Big banks stall on global tax evasion crackdown
Australian banks are stalling on a deal that will help expose tax evaders to global authorities. The information sharing deal, part of the G20 talks in Australia this year, requires banks to pass on information about their customers to the Australian Tax Office.
The deal has been signed by more than 40 countries, including Britain, the United States, and tax havens such as the British Virgin Islands.
Australia has signalled it will sign up to the deal but has refused to do so before consulting business.
In a submission to the Treasury, the Financial Services Council, which represents the Big Four banks through their financial planning arms, said complying with the new rules would create “significant” costs to members, which would then be passed on to customers. It called on the government to make some accounts exempt from the rules, such as trusts used to hold pension or super funds. This would bring it into line with the US Foreign Account Tax Compliance Act (FATCA), it said.
AMP said it was “deeply concerned” about the costs involved in handing the information over, saying the new rule would bring “extremely limited benefit to Treasury”. It said the ATO already held a “great deal of information” about individuals and entities, which should be leveraged before banks are called on.
“We believe it is likely to be far more cost effective for the ATO to collect more, or more detailed, information through existing systems, rather than ask financial institutions to ask questions of customers,” it said.
The so-called common reporting standard on automatic exchange of information requires financial institutions to collect additional data on customers and disclose it to the tax office.
The tax office then sends this information to authorities around the world in a bid to catch tax cheats.
The deal has been endorsed by finance ministers at the G20 meeting in Sydney in February as part of a global crackdown on tax dodging.
Australia has already been criticised for dragging its feet over the new rules.
In June, global anti-corruption agency Transparency International said Australia should have been an early adopter of the rules given its role as chair of the G20.
Mark Zirnsak, a representative of the Tax Justice Network, said it was concerning that the government was focused on reducing costs to business rather than increasing revenue from tax cheats. “There is a fear if some of the businesses got their way, then they would put serious dents in the scheme’s effectiveness,” he said.
The banks argue that additional costs would arise from having to ascertain whether a customer is a tax resident of another country.
Their submissions to Treasury follow the release of a discussion paper issued by the government in June.
The government has agreed to outline an implementation plan for automatic exchange of information at the finance ministers meeting in Cairns in September. Australia will lead discussions on tax evasion and profit shifting at meetings in Brisbane in November.
Australia already automatically shares tax information with many of its treaty partners. These existing deals netted the government $480 million in revenue in the 2012-13 financial year.
The new global rule is expected to increase this number substantially.
