Australian Tax office shake-up puts private sector experts at the helm

A management shake-up at the Australian Taxation Office after the retirement of second commissioner Neil Olesen will leave the top three positions filled by tax practitioners hailing from private sector advisory firms for the first time in the agency’s history.

Mr Olesen’s looming exit on November 30 after 35 years as a tax office insider was announced internally to ATO staff this week.

Former KPMG partner Jeremy Hirschhorn, who is currently responsible for enforcing tax compliance by large companies, will be elevated from ATO deputy commissioner to acting second commissioner.

He will join commissioner of taxation and former KPMG partner and policeman, Chris Jordan, and former Greenwoods & Herbert Smith Freehills partner turned second commissioner, Andrew Mills, at the top of the ATO.

Neil Olesen, second commissioner of Taxation, is retiring.
Neil Olesen, second commissioner of Taxation, is retiring.

Big business had originally hoped the installation of private sector tax experts in recent years at the country’s revenue collection agency would give companies a more sympathetic hearing on tax disputes, after long-time frustrations with the traditionally public-servant dominated ATO.

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However, business tax sources say that companies have unexpectedly had a testy relationship with the ATO, particularly Mr Jordan and Mr Hirschhorn, as the ATO tries to raise revenue for government coffers.

Observers say the ex-private sector tax practitioners have brought an assertive and at times uncompromising approach, employing hardline negotiating tactics in disputes with companies and their advisers.

On the other hand, the former private sector tax advisers now working at the ATO have an inner knowledge of the complex structures and strategies that corporates use to minimise their tax.

Under the leadership of Mr Jordan the ATO has gone after multinational tax avoidance structures. Its Tax Avoidance Taskforce has raised $5.6 billion in cash in two years from its audits of e-commerce giants, big miners and private wealth groups.

ATO deputy commissioner and former KPMG partner Jeremy Hirschhorn will be promoted to acting second commissioner.
ATO deputy commissioner and former KPMG partner Jeremy Hirschhorn will be promoted to acting second commissioner.

Mick Tsikas

The Australian Financial Review revealed last week that the ATO is examining whether tax promoter penalties can be applied to big four accounting firms Deloitte, EY, KPMG and PwC as it trawls through emails that detail how aggressive schemes were marketed, in a major challenge to legal professional privilege.

The Financial Review published documents detailing how Glencore moved $30 billion of international assets into offshore tax structures after a $16 billion writedown by its Australian holding company. The Glencore restructure is now the subject of a major investigation by the ATO.

The ATO has told corporate taxpayers that those who engage early on complex transactions and communicate issues transparently may enjoy a better experience working with the ATO on complex matters.

The Coalition government has made an effort to encourage more crossover from the private sector to senior roles in government agencies.

Andrew Mills, former Greenwoods & Herbert Smith Freehills partner-turned-second-commissioner.
Andrew Mills, former Greenwoods & Herbert Smith Freehills partner-turned-second-commissioner.

AAP

Former UBS international wealth management executive John Fraser became head of Treasury in 2015 before retiring in July 2018. He recruited heavily from private sector pools of economists, bankers and fund managers.

The retiring Mr Olesen has most recently had responsibility for the ATO’s client engagement group. He has deep experience in tax and superannuation administration, including designing and implementing new tax laws, helping to ensure compliance with existing laws and leading major change initiatives.

In a message to staff, Mr Jordan noted that Mr Olesen was a “driver for significant and breakthrough strategic initiatives at the ATO such as the thinking behind tax gap estimates, reframing compliance approaches to be more of ‘engagement’, evolution of our measures of effectiveness, driving the Reinvention program and maturing the client experience perspective, establishing the Smarter Data program, developing and using full end-to-end design for policy, law and administration following on from recommendations made by the Ralph Business Tax Review, and implementation of one of the largest government reform programs in the Superannuation system”.

“I have valued highly his corporate and technical knowledge, analytical thinking, whole of system understanding and perspective, and his productive relationships with Treasury and other agencies,” Mr Jordan wrote.

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