Jeremy Hirschhorn, second commissioner for the Australian Taxation Office, said corporate officers should proactively ensure they're seen as fulfilling an implicit promise that came with the bailout funds that the Australian parliament has authorized throughout the year. Hirschhorn spoke on Oct. 28 at an online event sponsored by the Group of 100, a consortium of chief finance officers.
"The business community has been entrusted with the weighty responsibility to recover the post-COVID economy, supported by extraordinary amounts of government funds," he said. "The quid pro quo in the community's mind is that large corporates, in particular but not limited to those who accessed these schemes, will pay their share and improve their approach to tax. Yes, follow the tax law, but also follow the spirit of the law."
For instance, the legislature recently allowed companies to immediately expense new investments in plants and equipment, and granted the full ability to carry back net operating losses to prior years. Hirschhorn said companies should ensure those savings are reinvested toward "business and jobs," but to avoid "artificial mechanisms to take advantage of these measures" by shifting the income away from the facilities it is meant to aid.
Hirschhorn also noted companies that have faced public outrage over executive bonuses after receiving government funds as another example of behavior that did not contradict Australia's laws, but seemed to violate public trust.
Through the "JobsKeeper" program, the Australian government has spent billions to subsidize most of the salaries of employees affected by quarantine shutdowns. It has also create a host of incentives and tax breaks to help companies struggling in the economic downturn, including delays in tax payments and speeding up the timing of other deductions.
Creating tax governance structures that work in practice and ensuring that financial statements match tax payments are among the ways that corporate managers can avoid being caught off-guard by potential problem spots, Hirschhorn said.
He also said "wise" advisers, rather than "clever" ones, can avoid the kind of risky tax planning that may seem attractive to a board but can cause later problems.
The ATO did not respond to a request for further comment.
--Editing by Vincent Sherry.
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