THE squeeze is being applied on the Australian Taxation Office following a Federal Court decision in favour of two investors in a managed investment scheme.
Justice Stone found, on appeal, that taxpayers were entitled to their full claimed deductions in a tax-effective horticultural project, the Australian Horticultural Project Number 1, which was growing protea and Australian native flowers.
The case, which involved solicitors and joint investors in the scheme Graham Cooke and Hugh Jamieson against the ATO, has been welcomed by investors and lobby groups as a major victory against perceived unlawful actions by the ATO.
Australians for Tax Justice has called for the resignation of Tax Commissioner Michael Carmody and an overhaul of current ATO practice.
AFTJ chairman Lawrence Henderson has written to Federal Treasurer Peter Costello and Minister for Revenue Senator Helen Coonan calling on them to immediately instruct the ATO to withdraw all amended assessments and settlement offers in the light on the Cooke case.
“The ATO has already wasted tens of millions of taxpayer dollars and four years pursuing and harassing investors,” Mr Henderson said.
“They have repeatedly breached the Taxpayer Charter, denied taxpayers procedural fairness and continue to spend millions of dollars of taxpayer money on lawyers and administration costs to cover up their mistakes.”
The AFTJ, which was formed in July to lobby on behalf of investors, repeated its condemnation of the settlement offer, which the ATO extended to 60,000 investors in tax-effective investment projects.
“The ATO coerced tens of thousands of investors into accepting the settlement offer after it won the Budplan case, and then extended the offer after they won the initial decision on the Vincent case back in June 2002,” Mr Henderson said.
The group believes that, with the overturning of the Vincent decision on appeal, followed by the Cooke decision, serious doubts have emerged as to the legality of the settlement offer.
The group now feels there are sufficient grounds for the offer to be challenged in court.
“Michael Carmody should be removed for his handling of this issue [and] any pretence the Howard Government makes about tax reform must be judged against its performance on this issue,” Mr Henderson said.
The ATO declined to comment on the issue.
