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Leading bank rejects Australian demand for offshore account details

10 January 2011

 

One of Australia's biggest banks is resisting a disclosure order obtained by the Australian Tax Office (ATO).

The court order requires Australia and New Zealand Banking Group (ANZ) to divulge details of 13,000 client accounts held at its branch on the independent Pacific island of Vanuatu.

Vanuatu has for many years been a thorn in the side of the ATO, which considers the jurisdiction has been widely used by wealthy Australians to shelter income from domestic taxation.

The agency's Project Wickenby offshore compliance investigation uncovered several cases of Vanuatu-based trusts or companies being used for tax planning - notably the Agius affair, which led to several Australian clients being jailed for tax offences. A recent ATO report claimed it was still owed nearly Aus$1 billion in unpaid taxes on concealed offshore assets.

In April last year, Australian pressure forced Vanuatu to sign a bilateral tax information exchange agreement, to take effect on 1 January 2011. But the ATO is clearly not relinquishing its pursuit of undeclared offshore assets dating back years. It has been pursuing Melbourne-based ANZ for information on the bank's Vanuatu client base for more than 18 months, according to Michael Rowland, the head of ANZ's Pacific operations.

On 17 December the ATO dropped negotiations with ANZ and obtained two court orders forcing disclosure. One of the orders covers every ANZ Vanuatu client who has Australian nationality or domicile, or has a residential or business address in Australia, or has an Australian dollar-denominated account, at any time between July 2008 and November 2010. The second order covers ANZ clients whose accounts are in any non-Vanuatu currency.

ANZ immediately filed an objection in the Federal Court of Australia and sought a counter-order blocking the ATO's demands.

The bank says the ATO is undertaking an illegal "fishing expedition" - i.e. that its demands do not identify specific individuals that it suspects of tax offences. It notes full disclosure of all the requested client accounts, or of the beneficial ownership of companies and trust assets, would be a criminal offence under Vanuatu law.

The Federal Court will hear ANZ's petition on 17 February.

 

Sources

 

The Australian

Brisbane Times

Bloomberg

Radio Australia

Tax-News (TIEA deal)

 


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