Showing posts with label taxation. Show all posts
Showing posts with label taxation. Show all posts

Tuesday 6 June 2023

"Eat The Rich" is an amusing conversational tag. But for how long?


For most Australians, income is the most important resource they have to meet their living costs. However, reserves of wealth can be drawn upon to maintain living standards in periods of reduced income or substantial unexpected expenses. Considering income and wealth together helps to better understand the economic wellbeing or vulnerability of households.”

[Australian Bureau Of Statistics, Household Income and Wealth, Australia, Reference period: 2019-20]


Given the grumbling coming from the opera boxes and dress circle seats in the Australian economy if it is suggested that those on low to middle incomes shouldn’t be solely responsible for fighting inflation by way of wage suppression, ever rising cost of living & below poverty line unemployment benefits, perhaps it’s time to remember some of the cream within the Top 1% and how richly they live in an Australian population of est. 26,510,186 men, women and children spread out across this country. [ABS, Population Clock, 4 June 2023 at 8:15am]


Forbes, Australia’s 50 Richest 2023, 15 February 2023:


NAME          NET WORTH          INDUSTRY


1. Gina Rinehart   $30.6 B         Metals & Mining

2. Andrew Forrest   $21.7 B      Metals & Mining

3. Harry Triguboff     $15.5 B    Real Estate

4. Bianca Rinehart & siblings   $12.5 B   Metals & Mining

5. Anthony Pratt   $11.6 B        Manufacturing

6. Mike Cannon-Brookes  $10.8 B Technology

7. Scott Farquhar   $10.6 B      Technology

8. Cliff Obrecht & Melanie Perkins   $7.2 B Technology

9. Frank Lowy   $6 B                 Finance & Investments

10. Richard White   $5.4 B        Technology

11. John, Alan & Bruce Wilson   $5.1 B Fashion & Retail

12. Kerry Stokes   $4.2 B          Diversified

13. John Gandel   $3.5 B          Real Estate

14. Lindsay Fox   $3.4 B           Logistics

15. Jack Cowin   $3.35 B          Food & Beverage

16. Michael Hintze   $3.2 B       Finance & Investments

17. James Packer   $2.8 B        Finance & Investments

18. Lang Walker   $2.7 B           Real Estate

19. Fiona Geminder   $2.6 B     Manufacturing

20. Brett Blundy   $2.45 B         Fashion & Retail

21. Solomon Lew   $2.3 B         Fashion & Retail

22. Bob Ell   $2.25 B                  Real Estate

23. Len Ainsworth & family   $2.2 B Gambling & Casinos

24. Heloise Pratt   $2.15 B        Manufacturing

25. Clive Palmer   $2.1 B           Metals & Mining

26. Gerry Harvey   $2.05 B        Fashion & Retail

27. Kie Chie Wong   $2 B          Metals & Mining

28. Hains family   $1.95 B         Finance & Investments

29. Cameron Adams   $1.8 B    Technology

30. Chris Wallin   $1.75 B         Energy

31. Terry Snow   $1.61 B           Real Estate

32. Bruce Mathieson   $1.6 B   Real Estate

33. Chris Ellison   $1.59 B        Metals & Mining

34. Angela Bennett   $1.55 B    Metals & Mining

35. Gretel Packer   $1.54 B       Finance & Investments

36. David Teoh   $1.53 B           Telecom

37. Nigel Austin   $1.5 B           Fashion & Retail

38. Tony & Ron Perich   $1.42 B   Real Estate

39. John Van Lieshout   $1.41 B   Real Estate

40. Anthony Hall   $1.4 B          Technology

41. Jack Gance & family   $1.35 B   Fashion & Retail

42. Mario Verrocchi & family   $1.34 B   Fashion & Retail

43. Sam Hupert $  1.3 B           Technology

44. Sam Tarascio   $1.25 B       Real Estate

45. Sam Kennard & siblings   $1.2 B  Real Estate

46. Michael Heine   $1.19 B      Finance & Investments

47. Manny Stul   $1.18 B           Manufacturing

48. Mark Creasy    $1.02 B        Metals & Mining

49. Alan Rydge    $1 B              Media & Entertainment

50. Kerr Neilson    $960 M        Finance & Investments


Globally only Monaco and Switzerland have higher individual net wealth than Australia. In this country in 2022 the Top 1% had individual wealth beginning at $5.5 million to >$30 billion, yet before it was driven from office the Morrison Coalition Government locked in an overly generous permanent tax cut for the wealthy in our society. Along with a negative gearing regime for property investment which is concentrating residential property ownership in the hands of richer individuals and families.


While the bottom wealth percentiles - including the homeless, unemployed, working age poor & elderly without assets or savings - recognising the taxation rate/negative gearing sleight-of-hand involved are left wondering how long they can manage to put a roof over their heads and food on the table now and into the foreseeable future.


IMAGE: Twitter via @MaggieDaWitch
4 June 2023



Saturday 7 January 2023

Quote of the Week

 


Numerous investigative reports have revealed that the former President, through the complex arrangements of his personal and business finances, has engaged in aggressive tax strategies and decades-long tax avoidance schemes, including taking a questionable $916 million deduction, using a grantor trust to control assets, manipulating tax code provisions pertaining to real estate taxes, and extensively using pass-through entities. Media reports have also revealed that he benefited from massive conservation easements, and that certain of his golf courses failed to properly account for wages paid to employees, raising questions about compliance with payroll and Social Security tax laws. As President, he took pride in “brilliantly” maneuvering the tax laws to his personal benefit. Even as he was championing the Tax Cuts and Jobs Act of 2017, the former President referred to the tax code as “riddled with loopholes” for “special interests—including myself.” ’

[US Congress, House Committee on Ways and Means, 20 December 2022, REPORT ON THE INTERNAL REVENUE SERVICE'S MANDATORY AUDIT PROGRAM UNDER THE PRIOR ADMINISTRATION (2017-2020), a review of taxation law and an the examination of former president Donald J. Trump’s federal income tax returns requested on 16 June 2021 & received between 30 November 2022 and 11 December 2022]


Tuesday 3 January 2023

And as Australia enters the first month of 2023.......


It is perhaps well to remember that whilst the cronyism, venality and often industrial scale corruption of national governments is well known in history, here in Australia we appear to hold the quaint notion that as a democracy we will not be led by the likes of a Pahlavi, Marcos or Putin. Men who sought not only authoritarian power but also to enrich themselves from the public purse and their nation’s resources.


But does the example of the former Morrison Government and what is happening in the U.S. right now not make one wonder if we here in Australia need to clearly define limits to the powers held by a prime minister and, perhaps also require all members of any federal Cabinet or outer ministry to present their tax returns to the Parliament for formal audit every year they are in government?


For that matter, perhaps it is well past time that members of a federal government are denied access to taxpayer funds to defray court ordered financial penalties & legal costs in relation to defamation or sexual harassment proceedings.


Both Morrison & Trump ignored democratic principles and processes whenever they chose, with Trump’s action being perhaps the more egregious. However, one has to wonder if profiteering from public office was something both national governments did – if not to the same scale at least with the same frequency.


In Australia we will never know because we have such weak mechanisms to monitor or prevent such things. The Parliament often being reluctant to police members' specific pecuniary interests, the Constitution not shutting the door firmly enough on profiting from the Crown and the Register of Members’ Interests being nothing more than a risible fig leaf covering suspected dodgy trusts and self-managed super funds.


Consider former U.S. president Donald Trump’s financial affairs and ask yourselves: Could some of the prime ministers and/or ministers in office between September 2013 and May 2022 have conducted their own financial affairs in a similar manner?


To call the business structure that Donald John Trump built – carried with him into the White House and back out again - ‘Byzantine’ is being kind.


It appears to be a maze of est. 500 inter-related companies, subsidiaries, partnerships, trusts, overseas bank accounts and possibly shells, potentially designed to literally push financial bullshite uphill until a business income loss or tax credit could be established on paper for personal benefit.


During his first presidential election campaign in 2016 Trump self-reported net wealth of almost US$10 billion with debts of at least US$265 million – thought at the time to be achieved by an exaggeration of property and brand values and that his net wealth would be closer to est. US$4.1 billion. There were calls to show his tax return. He promised to reveal his tax returns but didn’t.


As president he continued to falsely complained that his tax affairs were under almost continuous Internal Revenue Service (IRS) audit so it was impossible for him to release them.


Once the nation voted him out of office Trump went to the U.S. Supreme Court in an attempt to stop the release of his tax returns for the years 2015 through to 2020. A legal battle he lost in TRUMP, DONALD J., ET AL. V. COMM. ON WAYS AND MEANS, ET AL on 22 November 2022.


He was so successful in his resistance up until then that only one incomplete mandatory IRS audit occurred during his presidency - being ordered in September 2019 for the tax year 2016, but never completed and appears to have been quietly abandoned. Trump appointee as IRS Commissioner, Charles P. Rettig, reportedly excused the then president from the mandatory auditing process sometime during his tenure as commissioner.


On 16 June 2021 the U.S. Congress House Committee of Ways and Means wrote to the Treasury Secretary seeking details of the required annual mandatory audits of Trump’s personal tax returns during his presidency, unaware of the true state of affairs.


This letter requested all audit materials from 2015 to 2020 with particular reference to:

whether an IRS examination of the returns took place and the present status of the audits, the applicable statutes of limitations, and the issues considered:

1. The Federal income tax returns of Donald J. Trump (Form 1040),

2. The Federal income tax returns of the Donald J. Trump Revocable Trust,

3. The Federal income tax returns of DJT Holdings LLC (Form 1065),

4. The Federal income tax returns of DJT Holdings Managing Member LLC (Form 1120-S),

5. The Federal income tax returns of DTTM Operations LLC (Form 1065),

6. The Federal income tax returns of DTTM Operations Managing Member Corp (Form 1120-S),

7. The Federal income tax returns of LFB Acquisitions Corp (Form 1120-S),

8. The Federal income tax returns of LFB Acquisition LLC (Form 1065), and

9. The Federal income tax returns of Lamington Farm Club, LLC d/b/a Trump National Golf Club-Bedminster (Form 1120-S).


Trump’s personal tax returns were joint filings with his wife Melania and listed one son as a dependent. He stated his main source of income was derived from Management Services”, Aviation”, “Speaking Engagements”, “Real Estate”, “Golf”, “Ice Skating Rink”, and Restaurant”.


For a man who repeatedly bragged about his business acumen and wealth in the billions, his 2015 personal and business tax returns indicated that he carried forward business loses of US$105.15 million and he and his wife declared a 2015 calendar year joint negative income of $31.7 million leaving a nominal tax bill of $0.


So by 2015 either he was fast approaching the need for yet another strategic corporate bankruptcy or he had applied the most ‘creative’ accountancy when dealing with the U.S. IRS for that year and the following five years.


Either way, once in the Oval Office Trump appears to have continued to follow his own unique tax return template so that by 2020 he was still paying low tax or no tax – apparently due in part to sizeable business income losses at two of the nine entities whose tax returns were requested by the House Committee on Ways and Means  DJT Holdings Managing Member LLC and DTTM Operations LLC. It is interesting to note that 2020 was also a year devoid of charitable donations by Mr. & Ms. Trump and, it seems that there is some suspicion that previous charitable donation figures may be largely unsupported by appropriate documentation.


Page 2 of the House Committee on Ways and Means Final Report spells out some specific accounting concerns:


Charitable contributions—whether the 2015 conservation easement deduction of $21 million and other large donations reported on the Schedule A were supported by required substantiation.

Verification of Net Operating Loss Carryover Schedule—whether the amount of net operating loss carryover in 2015 of $105,157,825 and future years was proper.

Unreimbursed partnership/S corporation expenses—whether the terms of the partnership agreements supported unreimbursed expense deductions totaling $27 million over six years.

Related party loans—whether loans made to the former President’s children are loans or disguised gifts that could trigger gift tax.

Cost of goods sold deductions by DJT Holdings—whether these deductions of about $126.5 million over five years is appropriate when it is not clear what DJT Holdings is selling from the face of the return.

LFB Acquisition LLC—whether there is any support for changes in the management fees and general and administrative expenses of LFB Acquisition that were significantly higher in 2017 ($1.9 million and $2.8 million, respectively) than 2016 ($750,000 and $549,000, respectively) and 2018 ($707,000 and $570,000, respectively).


In fact when it comes to actually paying personal income tax Donald and Melania Trump paid US$641,951 tax in 2015, $US$750 in 2016, $US$750 in 2017, US$999,466 in 2018, US$133,445 in 2019 and US$0 in 2020, claiming a refund of US$5,468,593.


Then there is the matter of the two shell companies set up by Trump’s then personal attorney Michael Cohen in 2016, Resolution Consultants LLC and Essential Consultants LLC. The former allegedly created for the US$120,000 purchase and then suppression of a story by former Playboy Playmate Karen McDougal about her involvement with Trump and the latter created to pay US$130,000 to former adult-film star Stephanie Clifford, professionally known as Stormy Daniels.

A Delaware state judge ordered the dissolution of Essential Consultants LLC and Resolution Consultants LLC in October 2020.


It has been reported that Trump had claimed the second personal expense of $130,000 as a business expense though whether he did that in his 2016 tax returns or later I have been unable to ascertain.


It is noted that, in the three years from 2017 to 2019 Trump donated the annual US$400 million presidential salary “solely for public purposes” in order to get a back a combined total of US$1,200 million as a deduction on his tax bills, according to The Washington Post.


As for an overview of Trump’s business practices…..


To quote Page 5 of the House Committee on Ways and Means’ 20 December 2022 Final Report:


Numerous investigative reports have revealed that the former President, through the complex arrangements of his personal and business finances, has engaged in aggressive tax strategies and decades-long tax avoidance schemes, including taking a questionable $916 million deduction, using a grantor trust to control assets, manipulating tax code provisions pertaining to real estate taxes, and extensively using pass-through entities. Media reports have also revealed that he benefited from massive conservation easements, and that certain of his golf courses failed to properly account for wages paid to employees, raising questions about compliance with payroll and Social Security tax laws. As President, he took pride in “brilliantly” maneuvering the tax laws to his personal benefit. Even as he was championing the Tax Cuts and Jobs Act of 2017, the former President referred to the tax code as “riddled with loopholes” for “special interests—including myself.”


BACKGROUND


The House Committee on Ways and Means “REPORT ON THE INTERNAL REVENUE SERVICE'S MANDATORY AUDIT PROGRAM UNDER THE PRIOR ADMINISTRATION (2017-2020” Final Report of 20 December 2022 can be found at:

https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2022.12.20%20Final%20Report%20House%20Ways%20and%20Means.pdf



On 30 December 2022 the House Committee on Ways and Means released a zip file containing all Donald John Trump’s personal & business tax returns via Attachment E. Links to the full range of documents the Committee has released can be found at the bottom of this document at:

https://waysandmeans.house.gov/media-center/press-releases/ways-and-means-committee-votes-release-investigation-irs-s-mandatory



Saturday 30 July 2022

Tweets of the Week





Friday 22 July 2022

The Australian multi-agency Tax Avoidance Taskforce is earning its keep in 2022

 

Simply put, the Australian multi-agency Tax Avoidance Taskforce has the role of ensuring multinationals and large businesses pay the right tax.


It can sometimes take decades to induce multinationals and foreign-owned businesses to admit additional tax liability and legal battles have been known to go all the way to the High Court – repeatedly in the case of at least one corporation


However there are now runs on the board.


In November 2018 ATO persistence saw the nominally Australian-based multinational BHP Group Ltd settle their longstanding transfer pricing dispute over the amount of Australian tax payable as a result of BHP’s Australian commodities sales through its Singapore marketing business. The agreed amount was calculated as approx. AU$529 million in additional taxes for the income years 2003 to 2018.


In December 2019 the ATO announced that it had managed to retrieve an extra $481.5 million in taxes from Google Australia after an audit investigated its tax practices between 2008 and 2018 and, that it joined the likes of Microsoft, Apple and Facebook who have all publicly stated that they have settled their tax affairs with the ATO and we welcome their transparency. This result brings the increased collections made against taxpayers in the ecommerce industry to around $1.25 billion cash.


Apple Australia reportedly owed $28.5 million in back taxes when it received the ATO bill in 2012.


While Microsoft in Australia is said to have paid AU$39 million during the 2017 financial year to settle its outstanding tax bill.


U.S. multinational Facebook Inc. was obliged to meet a bill of AU$31.3 million in additional taxes reaching as far back as 2009 according to one media report.


In October 2021 U.S. based ResMed Inc. annnounced it had settled its tax dispute with the ATO for the equivalent of US$381.7 million and locked in future tax certainty.


Then came this announcement concerning a mining corporation which asserts that half its assets are situated in Australia…...


Australian Taxation Office (ATO), media release, 20 July 2022:


The Australian Taxation Office (ATO) can confirm a settlement has been reached with Rio Tinto Ltd (Rio). The settlement brings an end to all tax disputes including long standing disputes in relation to Rio’s Singapore marketing hub. The settlement brings Rio’s total payment in relation to the disputes to almost $1 billion.


Deputy Commissioner Rebecca Saint said that the settlement represented one of the largest settlements in Australia’s tax history.


This settlement is a very good outcome for the Australian tax system,” Ms Saint said.


Even prior to this settlement, Rio has been one of Australia’s largest payers of income tax for many years, with a strong track record of engaging with the ATO in relation to its tax affairs, albeit with some areas of dispute.


Rio have announced that the settlement agreed to has secured approximately $1 billion for the Australian community for past years, over and above their tax returns originally filed. Perhaps more importantly, the settlement locks in future tax outcomes, providing certainty going forward.


This means that additional profits from the sale of Rio’s Australian owned commodities will be taxed in Australia in the years to come.


The resolution of these matters means that ordinary Australians can have confidence that even the biggest companies are held to account to pay their tax due,” Ms Saint said.


This result was delivered through the expertise of the ATO’s Tax Avoidance Taskforce. Many ATO staff have worked for the best part of a decade on these audits to deliver an outcome for the Australian community that strengthens the tax system.”


The compliance programs funded by the Tax Avoidance Taskforce, together with robust tax laws provide an important foundation for the ATO to be able to scrutinise activities to address multinational tax avoidance, often involving investigations over many years.


This settlement reinforces the importance of Australia’s world leading anti-transfer mispricing rules and a tax administrator properly resourced with the capabilities to deal with this type of dispute. The complexity of properly understanding the global affairs of multinationals, and the true drivers of profitability, can take years of rigorous investigation. This is the case even when the multinational is fully engaged, shares information and is motivated to resolve the issue, such as with this settlement.”


The broader impact of the Taskforce in the market has been to reduce the proliferation of profit shifting and transfer mispricing. ATO intervention has resulted in taxpayers shifting their tax position and increasing their revenues being taxable in Australia.


The Tax Avoidance Taskforce has a focus on the energy and resources sector, including commodity exports and marketing hub arrangements.


The Rio settlement follows the announcement by BHP in November 2018 that they had settled their marketing hub dispute with the ATO. These announcements provide confidence that Australia’s largest iron ore exporters are meeting their income tax obligations and that profit is being retained in Australia,” Ms Saint said.


As of 30 April 2022, the Tax Avoidance Taskforce has helped the ATO raise $26.3 billion in tax liabilities and collect $14.9 billion in cash.


Australia has one of the best tax performance rates in the world overall, but in particular in the large market. The success of the Tax Avoidance Taskforce has helped us ensure that compliance rates in the large market have reached 92% of tax paid voluntarily, and 96% after compliance activities.” Ms Saint said.


Background

Details of the settlement are covered by confidentiality provisions and the tax secrecy requirements of the taxation law. However, all our large corporate settlements are reviewed by former Federal Court judges to ensure a fair and reasonable outcome for the Australian community.


ATO settlement practices are subject to significant external scrutiny, with the Australian National Audit Office (ANAO) finding that our practices are effective. The ANAO also indicated we have more transparency over large market settlements than any other jurisdiction.


The efforts of the Taskforce have seen several significant taxpayers publicly state that they have settled their affairs with the ATO, promoting unprecedented transparency. This includes the likes of Google, BHP, Apple, ResMed, and Microsoft.