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Monday, 1 September 2014
Page: 9324


Mr HOGAN (Page) (18:14): I rise to support the International Tax Agreements Amendment Bill 2014. I am also against the amendment moved by the shadow Assistant Treasurer. Let us get the essence of what this bill is about. This bill, like any international tax agreement, is about improving trade and investment opportunities between two countries. This bill is certainly doing that, and I will go through it in greater detail to say specifically why this bill is going to increase trade and investment between the two countries, which obviously is a good thing for both.

The amendment that was moved by the shadow Assistant Treasurer is quite bizarre. They were in office for six years and suddenly, after being in office for not even a year, we are getting called on inaction over something they had six years to do. When you talk about inaction, we have a G20 summit coming up. I know the Treasurer, the Assistant Treasurer, the finance minister and the Parliamentary Secretary to the Minister for Finance have been doing a lot of work on making sure tax evasion, in the way that it was mentioned in the amendment, is very much a priority of this government. As I am sure the learned people on the other side know, any action on global tax evasion needs a global solution. A global solution means the G20 summit is going to be a wonderful opportunity for us to get to the nitty-gritty of those types of things and to come up with global solutions so we can stop and limit tax evasion as best we can. I agree with some of the things the member for Griffith just said. What she is saying is right—governments do want multinationals to pay the tax that they should pay. When they are shifting money around because of different tax scales, and doing that with transfer of pricing or whatever means they use, that is not okay.

But let us come back to this tax agreement bill. Not only will it increase the trade investment between the two countries; it will also help to limit tax evasion, so this tax agreement is at least acting on that in this bilateral agreement. As previously said, this bill amends the International Tax Agreements Act 1953. A revised treaty was signed in Sydney last July and, once enforced, it will replace the existing Swiss treaty which was signed in 1980. The revised treaty will update the existing bilateral tax arrangements between Australia and Switzerland to align them with current Australian and international tax policy settings. As I have said, one of the main reasons we have these agreements is to encourage trade and investment, which will further enhance economic relations between Australia and Switzerland.

The revised treaty is expected to reduce taxation barriers to bilateral trade and investment, primarily by reducing source country taxes on cross-border payments of dividends, interest and royalties. In this regard, the revised treaty will fulfil Australia's most favoured nation obligation contained in its existing tax treaty with Switzerland to reduce its withholding tax limits on such income paid to Swiss residents. The revised treaty will also benefit the bilateral economic relationship in other areas, and there are many examples—I will just go through some of them.

The revised tax treaty will strengthen both countries' ability to tax profits from things like construction activities, immovable property and business profit derived through trusts—which is another area where people can evade tax. So this is going to strengthen our ability to get taxes from those types of sources. It will help remove double taxation of transactions between associated entities, again while maintaining the ability of both countries to enforce their transfer pricing laws. Again, it is going to the issue of tax evasion. It prevents a double taxation of fringe benefits, prevents tax discriminations against Australian and Swiss nationals, provides taxpayers with the option of referring unresolved tax disputes to independent arbitration and clarifies the Swiss tax treatment of income earned by temporary residents of Australia. Again, what this type of agreement does is to create certainty. When people are operating on an international level, the one thing they want is to be very clear about the rules and regulations they are operating under. This is going to make the rules and regulations clearer, and everyone will be very clear about what they are supposed to do and how they will be treated.

It will also enhance the tax system by authorising for the first time—given the amendment, this is interesting—the exchange of taxpayer information to help address tax evasion. We are trying not only to increase trade and investment but also to address tax evasion. In this regard the Swiss treaty is consistent with ongoing international efforts, supported by the G20, to improve tax transparency—and we will hopefully see a lot more of that later this year in Brisbane. The revised treaty will establish a legal framework under which the Commissioner of Taxation will be able to seek taxpayer information from the Swiss revenue authorities for tax compliance purposes, including information held by Swiss banks. This will help to enhance the integrity of Australia's tax system, which is good news for us all.

The revised treaty will enter into force following the last notification that both countries have completed the domestic requirements, which, in the case of Australia, includes enactment of this bill. Once in force, the Swiss treaty will take effect in Australia in four stages, as per the dates set out in article 27 of the treaty.

Finally, this bill will also amend the International Tax Agreements Act 1953 to clarify the meaning of the term 'immovable property' for the purposes of both the revised treaty and any further Australian treaties that also use that term. This will align the term 'immovable property' with Australian domestic law and provide for consistent treatment of incoming gains derived from such property across Australia's tax treaty network.

Once in force, the Swiss treaty takes effect in Australia in four stages: with respect to fringe benefits tax, on fringe benefits provided on or after 1 April next following entry into force; with respect to withholding tax and income derived by residents of Switzerland, on income derived on or after 1 January next following entry into force; with respect to other Australian tax on income, profits or gains of any income derived in the income year beginning 1 July next following entry into force; and with respect to the exchange of information that relates to taxation or business years in course on, or beginning on or after, 1 January next following entry into force.

This bill is going to be a good thing between Australia and Switzerland. This is going to increase trade and investment between the two countries. It is going to provide greater certainty. The rules are going to be much clearer. Importantly, given the amendment that was moved by the shadow Assistant Treasurer, it is clamping down and making it easier for both countries to come down on those entities that are trying to evade tax. I commend this bill.