Dob-in-a-tax-cheat reward being considered by government

Cash rewards for dobbing in multinational tax cheats and greater protection for whistleblowers are being considered by the Turnbull government to reduce tax avoidance.

In the US, whistleblowers who have provided information that lead authorities to tax cheats have received a cut of the billions of dollars recouped.

Assistant Treasurer Kelly O’Dwyer said the federal government was considering a similar scheme, on a smaller scale and focused on international companies with turnover of $1 billion or more.

The government is looking at extending whistleblower laws to specifically protect those who inform on multinationals cheating on their tax bills.

“We’re very keen to ensure that the ATO not only have the powers but also the resources that they need to enforce the law,” Ms Kelly told The Australian Financial Review.

“The government is looking very seriously at UK and US measures that provide not only encouragement and protection for whistleblowers but also financial incentives for them to come forward with new information that allows the government to collect tax that it would otherwise be unable to collect,” she said.

A taskforce dedicated to enforcing the government’s anti-avoidance and profit shifting laws, which came into force on January 1, will be established within the Australian Tax Office.

The taskforce will probably get extra funding and resources, but details will not be revealed until the May federal budget.

The government has directed tax commissioner Chris Jordan to take a hard line on multinationals that fail to file their accounts on time.

The Coalition is eager to be seen to be acting on multinational tax avoidance because Labor and the Greens claim they would impose tougher measures to raise more revenue and prove the system is fair.

CORPORATIONS ACT PROTECTIONS

Whistleblower protections exist within the Corporations Act to “encourage people within companies, or with special connections to companies, to alert ASIC and other authorities to illegal behaviours”.

The protections do not extend specifically to matters within the ATO’s remit. Nor are there any financial incentives or inducements to encourage whistleblowers.

Critics say Australia’s whistleblower laws are outdated and in 2014 a parliamentary committee found that “a strong case exists for a comprehensive review of Australia’s corporate whistleblower framework, and ASIC’s role therein”.

It is Greens policy to pass both corporate whistleblower protection laws and create a US-style False Claims Act “so that our tax agencies can rely on those in the private sector to act in the broader public interest”.

The False Claims Act allows a whistleblower who exposes fraud to take legal action against the perpetrator on behalf of the government, and receive a share of the recovery as a reward.

Ms O’Dwyer said she was looking at a number of options, including the Dodd-Frank Wall Street laws and Consumer Protection Act.

Under the law’s “bounty” provisions, whistleblowers are protected from retaliation and can obtain awards of up to 30 per cent of money recovered if the enforcement action is worth more than $1 million.

“There are a number of examples and models overseas and we have our own example here under the Corporations Act,” Ms O’Dwyer said.

“We are considering all of those to come up with a best-practice model that can ensure we are confident, and every Australian can be confident, in the integrity of our tax system.”

In the UK, the Public Interest Disclosure Act protects whistleblowing employees against retaliation from their employers, allows for compensation in cases of retaliation, and prevents the use of confidentiality clauses as barriers for whistleblowing.

Under Australia’s new anti-avoidance laws for multinationals, companies using complex cross-border structures to avoid paying tax will be subject to bigger penalties.

The ATO is targeting 80 multinationals, including a range of well-known technology, pharmaceutical and resources companies.