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THE Senate Standing Committee on Economics heard damning criticisms of the Australian Securities and Investments Commission (ASIC) and Taxpayers Australia is highlighting ASIC’s poor handling of how multinational corporations represent themselves in Australia.

Senator Christine Milne’s probing of ASIC’s ‘check-and-rein’ protocols in October has produced worrying insights, according to Taxpayers Australia, which also submitted to the enquiry “at worst, the government regulator has an ineffectual standing among multinational corporations, who are playing fast and loose with basic compliance and self-determination processes”.

Taxpayers Australia’s head of tax, Mark Chapman said ASIC’s primary misstep — highlighted by Sen. Milne in session — was best summarised as “an inability to regulate Australian subsidiaries operating as part of larger, overseas parent companies”. 

ASIC’s current Class Orders only require large organisations and large Australian-based groups to submit financial statements. 

“The rub is this:  businesses self-determine their size, and thus their eligibility to report to ASIC,” Mr Chapman said. “Self-determination requires an honour-based compliance standard. 

“Therefore less-than-honourable businesses can dodge regulation by determining themselves ‘small’ with little apparent fear of ASIC validation.”

Taxpayers Australia claims Facebook Australia “looks to have done this, being an Australian subsidiary of a larger overseas parent company”.

“Given the size of the Facebook global empire, questions need to be asked about Facebook Australia’s ‘small company’ self-determination,” Mr Chapman said. “Its practices are sobering proof an overhaul is needed.”

In a submission to the Senate Standing Committee on Economics, Taxpayers Australia has sought to tackle the legislative grey area Facebook Australia – and Facebook US, being the parent – may be operating in.

“The fact remains, ASIC has not defined large multinational group disclosure arrangements,” Mr Chapman said. “Taxpayers Australia notes that under current law, ASIC’s existing Class Orders do not require multinational corporations to submit financial statements in respect of their Australian subsidiaries.

“Therein lies the worrying likelihood of ASIC missing out on critical financial information.”

Mr Chapman said Taxpayers Australia advocated it essential that not only ASIC follow the law in relation to self-determination, but that the law was appropriate in the first place.

“And clearly it isn’t,” Mr Chapman said. “We’re not calling for over-regulation but clearly when the parent company of one of the world’s largest corporations is able to legitimately describe itself as small – with all the implications that carries for the amount of scrutiny it will receive by ASIC and later the Tax Office – there is something very wrong with the rules.”
Taxpayers Australia said its understanding was that the Australian Taxation Office (ATO) can request financial statements from relevant subsidiaries of foreign multinationals, but ASIC’s laws do not support any such procedures. 

“The two bodies should work in tandem,” Mr Chapman said. “As it is right now, any financial statements provided independently to the Tax Office would not be legally subject to audits by an independent third party, nor would they be need to be prepared in accordance with Chapter 2M of the Corporations Act 2001 (Cth).”

Taxpayers Australia is calling on the Senate Committee to clarify the extent to which ASIC consults with the ATO and other powers when formulating Class Orders. 

“The partnership of ASIC and the ATO, with respect to multinational compliance, must be seen to deliver clear legislative strength,” Taxpayers Australia said in a statement. “If it does not, the government must act to strengthen the law covering the  verification of self-determination processes.

“Proof the Tax Office is receiving quality information from foreign multinationals to aid ongoing compliance must be given, and ASIC must address glaring holes in Class Orders stipulating company self-determination criteria.”

www.taxpayer.com.au

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NEW INVESTMENT attraction for Australia is the impetus behind expansion of schemes to attract wealthy migrants – and their capital – by the Australian Government.

Mullins Lawyers partner and registered migration agent, Tony Hogarth said the Premium Investor Visa (PIV) would be introduced from July 1, 2015. The PIV will allow an applicant to become a permanent resident in just 12 months by investing $15 million into complying investments – and importantly there will be no permanent residency requirement under the scheme.

This is a significant move, as is the increased involvement of Austrade in determining the investment eligibility criteria for both PIVs and Significant Investor Visas (SIVs), Mr Hogarth said.

“In addition to States and Territory governments, Austrade will play a more prominent role in SIVs through the nomination of SIV applicants,” Mr Hogarth said. “For PIV applicants, Austrade will become the sole nominating entity.”

The visa schemes are expected to link back to the Federal Government’s recently released the Industry Innovation and Competitiveness Agenda.

The SIV scheme was released in November 2012 by the previous Labor Government. It required migrants to invest $5 million into complying investments in Australia for a minimum period of four years. With the new provisions, the Coalition Government appeared to be strengthening the program, while dealing with anomalies.

“In order to attract more high net worth individuals, improvements in the exiting SIV will be made by streamlining the processing time, strengthening its integrity measures and further promoting the program globally,” Mr Hogarth said.

“With the implementation of the new PIV, Australia will be able to better compete with other countries and to maintain its position as one of the leading destinations for wealthy migrants.”

Mr Hogarth said the government also proposed to implement changes to the 457 Visa regime to make it easier for employers to engage skilled overseas workers, and specifics were expected to come through in coming months.

www.mullinslawyers.com.au

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AUSTRALIA now has its own national identity theft support service, known as iDcare, officially launched this week by Federal Justice Minister, Michael Keenan.

The service has been boosted to meet the rapidly threats to business and society of identity crime.

Mr Keenan said iDcare was “one of a kind”.

“It offers a toll-free national anonymous telephone service that works with members of the community without charge to develop tailored and practical response plans to get people back on track following an event that threatens their personal information,” Mr Keenan said at the launch event attended by members of parliament, business and government leaders.

“It’s a great pleasure to be here today, and to be invited to help officially launch iDcare, the national support centre for victims of identity crime.”

He said iDcare was in a unique position “to understand not only the experiences of victims – but also how well prepared government agencies and businesses are to assist and support victims on the road to recovery”.

“In this way, iDcare is perfectly positioned to play a strong advocacy role in promoting best practice for responding to victims – and raising awareness of the need to maintain strong protections over personal information,” the Minister said.

The managing director of iDcare, David Lacey, said, “To have one provider, that cuts across all levels of government and industries, that works with individuals to build a tailored response to their circumstances is very unique.”

Dr Lacey said iDcare was a not-for-profit established as a joint national public-private sector initiative. It is located on Queensland’s Sunshine Coast. Its case management centre is specifically tailored to deal with minor through to complex identity theft and misuse events. 

“We respond to clients from Cairns to Esperance, of all ages, and respond to all forms of identity theft, online and physical.” Dr Lacey said.

“A measure of our success is the ability to cut down the complexity of how our clients need to respond, to share critical knowledge, and get them feeling back in control.”

The iDcare support line operates from 8am to 6pm (AEDT) Monday to Friday: 1300 432 273 (1300 IDCARE).

Dr Lacey said iDcare does not collect personal details, nor does it charge for its service.

www.idcare.org

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EXTRA: THE Institute of Public Accountants (IPA) reckons fringe benefits tax is the most burdensome item of compliance in front of Australian small business today.

FBT’s overhaul is both warranted and overdue, according to the IPA – but it was overlooked in the recent Federal Budget. 

“Look no further than FBT if the government wants to make some inroads to its commitment to reducing regulatory red tape,” IPA senior tax advisor, Tony Greco said.

“FBT has the unenviable title of having the highest compliance cost of any tax. It places a significant compliance burden on small business operators.

“The complexity of the FBT system applies to all small business employer groups, including the not-for-profit sector.  We are talking about a lot of entities trying to navigate a quagmire of rules to safely negotiate ways to comply with these tax rules.

“The IPA believes that shifting FBT from employers to employees would provide a more equitable solution to many of the current problems. Taxing fringe benefits at the employee level has the potential to deliver greater neutrality in the treatment of cash and non-cash remuneration while reducing the compliance costs for both employers and employees.

“The Henry Review supports such a proposal to simplify the current rules and provide for more transparency. There are also a number of anomalies in the FBT rules which have been allowed to exist for too long and should be addressed by any responsible government.

“The use of uncapped access to FBT exemptions for restaurant meals and the hire of entertainment facilities for private purposes are highly discriminatory and need to be immediately reined in on equity grounds,” Mr Greco said.

“The exploitation of these uncapped concessions offends the principle of fairness. For example, allowing someone to salary sacrifice a $40,000 wedding from pre-tax income to avoid a significant amount of tax is difficult to justify.

“If the incidence of FBT is transferred to employees, then an alternative mechanism for funding FBT tax concessions will need to be considered. The funding alternatives proposed by the Not-for-Profit Sector Tax Concession Working Group have merit as they offer more transparent incentives for attracting and retaining talent in the not-for-profit sector.

“These alternatives need to be considered in the interests of simplicity, fairness and transparency,” Mr Greco said.

The IPA made this recommendation as part of its pre-Budget submission. 

www.publicaccountants.org.au

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