ATO caves in on bank tax secrets

“The ATO receives valuable information from taxpayers and other international revenue authorities on the basis it is confidential.

“Our position remains that taxpayer confidentiality is a vital public interest that ensures effective administration within a taxation system that is dependent on self-assessment for its efficient operation.”

The focus on the tax affairs of financial firms comes as the royal commission tests the conduct of banks and regulators.

Narrowed the request

Aggregate data provided by the ATO in an attempt to ward off the Senate economics committee’s more obtrusive probing shows there were 137 late lodgements by financial entities between 2001 and 2016.

Centre Alliance Senator Rex Patrick has been pressuring the ATO to comply. Alex Ellinghausen / Fairfax Media

Eighty-two of those late lodging entities no longer exist.

Of the 55 active entities, most of the offences dated back to the early 2000s.

For example, in 2001 five local branches or subsidiaries of foreign banks, five life insurers and friendly societies, three general insurers, two superannuation funds and one non-operating head company did not meet the deadline.

Senator Patrick originally sought the detailed tax affairs of all financial companies with annual income above $100 million who lodged late over the past 15 years, but later narrowed the request.

He argued the Senate’s inquiry powers enshrined in Section 49 of the Constitution trump tax-law secrecy provisions, unless the law specifically states the Parliament can’t see something.

Separately, the ATO annually releases the corporate names, gross income, taxable income and tax paid by about 2000 of the biggest public, multinational and private tax groups.

The ATO is worried disclosures would undermine confidence in the system and could be a slippery slope, because the precedent may tempt politicians in the future to seek confidential information about other business targets or political opponents.

The tax law notes a government minister can’t request tax information to disclose to the Parliament, but the rule does not apply to a House or Senate committee.

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