Rio Tinto adviser appointed to board advising Abbott government on how to increase tax transparency

Rio Tinto’s head of tax – who was recently hauled before the Senate inquiry into corporate tax avoidance about the lack of tax the miner pays – will now be also advising the Abbott government on how to improve the tax system and increase transparency in relation to the tax affairs of the nation’s biggest companies.

Rio Tinto is among a number of other companies currently under audit for its use of hubs in the island nation, which has become a popular spot to shift profits to avoid paying tax in Australia.

.It’s unsurprising that the government would want a representative from one of Australia’s largest taxpayers on the Board of Taxation. – Rio Tinto

At the corporate tax inquiry’s Melbourne hearing on April 10, Asia Pacific’s head of tax for Rio Tinto, Ann-Maree Wolff, faced some tough questions about the miner’s use of Singapore hubs.

Today, Ms Wolff has a new dual role: for the next three years she gets to advise the Abbott government about how to reform Australia’s tax system and increase the level of public disclosure companies make about their tax affairs. The Board has long been involved with tax reform under numerous governments and given advice about how to change Australia’s tax laws.

Ms Wolff “brings long standing experience in senior tax roles within the mining industry,” Assistant Treasurer Josh Frydenberg said in a statement on Friday when he announced new appointments to the Board of Tax.

Ms Wolff was the person who admitted that Rio Tinto was under audit at the corporate tax inquiry hearing in Melbourne last month, telling the Senate Economics Committee: “We received a relatively moderate assessment in relation to a very early period, where we agreed to an adjustment to our pricing with the ATO,” she said.

Tax Commissioner Chris Jordan, in another hearing following that, disputed that it was an immaterial amount. “Although perhaps immaterial to Rio, in an accounting sense we note that it’s substantial from our perspective, well in the order of over $100 million,” Mr Jordan said.

Ms Wolff has also served on a number of business lobbies including The Corporate Tax Association, Business Council of Australia and Minerals Council of Australia.

A spokesman for Rio Tinto said: “It’s unsurprising that the government would want a representative from one of Australia’s largest taxpayers on the Board of Taxation.

The head of the Corporate Tax Association Michelle de Niese said Ms Wolff was “an excellent candidate” for the Board of Tax.

She is both technically skilled and has a good understanding of commercial realities in her sector and other sectors,” Ms De’Neise said. “The Board of Tax is lucky to have her.”

Clayton Utz tax partner Niv Tadmore said it was not unusual to have people from the corporate sector advising on the Board.

Board of Tax representatives have always come from outside the public service, and serving on the board can often lead to brighter pastures. Mr Jordan served as chair of the Board of Tax, before taking the top job at the Australian Taxation Office.

Mr Frydenberg also appointed Cochlear chief financial officer Neville Mitchell, to the board. Mr Mitchell is also the national president of the peak body the Group of 100, which gives the business view on how tax reform should proceed. He also appointed Minter Ellison partner Karen Payne, who is a member of the Tax Committees of the Law Council of Australia and Property Council of Australia.

Herbert Smith Freehills consultant John Emerson, who has long been with the board, was promoted to deputy chair.

“The new appointments will put the Board in a strong position to support the national debate about the future of the tax system being conducted through the government’s tax white paper process,” Mr Frydenberg said.

He said the government would consult with business – through the Board of Tax – to develop a new voluntary code of public disclosure of tax information for large corporates.

In the May federal budget, Treasurer Joe Hockey said the government would be working with businesses to develop the code, but it would be up to the companies whether they publicly disclose the information.

The move comes after the Abbott government said it would exempt 700 private companies from tax disclosure laws released under the former Labor government, that require the Tax Commissioner Chris Jordan to publish the amount of tax paid by the nation’s top companies.

The Coalition’s proposed tax code could go a step further and require companies to give more detailed information, but given it’s voluntary there’s questions about how much detail companies would be willing to give about profits that are shifted through tax havens and low-tax nations.

The profit shifting occurs because of loopholes in current global tax laws, which the OECD is working with world government’s to fix.

As revealed on Tuesday by Fairfax Media, international fast-food giant McDonald’s avoided paying half a billion dollars of tax in Australia over a five-year period by shifting profits through Singapore.