Tax Office integrity at risk from corporate contracts­­

A new report has examined the aggressive tax minimisation strategies used by multinational companies holding Australian Taxation Office contracts worth hundreds of millions of dollars, showing the integrity of our tax system is at risk.

The CPSU commissioned the report by the Centre for International Corporate Tax Accountability and Research (CICTAR), focussing on ATO contracts held either directly or indirectly by Serco, Stellar and Outsourcing Inc. The contracts combined value is more than $250 million.

The CICTAR report has also made a number of recommendations to ensure transparency and accountability for any corporation seeking to provide services to the ATO or any Commonwealth entity.

Report author and CICTAR Principal Analyst Jason Ward said: “The ATO is a massive user of outsourced labour hire and other private services, many of them provided by subsidiaries of foreign companies that appear to use aggressive tax avoidance schemes and provide little or no disclosure.”

“The specifics are different for each of the three companies that I’ve examined in this report – Serco, Stellar and Outsourcing Inc – but what they all have in common is that they’re taking tens if not hundreds of millions of dollars in taxpayer money through lucrative contracts while aggressively minimising the tax they pay.”

“All Commonwealth contractors should be made to pay their fair share of tax and be fully transparent and publicly accountable. We have made some sensible and relatively easy to implement recommendations to make that happen.”

CPSU National Secretary Nadine Flood said: “This is a very serious issue of probity and integrity, that multinational companies with questionable tax practices are so deeply integrated in the day-to-day running of Australia’s tax system. It’s deeply disturbing that the Tax Office may be the clearest examples of tax avoidance among Commonwealth contractors. This is a huge problem for our entire tax system, as it shows there’s one rule for ordinary people who pay their tax without fuss every year and another set for these companies being handed that same money through Government contracts.”

“The tax practices exposed in this report are an insult to Tax Office staff, given they’re held to such a high standard when it comes to their own tax affairs. An ATO staff member can be sacked for missing their tax return deadline, yet these multinational companies are being allowed to aggressively minimise their tax rather than paying their fair share.”

“People rightly expect the highest possible levels of integrity in the Tax Office, and what’s going on here just isn’t meeting the public interest test. The Australian community doesn’t like outsourcing and privatisation at the best of times, let alone when lucrative ATO contracts are being given to companies whose own tax practices are under a cloud.”

“The business model of these companies appears to be based on securing lucrative Commonwealth contracts while exploiting workers and paying as little tax as possible. They’re not paying a fair amount in tax or in wages to many of their workers, while generally providing lower quality work than the directly employed Commonwealth workers they’ve displaced, and yet the Abbott-Turnbull-Morrison Government is falling over itself to give ever bigger sums of cash to these companies.”

Download the report here

MEDIA CONTACT: SIMON FRAZER 0409 493 290

All electoral communications authorised by Nadine Flood, Community and Public Sector Union (PSU Group), Sydney