ATO fires its latest volley in the drawn-out battle with Raptis

ATO fires its latest volley in the drawn-out battle with Raptis

Gold Coast developer Jim Raptis, the man who has battled creditors at some stage in every decade since the 1980s, has found himself at the centre of another controversy – but this time it is the Australian Taxation Office (ATO) that is gunning for him.  

It’s not unfamiliar territory for the developer who over the past 40 years has reshaped the Gold Coast skyline with developments such as Chevron Renaissance, the three-tower Southport Central development and the Hilton Surfers Paradise. The latter two projects ultimately fell to receivers more than a decade ago; a period that triggered the darkest days for the Gold Coast property market at the height of the GFC.

While one high-profile stoush with the ATO scored him a victory in 2016 when he managed to whittle down a $29.3 million tax bill to just $6 for his listed company Raptis Group (ASX: RPG), the latest battle – which has nothing to do with the listed company - carries a great deal more weight.

The Deputy Commissioner of Taxation last week secured a Federal Court judgment against Jim Raptis, and associated entities, to freeze up to $23.8 million in net personal assets following an ATO investigation into the developer’s affairs.

The ATO is alleging Raptis and two companies linked to him owe a combined $109.6 million in tax plus interest after an investigation that claims Raptis, members of his immediate family and associated entities have been involved in offshore tax avoidance arrangements. It’s unclear if there is a doubling up of the taxes allegedly owed to the ATO between Raptis and the associated companies Northernson Pty Ltd and Sevinhand Company Limited who are named as respondents.

The ATO investigation, which was launched in 2020, was reported by The Australian Financial Review this week as stemming from the Pandora Papers leak where nearly 12 million documents offered up an insight into secretive offshore companies and trusts used to avoid paying tax.

However, the ATO released a statement saying it ‘regularly receives information from a range of different sources in our efforts to fight tax evasion and crime’.

“While the information in data leaks is interesting, we don’t rely on data leaks to do our job,” says ATO Deputy Commissioner and Serious Financial Crime Taskforce chief Will Day. “We detect, investigate and deal with offshore tax evasion year-round.”

While the ATO says it will be analysing the information to identify any possible Australian links, the tax collection agency and Raptis have met head-to-head frequently during the course of the Gold Coast developer’s career.

After the spectacular $1 billion collapse of his listed entity Raptis Group in 2008, Raptis has been actively developing apartment projects on the Gold Coast as a private entity in the aftermath of the corporate failure. His listed company was ultimately saved via a deed of company arrangement that saw creditors receive cents in the dollar and some shares in the listed entity, but the listed Raptis Group has done very little developing since it was reinstated to the ASX in 2016.

The ATO was no doubt stinging from previous stoushes with Raptis where he managed to secure court wins that diminished tax claims against his companies.

ATO's concerns 

Interestingly, the background information provided in the latest Federal Court ruling offers an insight into the behind-the-scenes dealings by the ATO in investigating Raptis’s affairs.

Notably, the ATO has raised concerns over the developer’s long association with Vanda Gould as his accountant. Gould was convicted in 2019 of orchestrating offshore tax avoidance schemes, although late last year he launched a civil defamation case against the ATO Commissioner Chris Jordan, on top of an appeal protesting his innocence.

Last week’s Federal Court judgment highlights the fact that Raptis has been the subject of several ATO reviews and audits into his tax affairs.

“Mr Raptis has been involved with offshore entities associated with Mr Gould,” the ATO has alleged.

“ATO investigations have revealed what appear to be tax avoidance arrangements in respect of Mr Raptis, members of his immediate family, and entities with which he is associated.

“Mr Raptis and entities with which he is associated have a long history of failing to file tax returns and pay tax debts. As a result of a review/audit, the Commissioner of Taxation has concluded that there are significant amounts of undisclosed income and evasion by Mr Raptis.”

The Federal Court ruling identified a number of specific assets it sought to freeze while its investigations continued.

These included the Raptis family home in Paradise Waters, estimated to be worth $20 million, as well as several bank accounts held jointly with Raptis’s wife Helen. Other assets include shares in CVC Limited (ASX: CVC) and Telstra Corporation (ASX: TLS), and a Lexus 2018 LS500H sedan.

Nine other Raptis entities are identified in the Federal Court judgement, involving a number of future development assets planned by the group.

The court ruled that Raptis is eligible to pay himself up to $10,000 a week on ordinary living expenses and reasonable legal expenses up to $100,000.

A 'good arguable case'

In her judgment, Justice Berna Collier of the Federal Court says she is ‘satisfied that, in respect of the Deputy Commissions of Taxation’s (DCT) substantive claims against Mr Raptis, Northernson and Sevinhand, the DCT has a good arguable case’.

In issuing her orders to freeze the Raptis assets, Justice Collier took into consideration ATO submissions that ‘Mr Raptis has a history of taking steps to limit liability following review and audit activity by the Commissioner, for example by resigning as a director of taxpayer entities and backdating the effective date of the resignation’.

The ATO also alleges Raptis has a ‘history of failing to disclose beneficial interests in foreign entities and their international and domestic assets’.

“Mr Raptis and his associated entities have a history of transferring funds offshore, including to countries that are known tax havens,” it says.

“A 2020 review undertaken by the Commissioner revealed that Raptis group entities examined by ATO officers during the course of the review had a history of poor financial reporting and record keeping, and mingling of funds, and Mr Raptis and his associates had provided vague answers to direct questions from ATO officers.”

The ATO has declined to comment further on the Raptis matter, citing it is unable to respond in relation to individual matters before the courts.

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