The Budget provides more funding to the ATO’s Tax Avoidance Taskforce with a focus on unpaid tax and superannuation by large businesses and high wealth individuals. A dedicated sham contracting unit will also be created within the Fair Work Ombudsman to address sham contracting.
Tax Avoidance Taskforce
From 2019-20, the Government will provide the ATO with an additional $1.0 billion in funding over four years to extend the operation of the Tax Avoidance Taskforce and to expand the Taskforce’s programs and market coverage. The additional funding is expected to result in increased tax receipts of $3.6 billion over the forward estimates period.
The Taskforce undertakes compliance activities targeting multinationals, large public and private groups, trust and high wealth individuals. This measure is aimed to expand its activities, as well as increasing its scrutiny of specialist tax advisors and intermediaries who promote tax avoidance schemes and strategies.
Focus on unpaid tax and super by larger businesses
The Government will provide the ATO with $42.1 million over four years to increase activities to recover unpaid tax and superannuation liabilities. These activities will focus on larger business and high wealth individuals to ensure on-time payment of their tax and superannuation liabilities. This measure will not extend to small business.
This measure is in keeping with the recent increased focus of the Government and the ATO in addressing non-compliance with tax and superannuation obligations.
Dedicated unit to be established
From 2019-20, $9.2 million will be provided over four years to establish a dedicated sham contracting unit within the Fair Work Ombudsman. The unit will address sham contracting behaviour by those who knowingly or recklessly misrepresent employment relationships as independent contracts to avoid statutory obligations and employment entitlements. The unit will address sham contracting by increasing education, compliance and enforcement activities, and dedicating additional resources to, not only investigate, but also litigate cases.
The establishment of this unit is a further indication of the Government’s desire to arrest sham contracting to ensure employers meet their legal and taxation obligations.