Is the Australian Tax Office outsourcing to tax dodgers?
The Australian Taxation Office (ATO) is the largest user of outsourced labour hire in the federal government. Subsidiaries of foreign companies with ATO contracts pay very little tax, appear to use aggressive tax avoidance schemes and provide little or no disclosure.
In this study by CICTAR, three companies are analysed as case studies but represent a broader problem with other ATO labour hire contractors and other outsourced service corporations across federal and state governments in Australia.
After reviewing three case studies of ATO contractors, this report provides concrete recommendations to ensure all government contractors pay their fair share of tax and are required to be fully transparent and publicly accountable.
Government procurement can and should be used to increase transparency and compliance and set higher standards for all corporations operating in Australia. The three corporate case studies are:
OUTSOURCING INC – a rapidly growing multinational listed in Japan has acquired several Australian companies including, Hoban, Clicks and Index, which have large government contracts. These entities are operated through Unit Trusts and file no annual financial statements. While it is unclear what tax is paid in Australia, it is clear the head of the Japanese company owns stock worth half a billion dollars. Contracts for outsourced public services in Australia are a critical part of Outsourcing Inc’s global growth strategy.
SERCO – the UK listed company, best known for managing prisons and immigration detention centres, gets 20% of its global revenue from Australian governments. The subsidiary with the ATO call centre contracts, the largest ATO contract, claims to not have a separate bank account and the company’s multiple related party transactions are a key indicator of aggressive tax avoidance schemes. Another Serco subsidiary, through a contract with the Victorian state government, has managed to convert speeding tickets into a $20 million tax free dividend.
STELLAR – a private company owned by a family of Texas millionaires with a history of dubious business practices also operates call centres for the ATO. In 2018, its UK call centre business declared bankruptcy in Nevada, where it and the Australian business are incorporated. The company continue to transfer payments to a British Virgin Islands company while failing to pay money owed to the UK tax authority and redundancy payments to workers. Other subsidiaries of foreign multinationals, which also appear to have questionable tax practices, are ATO and federal government contractors. Further analysis is required but these three examples present disturbing findings which must be addressed
Latest News
Sign up for our newsletter
By clicking ‘Sign Up’ you are consenting to be contacted by CICTAR about our work. We will not share your information outside the organisation. You can unsubscribe at any time by emailing us.