Chris Jordan - Maiden Speech by Tax Commish at the National Press
‘Drug cheat’ resource groups pay $12b in tax as ATO breaks cycle
Commissioner of Taxation Chris Jordan says the model by which resource companies repeatedly flouted rules to avoid paying tax has effectively been broken, delivering an extra $12 billion to the budget bottom line since 2017.
In an interview with The Australian Financial Review following last week’s $1 billion settlement between the Australian Taxation Office and Rio Tinto, Mr Jordan compared tax avoiders with Olympic drug cheats, saying it was better to stamp out their behaviour rather than repeatedly ”cracking down” on transgressors.
Tax Commissioner Chris Jordan says behavioural change is far preferable to the need for constant audits. Alex Ellinghausen
He said a spate of such settlements over recent years, starting with the Chevron case in 2017, was starting to bear fruit.
“Resources companies have started paying tax,” he said.
“We collectively eliminated more than $30 billion of their losses applying the Chevron decision, so they are paying tax a lot earlier.”
He said the consequent saving to the taxpayer was around $12 billion.
Mr Jordan said as far as the ATO was concerned, success with multinationals tax minimisation should no longer be judged on the outcome of audits, but on there being fewer audits because there was less tax avoidance.
“Audit yield is no longer the paradigm,” he said, drawing an analogy with “drug cheats at the Olympics”.
“There’s no point settling with these companies and then having to do it all over again.”
Resource giants pay up
Last week, a long-running dispute between Rio Tinto and the ATO ended when the nation’s largest iron ore miner agreed to pay an additional $613 million in tax for the period from 2010 to 2021, on top of $378 million paid last year.
It follows a $529 million settlement with BHP in 2018, both of which involved the ATO taking issue with the way the mining giants used Singapore-based marketing hubs to sell their product to reduce their tax.
Despite the cases, Rio and BHP are among the nation’s largest taxpayers.
While the BHP settlement – as well as other multinational tax settlements with Apple, Google, Microsoft and ResMed – all involved the companies agreeing to permanent arrangements, Mr Jordan said the settlement with Rio Tinto was for five years.
He doubted the behaviour would resurface after that period, given the ongoing focus of the ATO.
“Who knows, marketing hubs may not be that relevant in five years,” he said.
After the Rio settlement, Prime Minister Anthony Albanese said there more settlements pending
