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McDonald’s Australia Convicted for Not Providing Records to ATO

Posted on Jan. 18, 2022

McDonald’s Australia has been convicted and fined for failing to provide documents to the Australian Taxation Office.

On January 14 the ATO said it had issued a formal notice to McDonald’s in 2019 instructing it to produce documents in connection with an unspecified matter. “However, despite continued engagement with McDonald’s Australia to obtain the information and resolve the matter, the documents were not provided by the compliance date,” the tax agency said.

The company entered a guilty plea January 14 to one count of failing to comply with an information gathering notice, the ATO said. The amount of the fine levied by the Downing Centre Local Court in Sydney was not specified.

“Instances where taxpayers have failed to comply with requests for information rarely result in criminal convictions, as most will work with us to meet their obligations,” ATO Deputy Commissioner Will Day said. “However, where taxpayers hold back necessary information or documents, the ATO will initiate prosecution action.”

In the background section of its statement, the ATO said the High Court had refused a request to review a decision by the full Federal Court in favor of the tax agency “as related to this sector.” The ATO cited the case of Mussalli v. Commissioner of Taxation (NSD555/2020), in which the lower court ruled that amounts treated as prepayments of rent by a McDonald's franchisee to McDonald's had actually been made on capital account and were therefore not deductible expenses. It does not appear that McDonald’s Australia was a direct party to that legal action, and there is no reference in the Court’s decision to any failure by the franchisor to provide the ATO with documents it might have requested. 

A spokesman for McDonald's said the company “won’t be commenting at this stage.”

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