Lendlease fesses up to ATO tax scam audit, provisionally

Featured, Finance & Tax||
Lendlease, tax avoidance
It's an uphill battle. Image by Alex Anstey

Lendlease has finally admitted the Tax Office is conducting an audit on its $1 billion double dipping scam, while paying zero tax again in Australia. 

It is true that the Tax Office faces a Sisyphean task in combatting corporate tax shysters. Battalions of highly remunerated tax lawyers and the seeming immunity of the Big Four enablers – KPMG, PwC, Deloitte and EY – to any reprisals for their constant, devious frauds on the government, along with the sheer complexity of tax laws, assures that.

When you consider the size of the loot at stake, it is no surprise. Take Lendlease which recorded another $8b in annual revenue this week, and again paid nary a copper coin of income tax in Australia, again. Now it is almost a decade since even a tiny bit has been paid here. The foreign tax authorities manage to get a bit each year, but not us.

The shareholders and executives continue to rake in their dividends and lavish remuneration, mind you. But to the size of the loot and the immense scale of tax avoidance, let’s say Lendlease managed to make a $1b profit on that $8b in revenue, and paid tax at the statutory 30% corporate rate, that would amount to $330m the group would contribute to the national purse, in just this one year – or $1b in three years.

It’s no wonder then they fight so hard and pay their advisers so richly. And in the case of Lendlease, the fight over the $1b “double dipping” scheme has been going on for years, far longer than Covid, as the blue chip operator has inveigled the support of people like those at Law Council of Australia to barrack for them in submissions to the Tax Office. This, despite their being a draft ruling now extant for three years which explicitly says you can’t double dip.

If this were an ordinary citizen trying to pull off such a devious plot, that ordinary citizen would have been sprung years ago, penalised heavily, wages garnered, penalties heaped on top. Not the Big End of Town though.

The latest twist came yesterday with the annual profit results and the belated admission from the group that, yes, in fact it was being audited by the ATO for its $1b in fraudulent tax deductions, the admission secreted in the group’s Tax Transparency Report, a misnomer in itself: 

“the ATO is doing an audit of the partial sale of our Retirement Living business in the 2018 year”.

It is an otherwise unremarkable admission, save that the construction giant has been denying for three years that there is any issue at all, and now have the bravado to claim they enjoy a “high level” of compliance with the ATO.

This is a bit like Crown Resorts claiming it has a “high level of compliance” with money laundering laws because there is no final finding by regulators of rampant money-laundering.

So it is that Lendlease admits its “high” compliance rating is “provisional” because the ATO is doing an audit. No doubt its sleepy auditors from KPMG and plotting architects of the tax scheme, PWC, are still scurrying about behind the scenes trying to work out how to derail the Tax Office and maybe come up with an abstruse solution to save face; save face that is from the reality that they have defrauded the Commonwealth of $300 million or so.

Is this why the stock was down more than 7% yesterday? Or was it the quality of the profit result, whose $222 million profit was made up of $50m in asset revaluations? Total income was $8.2bn, tax payable once again at a wearily predictable zero.

Instead of informing the market properly, the admission was buried in the group’s Tax Transparency Report. Yet surely, the potential $300m hit should have been better telegraphed under Continuous Disclosure laws, had the government not done company directors and the big business lobby another favour by watering down their obligations for Covid, even extending that leg-up again via an amended Treasury Bill in Parliament last week.

What can be done about the power of the Big Four facilitators, the world’s most powerful partnerships? Those who are supposed to be the auditors, the guards, but in fact are the enablers, the masterminds.

Well, some politicians did take a look at it not so long ago. They held a Parliamentary inquiry into audit; really the Big Four Inquiry. There were a couple of robust submissions but politics and vested interests got the better of it and they shut it down early and issued the flimsiest findings this reporter has seen in two decades of journalism. Just too damn hard. Among the key findings of this non inquiry inquiry was to have a review, a review into nothing which was relevant to the central issues of inquiry at all.

Rather, they espoused a review into the possibility of requiring the worlds’ largest corporations and their tax avoiding Big Four enablers to use something which had been invented 30 years before … the internet. Yes, they found it might be a good thing for the world’s most powerful institutions to report – not by fax machine anymore but digitally.





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