Very disappointed that ATO commission Chris Jordan, a well connected KPMG alumni, is playing so hard to keep JobKeeper recipients secretive. Wonder what his old colleagues like Wayne Jones, John Schaeffer and Steve Kirby would make of this?
Current and Former KPMG partners among high flyers stung in investment tax stoush
Current and former partners at KPMG are among high flyers stung by the taxman over investments in a scheme run by a former colleague at the top tier accounting firm.
Those pursued by the Tax Office include former KPMG tax partner Steven Economides, who left the firm after pleading guilty to common assault in 2019 after stabbing a Tony Abbott campaign worker with a corkscrew, the firm’s current head of transactions, Craig Mennie, and valuer Ian Jedlin, who left two years ago and now works at Kroll.
All three have gone to the Federal Court to challenge tax bills over their investments in timber projects run by former KPMG partner Wayne Jones.
Court documents show the ATO has been going through the old tax returns of investors in the projects and issuing new tax bills for years as far back as 2016.
The stoush comes amid intense and unrelated scrutiny on KPMG and the other three “big four” firms — PwC, Ernst & Young and Deloitte — over their involvement in government contracts that include a $100m defence deal given to KPMG, tax advice to multinationals and their opaque structures.
Mr Jones left KPMG in 2005 and now runs the investment company behind the forestry scheme targeted by the ATO, AgriWealth.
Court and tribunal documents show he is fighting a separate legal battle with the ATO over his investment in an ex-girlfriend’s project to bring highrolling patrons to Australian casinos, which he later discovered was a Ponzi scheme.
The ATO refused to allow Mr Jones to claim a deduction for $18m in interest on money he borrowed to invest in the scam – a decision upheld by the Administrative Appeals Tribunal in August last year.
“I don’t want to go into anything with you,” he told News Corp before hanging up the phone.
How many people were caught in the ATO’s AgriWealth dragnet is unknown, but Mr Economides indicated there were at least dozens.
KPMG partners and ex-partners “wouldn’t be 10 per cent” of the people affected, Mr Economides said when reached by telephone.
“The great majority of people involved in the dispute have got nothing to do with KPMG.
“That’s all I’ve got to say. Bye.”
Mr Mennie launched action against the ATO in October last year but the case was settled in November and it is understood he has paid his tax bills.
A KPMG spokesman said the investments were made in 2011 following a positive ruling from the ATO and said the firm worked hard to ensure partners complied with tax law.
“No KPMG partner is currently involved in the managed investment scheme being challenged and the ongoing legal proceedings do not involve any current KPMG partner,” the spokesman said.
“There are no outstanding tax liabilities by any current partner in relation to this matter, and all related tax bills have been paid in full.
“Private investments are personal decisions for individuals and KPMG has strong governance and policies in place to help ensure that tax affairs are conducted in accordance with ATO policy and relevant laws, regulations and product rulings.”
Documents filed with the court by Mr Mennie show he was an investor in the AgriWealth 2011 Softwood Timber Project.
The documents show that last year the ATO issued him with a new tax bill for 2016, adding an extra $210,000 in income it said he received by selling his interest in the forestry scheme back to AgriWealth.
Mr Mennie told the court the ATO’s original ruling in 2011 meant he wasn’t liable for capital gains tax on the extra $210,000.
Tax officials also levied penalties for making a false or misleading statement in his original return, which Mr Mennie denied.
While Mr Mennie’s case has settled without any admissions or any findings, the others continue.
In November, Federal Court judge Robert Bromwich ordered the parties to confer with a view to settling on a single test case that can resolve the stoush.
Mr Mennie and Mr Jedlin didn’t respond to requests for comment.