Australian tax office probes hundreds for possible tax evasion after Panama leak

By Jane Wardell and Rebecca Howard

SYDNEY/WELLINGTON (Reuters) - The Australian Tax Office (ATO) said on Monday it is investigating more than 800 wealthy clients of a Panama law firm for possible tax evasion.

The probe follows the reported leak of more than 11.5 million documents from the files of law firm Mossack Fonseca, based in the tax haven of Panama, revealing details of hundreds of thousands of clients.

The documents are at the center of an investigation published on Sunday by the International Consortium of Investigative Journalists, the German newspaper Süddeutsche Zeitung and more than 100 other news organizations around the globe. ICIJ is the international arm of the Center for Public Integrity.

The leaked "Panama Papers" cover a period over almost 40 years, from 1977 until as recently as last December, and allegedly show that some companies domiciled in tax havens were being used for suspected money laundering, arms and drug deals, and tax avoidance.

"Currently we have identified over 800 individual taxpayers and we have now linked over 120 of them to an associate offshore service provider located in Hong Kong," the Australian tax office said in a statement emailed to Reuters. It did not name the Hong Kong company.

ATO Deputy Commissioner Michael Cranston said his office was working with the Australian Federal Police, the Australian Crime Commission and anti-money laundering regulator AUSTRAC to further cross-check the data from the documents.

"Some cases may be referred to the Serious Financial Crime

Taskforce," Cranston said in the statement. "The message is clear - taxpayers can't rely on these secret arrangements being kept secret and we will act on any information that is provided to us."

Treasurer Scott Morrison told ABC Radio Monday that "our record when it comes to tax avoidance and particularly multinational tax avoidance is one of legislation and action."

NZ GOVERNMENT UNDER PRESSURE

The 800 individuals under investigation include some taxpayers who had previously been investigated and others who had reported themselves to the tax office under its so-called Project DO IT - Disclose Offshore Income Today. The voluntary disclosure initiative, which closed at the end of 2014, allowed people to come forward and avoid steep penalties and criminal charges.

However, the tax office said the individuals under investigation also include "a large number of taxpayers who haven't previously come forward."

In New Zealand, the tax agency is "working closely" with its tax treaty partners to obtain full details of any New Zealand tax residents who may have been involved in arrangements facilitated by Mossack Fonseca, said John Nash, Inland Revenue's international revenue strategy manager, in comments emailed to Reuters.

According to the Australian Financial Review, New Zealand's foreign trust regime allowed Mossack Fonseca to create trusts in New Zealand to protect controversial assets.

On Monday, New Zealand Labour Party opposition leader Andrew Little called on Prime Minister John Key to come clean about what he knows about New Zealand becoming a "haven for rich foreign investors looking to hide their fortunes in secret trust accounts."

New Zealand Revenue Minister Michael Woodhouse said in a statement that "we tax people who live, work and do business here. We don't tax foreign income earned by foreigners."

According to Woodhouse, New Zealand's tax rules require foreign trusts to be registered.

"We also have a strong tax treaty network with the express purpose of discovering and preventing tax avoidance by exchanging information between tax jurisdictions," he said.

(Reporting By Jane Wardell and Rebecca Howard; Editing by Martin Howell)