The government has announced that it will extend for another year the 50 per cent reduction in the required minimum payment amounts that must be made from account-based, allocated and market-linked pensions.
The minimum amounts had been reduced for the 2008 – 09 and 2009 – 10 financial years. This means, for example, that the minimum annual drawdown for 2010 – 11 for someone aged 64 years or less will remain at 2 per cent; and for those aged 65 – 74, will be 2.5 per cent.
James Soong, 65, was today sentenced to three years jail in the Sydney Downing Court for failing to remit $6.7 million to the ATO.
Between October 1995 and July 1998 two companies operated by Mr Soong deducted tax instalments totalling $6.7 million from the wages of their employees. This money was not remitted to the ATO.
When the first of these companies was liquidated the employees were moved into the second company where Mr Soong continued to withhold funds from his employees’ wages without forwarding it to the ATO.
Tax Commissioner Michael D’Ascenzo said this case was an example of a ‘phoenix’ arrangement which involves the deliberate liquidation of a company to avoid paying outstanding debts.
The conviction is the result of a long standing joint investigation conducted by the Australian Federal Police and the ATO.
Soong will serve two years jail before being eligible for parole and has been ordered to pay back $6.7 million to the Commonwealth.
The ATO is seeking amendments to its powers with the introduction of the Draft Tax Laws Amendment Bill 2010 that will give the ATO discretionary power to demand security deposits from businesses as part of securing likely or expected tax obligations.
The draft legislation is an attempt to stop companies and directors engaging in phoenix activity.
The ATO estimates that the level of suspected phoenix cases may be in the order of $600 million and that this is an unacceptable risk to the governments revenue.>
Section 255-100 of the proposed Bill says:
The Commissioner may require you to give security for the due payment of an existing or future tax related liability of yours if: (a) the Commissioner has reason to believe that: (i) you are establishing or carrying on an enterprise in Australia; and (ii) you intend to carry on that enterprise for a limited time only; or (b) the Commissioner believes that the requirement is otherwise appropriate, having regard to all relevant circumstances.
The Bill gives the ATO power, at any time, to require such security deposits as the Commissioner considers appropriate. It is expected that the ATO will use this power in high risk industries known to be at risk for phoenix transactions and against directors with a history of failed companies with large tax debts.
