Joe Hockey to move on fraud, identity crime and tax avoidance

Canberra is planning a major assault on high-end financial crime through the establishment of a new Serious Financial Crime Taskforce drawing on the nation’s major law enforcement, business, and taxation regulators, and provided with $127.6 million over four years to secure criminal convictions.

The move, which will be outlined in more detail next week’s federal budget by Treasurer Joe Hockey, is designed to replace the successful Project Wickenby which has located $2.1 billion in otherwise avoided tax liabilities for return to the budget bottom line.

Project Wickenby, which winds up this year, has also been credited with improving taxation compliance.

The government argues the effort to date has secured “substantial sentences and strong deterrent messages in the sentencing judgments” with 76 people charged with serious offences resulting in 44 criminal convictions.

“The Serious Financial Crime Taskforce will have an unquantifiable positive benefit on the financial wellbeing of members of the community who, without the taskforce, may be victims of financial crime. It will also help ensure all taxpayers pay their fair share of tax,” Mr Hockey said.

The move comes as both sides of politics look to policies to clamp down on widespread tax avoidance, as well as other corrupt activity which results in taxpayers as a group being ripped off, as well as individuals being subjected to criminal behaviour.

The scale of the problem of fraud, identity theft and other financial scamming is not yet known but the government expects to recover far more than the cost of the investigations.

The new taskforce will be comprised of the Australian Taxation Office, Australian Securities and Investments Commission, the Australian Federal Police, Attorney-General’s Department, the Australian Crime Commission, the Australian Transaction Reports and Analysis Centre, the Commonwealth Director of Public Prosecutions and the Australian Customs and Border Protection Services.

Mr Hockey is putting the final touches on his second budget in some of the most complicated circumstances seen in recent times.

A worsening budget deficit blowing out to nearly $46 billion this year is expected but the tricky state of the economy and the low standing of the government mean promised budget repair has to be slowed to protect the economy and jobs.

In a sign of that, the Reserve Bank is expected to cut interest rates again on Tuesday, taking the cash rate to a record low of just 2.0 per cent.

Established in 2006, Project Wickenby was also a “cross-agency task force” but its major focus was on tax avoidance and tax crime.

In March, Opposition Leader Bill Shorten revealed Labor’s plan to crack down on multinational tax avoidance, claiming it would raise up to $2 billion in revenue.

The main feature of the plan – worth $1.6 billion – is an amendment to the “thin capitalisation” rules, affecting deductions companies can claim on their debt-to-equity ratio. It also included an increase in funding to the ATO, fast-tracking improved compliance rules and aligning Australia’s rules on hybrid entities with those of other countries.

While Shadow Treasurer Chris Bowen called it the “opening salvo in the battle of ideas”, Mr Hockey has demanded more details and attacked the policy for missing the target, claiming it would “cost Australian jobs”.