||Issue No. 142||28 June 2002|
Interview: Safe as Houses
Safety: Ten Steps to Safety
History: Staying Alive
Unions: Choose Life
International: Seoul Destroyers
Corporate: Crash Landing
Activists: The Refusenik
Review: Dumb Nation
Poetry: Helping Out The Rich
The Locker Room
Week in Review
Good News from the Pilbara
Go Mark, Go
Tax Office Backs CFMEU Case
The submission, that directly contradicts assertions by Royal Commission architect Tony Abbott that ï¿½there is no evidence that tax evasion is more prevalent in this industry than othersï¿½ was lodged this week.
In its submission the ATO says the building industry hides up to 40 percent of its income and is twice as likely to have outstanding tax debts as other Australian industries.
After more than 100 days of seemingly partisan Royal Commission evidence from industry participants the Tax Office provides the first substantial, impartial overview of how the industry operates.
It reads like a blow by blow defence of the union case and a slap in the face for highly-paid counsels assisting who have led months of evidence from disgruntled small operators.
At essence, counsels have tried to build a case that the CFMEU uses illegal and innapropriate tactics to stand over minor industry players.
In Sydney, the union has contended it is usually attracted to those companies by the need to defend industry standards from those seeking to cut costs by evading safety, tax and workers comp responsibilities.
Counsel have concentrated questioning on perceived union failings even when witnesses have conceded business failures, phoenixing (rising from the ashes of insolvency in a new guise), and non-compliance with tax or workers compensation obligations.
The ATO goes to the heart of that matter by submitting "there are significant differences in the tax behaviour observed between large clients and the rest of the industry" which it refers to as the "general trade sector".
"The Tax Office view is that levels of non-compliance in the commercial trade services sector are high and widespread when compared with other areas of the Australian community.
"Several promoters of bogus labour hire arrangements have been prosecuted and gaoled. A number of promoters of phoenix arrangements, who are tax professionals, are now under investigation."
It lists the following as "significant" tax compliance issues amongst smaller operators ...
- cash payments not disclosed on summaries
- payments to contractors, and others, not returned as income
- fraudulent claims for GST credits
- the use of bogus labour hire arrangements
- "phoenix arrangements used to evade payment of tax liabilities through deliberate and systematic liquidation of trading entities.
The tax office has 220 staff dedicated to monitoring building and construction and will add another 50 workers to that total during the next financial year. In addition, it has more than 30 staff undertaking casework on its special Phoenix Project.
The latter group has finalised 400 cases in four years and has another 150 pending. Already it has "raised" or "collected" $200 million in taxes and penalties.
According to the ATO, formwork, steelfixing, scaffolding and plastering are "high risk sub-industries" and each is subject to targeted audits.
Under-pressure Builder Changes Story
Meanwhile, Sydney builder Joe Chebaia appears to have been pressured into recanting a claim that hit at the Royal Commission's credibility.
Chebaia, a director of Excell Building Corporation, was the builder nominated by the CFMEU for a safety inspection last week at Commissioner Cole's invitation.
The Commissioner eventually declined to visit the Flemington site, saying the builder had refused permission and, in those circumstances, he had no greater entry rights than an average citizen.
On Tuesday, Chebaia insisted he had never turned the Commission away.
"No way, I told them they were welcome," he told Workers Online. "I was more than happy for the Royal Commission to come onto the site.
Chebaia said the only way he could understand the Commissioner's statement was that "there must have been some mis-communication".
Reports that Chebaia was speaking out sparked a flurry of activity from Melbourne-based commission secretary, Colin Thatcher.
Media manager Rick Willis told Workers Online that Thatcher had flown to Sydney for a meeting with Chebaia, spoken to him by phone and written outlining the Commission's version of events.
Today, Willis rang Workers Online to say Thatcher had finally secured Chebaia's agreement with the Commission's understanding of how events unfolded.
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