser’s licence. During that time, operators were able to give advice without such a licence, but only in relation to their own schemes. Evidence, p.758.

[28]          Freehills, Submission No. 669, p.8.

[29]          Financial Planning Association of Australia Ltd (FPA), Submission No. 705A, p.8.

[30]          Evidence, p.758.

[31]          Evidence, p.760.

[32]          ASIC, Additional Information, 14 September 2001, p.6.

[33]          Evidence, p.637.

[34]          Evidence, p.746.

[35]          Evidence, p.638.

[36]          Evidence, p.39.

[37]          Evidence, p.744.

[38]          ASIC, Submission No. 853, pp.4-9.

[39]          Evidence, p.744.

[40]          Van Eyk Capital, Submission No. 691, p.5.

[41]          Van Eyk Capital, Submission No. 691, p.5.

[42]          Van Eyk Capital, Submission No. 691, p.8.

[43]          ATO, Submission No. 845, Attachment C, p.5.

[44]          Evidence, p.551.

[45]          Evidence, p.594.

[46]          Evidence, p.748.

[47]          Evidence, p.745.

[48]          Evidence, p.745.

[49]          ATO, Submission No. 845A, Attachment 1, p.1.

[50]          ATO, Submission No. 845A, Attachment 1, p.1.

[51]          ATO, Submission No. 845A, Attachment 1, pp.1-2.

[52]          ATO, Submission No. 845A, Attachment 1, p.2.

[53]          Van Eyk Capital, Submission No. 691, pp.4-5.

[54]          Evidence, p.728.

[55]          Evidence, p.550.

[56]          ASIC, Media Release, 21 August 2001.

[57]          Evidence, p.744.

[58]          Evidence, p.690.

[59]          Australian Forest Growers, Additional Information, 22 August 2001.

[60]          ASIC, Additional Information, 14 September 2001, p.4.

[61]          Evidence, p.745.

Minority Report

[1]            It should be noted that the annual scheme deductions in Table 1 do not include deductions for EBAs.

[2]           ATO Media Release, ‘Tax Shelters – Why Some Umbrellas Sometimes Have Holes’, 91/26, 2 June 1991.

[3]           Economics References Committee Inquiry into Mass Marketed Tax Effective Schemes and Investor Protection, Written Reply by Mr Fitzpatrick to the Committee dated 15 June 2001.

[4]           Commonwealth Bank, ‘Infrastructure Investment Package for Develop Australia Bonds’, Offering Memorandum 1996:2. (See also page 5 where they say the Loan is non-recourse to the borrower).

[5]           Advice from Price Waterhouse to Legal and General Financial Services Limited on 27 May 1996, p5.

[6]           Economics References Committee Inquiry into Mass Marketed Tax Effective Schemes and Investor Protection, Reply by Mr Fitzpatrick to the Committee dated 15 June 2001.

[7]           Macquarie Geared Equities Investment – Macquarie Bank Ltd. Sourced: http:///www.macquarie.com.au/adviser/geared_equities_investment.htm, p1.

[8]           Ibid, 1.

[9]           Macquarie Bank  ‘Apollo Trust’ Prospectus – Investment Highlights, 8

[10]          Ibid, 9.

[11]          Second Commissioner  Mr D'Ascenzo, Senate Economics References Committee Hearings, Hansard 23-08-01, p.826.

[12]          Ibid, p.820.

[13]          Senate Economics References Committee into Mass Marketed Tax Effective Schemes and Investor Protection. Written evidence from First Assistant Commissioner Kevin Fitzpatrick in response to Committee questions, 15^th June 2001, p.3.

[14]          Senate Economics References Committee Enquiry into Mass Marketed Tax Effective Schemes and Investor Protection, Sydney Hearings 24-07-2001, Hansard transcript, p.535.

[15]          Robert K. O’Connor, written submission to the Senate Economics References Committee Enquiry into Mass Marketed Tax Effective Schemes and Investor Protection, 25 July 2001, para 14,  p.4.

[16]          Assistant Commissioner Mr Peter Smith, Response to the Senate Economics References Committee 19 September 2001, p.1.

[17]          Taxation Ruling TR 2000/8, clause 27

[18]          ibid, clause 61 (iii) Financing Arrangements.

[19]          Senate Economics References Committee into Mass Marketed Tax Effective Schemes and Investor Protection Hearings 11 December 2000, Hansard transcript E5.

[20]          Ibid, E5.

[21]          Ibid, E6.

[22]          Ibid, E7.

[23]          Ibid, E7.

[24]          Ibid, E7.

[25]          See the Commissioner’s speech, “A New Tax System – Changing Cultures”, 19 November 1998, Sydney; and Assistant Commissioner Michael O’Neill’s speech, “Taxes, Death & Civilisation: a look at year end “tax effective products”, 15 May 2001, Brisbane.

[26]          Michael O’Neill, “Taxes, Death & Civilisation: a look at year end “tax effective products”, 15 May 2001, Brisbane.

[27]          Evidence, pp.798-799.

[28]          “A New Tax System – Changing Cultures”, 19 November 1998, Sydney.

[29]          Mr Robert O’Connor QC, Submission No. 891, pp.8-9

[30]          Evidence, p. 524

[31]          Inquiry into Mass Marketed Tax Effective Schemes and Investor Protection, Sydney Hearing 25 July 2001 p.601.

[32]          Ibid, 21-08-01, p.761.

[33]          Inquiry into Mass Marketed Tax Effective Schemes and Investor Protection, Dr Ryde James ANU Forestry, Canberra Hearing 31 January 2001, p.119.

[34]          Transcript of Press Conference, The Hon Peter Costello, Treasurer, 14 February 1997 Parliament House Canberra, 2.

[35]          Senate Economics References Committee, ASIC Answers to questions , 19 September 2001.

[36]          ASIC Information Release on Surveillance Outcomes for Responsible Entities, Wednesday 1 August 2001.

[37]          Business Review Weekly, August 30 – September 5, 2001, Michael Laurence, 42.

[38]          ASIC Practice Note 55 Prospectuses – citing experts and statement of interests, clause PN55.6.

[39]          ibid, PN 55.4 (c).

[40]          ibid, PN 55.6 (d).

[41]          ibid, 55.14.

[42]          Evidence from Dr Ryde James ANU Forestry, see Hansard Transcript  30 –01 2001, p119.

[43]          Business Review Weekly, August 30 – September 5, 2001, Michael Laurence, p.46.

[44]          ibid, E5.

[45]               As mentioned previously. See Deputy Commissioner Mr Michael D’Ascenzo, “Guidance provided by the ATO on the application of Part IVA” to the Taxation Institute on 22-24 March 2001.