Thread by @TaniaPV

ATO loses landmark gold case creating a budget hole afr.com/policy/tax-and…

‘The Australian Taxation Office is facing a budget black hole of more than $1.15 billion and the spectre of a class action after it lost one of the country’s most important and controversial tax cases on Friday’

The landmark case, heard by full bench of Federal Court in front of justices Perram, Moshinsky & Thawley unanimously overturned a decision made in the AAT in relation to GST assessments issued to an entity in the precious metals industry. It also had a costs order of $1 million.

‘The Federal Court decision means up to $500 million of assessments and penalties issued by the ATO will be set aside.’

‘While the case relates to defunct refiner EBS & Associates – which was formerly part of the country’s second-biggest gold refiner... it puts in doubt the ATO’s cases against other precious metals companies, estimated to be worth hundreds of millions of dollars to the ATO.’

‘Leaked ATO documents prepared for the newly elected government in May 2019 included a list of strategic litigation matters that could result in significant revenue or administration risk. It noted the GST input tax credit case by refiner of gold, EBS’

‘The document said the ATO was expected to brief the government that an adverse decision would likely attract "significant media attention" and impact a line of other similar cases.’ #gold #ATO #ICAC

‘With the case over it is expected to open the floodgates to damages claims by some industry operators that collapsed or suffered financially after being subjected to raids, garnishee notices, drawn-out litigation and a public smear campaign of the industry.’ #gold #aTO #ICAC

‘The gold refining industry has been in the ATO’s crosshairs since 2013 after revelations it was the target of an international GST rort involving crooked gold traders and organised criminal syndicates from the Middle East.’

‘Instead of going after the crooks, the ATO targeted the refiners and set the industry back years.’

‘What is tragic is much of the fraud that did take place by criminal gangs could have been avoided if the loophole had been addressed when the scam first hit the radar of the authorities – or when Britain, which operated a similar system, closed its loophole back in 2003.’

A source estimated that up to $40 million in taxpayers’ funds had been squandered by the ATO’s pursuit of this case. "A Cartier watch for every one of the ATOs approximately 20,000 employees, nearly 1000 nurses, a Big Mac for every Victorian or 500 new teachers," the source said.

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‘The ATO became aware of the scam in 2012-2013. It was around this time a number of refiners also warned the ATO they suspected fraud. Some tipped off AUSTRAC.’ *************
#ICAC

‘Legislation was changed to close the loophole in late 2016.’ #ATO #ICAC

EBS was hit with massive tax assessments in April 2016, ...which totalled more than $200 million.
In September.. EBS was placed into liquidation and Schon Condon was appointed liquidator. Condon looked at what had gone on and decided to challenge the ATO’s decision at the AAT.

One smaller refiner, who asked not to be named for fear of retribution, said the way he had been treated by the ATO over the past few yrs had been nothing short of shocking. He hoped ATO would do the right thing & start settling with other players insteadof draggingout litigation

‘At the ATO, news of the judgment would have sent a cold chill through the organisation. It will need to brief the government on the significant loss and the media attention it is likely to receive.’