800 Australians investigated after offshore accounts leak

AP News
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Posted: Apr 04, 2016 2:51 AM

SYDNEY (AP) — More than 800 wealthy Australians are under investigation by the Australian Taxation Office for possible tax evasion linked to their alleged dealings with a Panamanian law firm, the tax agency said on Monday.

The investigation comes one day after an international coalition of media outlets published details of an investigation into the offshore financial dealings of the world's wealthy elite, based on a massive cache of documents provided by an anonymous source. The Washington-based International Consortium of Investigative Journalists said the cache of 11.5 million records detailed the offshore holdings of a dozen current and former world leaders, along with businessmen, celebrities and sports stars.

Ramon Fonseca, a co-founder of Panama-based law firm Mossack Fonseca — one of the world's largest creators of shell companies — confirmed to Panama's Channel 2 television network that the papers were authentic and had been obtained illegally by hackers.

The Australian Tax Office said in a statement that it had identified over 800 individual Australian taxpayers in the data, and linked more than 120 of them to an associate offshore service provider in Hong Kong. The agency did not name the provider.

The tax office's deputy commissioner, Michael Cranston, said the agency was working with the Australian Federal Police, Australian Crime Commission and the nation's financial intelligence agency, Austrac, to cross-check data from the documents.

The tax office has in recent years boosted its focus on taxpayers who fail to disclose offshore income and assets. Cranston said the agency has been analyzing information from the data leak against information taxpayers had reported to the government.

Cranston said the data includes some taxpayers it has previously investigated and a small number who had reported their assets to the tax office under a 2014 voluntary offshore disclosure initiative.

"It also includes a large number of taxpayers who haven't previously come forward, including high wealth individuals, and we are already taking action on those cases," Cranston said in a statement. "Through data analysis we have been able to identify patterns such as clusters of individual taxpayer and advisers for further investigation."

Meanwhile, in neighboring New Zealand, Prime Minister John Key rejected the International Consortium of Investigative Journalists' characterization of his country as among 21 tax havens used by Mossack Fonseca.

"Tax havens are where there is nondisclosure of information," Key said. "New Zealand has full disclosure of information."

Key said the country has had the same tax laws for trusts since 1988, which were given a clean bill of health in a 2013 review by the OECD. He said the country had been strengthening its rules over time.

"You can't stop people writing something that might be factually incorrect," he said of the news reports.

Revenue Minister Michael Woodhouse said the country doesn't tax foreign income earned by foreigners and that the same principles apply to trusts.

"It is ridiculous to suggest that New Zealand is a tax haven, as tax havens thrive on secrecy," he said in a statement.

But opposition leader Andrew Little said the country's reputation was at risk because it was becoming a favorite investment location for foreign companies looking to keep their profits tax-free. He said a loophole allowed some foreign trusts to avoid any tax obligations in New Zealand and to avoid filing an annual income tax return there.

"The Prime Minister must take urgent action to close this loophole to protect the integrity of New Zealand's tax system and our international reputation for honesty and transparency," Little said in a statement.

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Associated Press writer Nick Perry in Wellington, New Zealand, contributed to this report.