Questions raised after ATO wiped $1m bill from Paul Keating’s company
ATO waived Paul Keating’s $1m tax bill: ABC’s Four Corners
Tax authorities wrote off an almost $1 million tax penalty owed by former prime minister Paul Keating via one of his companies in 2015, according to a report by ABC’s Four Corners program.
The Australian Tax Office had initially refused to waive the charge for interest and penalties, but reversed its decision three months after issuing a formal notice demanding payment. The entire dispute went on for more than three years.
The ATO issued a formal demand to former prime minister Paul Keating to pay a debt of $953,396.
The ABC said the revelation raised questions about the “lack of transparency in how the tax office conducts confidential settlements”.
The Australian Financial Review does not suggest any wrongdoing by Keating or his advisers in seeking to have the debt cancelled. Four Corners said Keating had declined to comment.
All taxpayers have the option of appealing a penalty by writing to the ATO. But under normal circumstances, taxpayers would have to contest the decision via the Administrative Review Tribunal, or appeal the decision via the Federal Court.
Te tax debt had its origins after Keating, via one of his companies Brenlex Pty Ltd, sold $1.5 million worth of shares in audio engineer company Lake Technology in 2004.
Eight years later, in 2012, the ATO ruled that Brenlex owed $446,000 in tax because the original profit from the sale had not been reported.
The ABC reported that Keating had already reached a separate settlement with the ATO, for $3 million, relating to another of his companies, Verenna Pty Ltd.
As part of this settlement, Keating’s advisers told the ATO that his other companies, including Brenlex, was up to date with its tax liabilities.
Brenlex agreed to pay the tax owing in 2012, but the matter became more complicated after the ATO demanded more than $600,000 in general interest charges and late lodgement penalties.
Keating’s tax advisers asked the agency to use its rules allowing for the interest and penalty charges to be waived.
The parties debated the issue until October 2014 when the ATO sent a formal notice stating the penalty would not be waived. By this stage, the debt had grown to $904,000.
In April 2015, the ATO issued Brenlex a formal demand to pay the debt, then at $953,396, within 21 days.
Further discussion between the parties led to a July 2015 decision by the ATO to waive the penalty.
