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Monday, 19 October 2015
Page: 11616


Mr WILLIAMS (Hindmarsh) (18:33): Before the member for Wakefield disappears, I look forward to the ongoing dialogue he has with the officials of Gibraltar. I will be most interested in how that relationship goes and I am sure they will appreciate his promotion of their fine part of the world.

We are here today to discuss and debate the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. We are committed to making sure that multinationals pay their fair share of tax. We are committed to ensuring Australia has a sustainable taxation system in particular. We already have some of the strongest integrity rules in the world but we know that some multinationals are artificially structuring their operations to avoid Australian tax by booking revenue from Australian sales offshore. We have heard plenty of examples of this over the last year or so through the media and other forums. The coalition government is continually on the search for ways to ensure that Australian individuals and companies pay their fair share of tax, probably even before the late Kerry Packer went to a parliamentary hearing and made his famous statement that Australian individuals and companies have been trying and will continue to try and minimise their tax.

This year, the ATO has stated that there are over 4,600 high-worth individuals. The ATO is again targeting those who try and cheat the system, as they do, and the government is very happy to support the tax office in this. The ATO is also chasing explanations from people who have had large one-off or unusual transactions or a history of aggressive tax planning and lifestyles not supported by after-tax income. The tax and revenue committee talks to the ATO about these matters and know it is committed to pursuing these with all its resources.

Speaking of something done in recent years, there is also Project Wickenby, a cross-agency task force that plays a role in the government's fight against tax evasion and avoidance. It was established in 2006 by the Howard government to protect the integrity of Australia's financial and regulatory systems. The task force consists of eight federal agencies and became necessary because of the scale of the tax avoidance. As an example of the success of the government and the ATO, just last financial year there were some 33 convictions for tax crime and, importantly, some $10 million was recovered. The most significant of those was a Queenslander sentenced to seven years jail with a repatriation order of over $1 million. So the government is serious about this. We have taken some action, had some success and will continue to have more success as time goes on.

As I mentioned before, there has been a great deal of press about multinational corporations minimising their tax. Companies like Apple and Ikea have been in the spotlight among others. This is not a problem unique to Australia. Governments around the world that are challenged by the new economy, the digital economy, international operations, the use of the internet and intellectual property laws, we find that they can restructure their corporate and financial activities. Great Britain are onto this as well; they have come up with a diverted profits tax to counteract contrived arrangements used by large groups—typically, multinational enterprises—that had resulted in the erosion of their tax base in the United Kingdom. With this bill, the government is taking another step to ensure that multinationals that have activity in Australia pay tax in Australia, and we understand from the tax office that this amount will be hundreds of millions of dollars, so it is not insignificant.

The multinational anti-avoidance law will allow the Commissioner of Taxation to treat large multinationals as though they have a taxable presence in Australia and are subject to Australian tax. The government is determined to maintain the integrity of the system, and we have led the fight in this. This is not something we have just looked at over the last few months. We did this last year at the G20 where Australia was President. We have led the global response, and other countries have responded, quite rightly. Last year the government strengthened the already robust defences against tax avoidance by tightening our thin capitalisation rules, limiting the scope for multinationals to claim excessive debt deductions. This measure is only one part of a package.

This same bill will also implement country-by-country reporting, which was a recommendation of the OECD and the G20, and increase penalties for those engaging in tax avoidance and profit-shifting. If we have a look at the resources that the government is providing to the ATO, they are considerable—around $90 million to the ATO over three years. I also know that they have targeted at least 30 multinationals, and I think that number has increased just recently. To date, the program has raised over $400 million—a considerable amount—in tax liabilities and is estimated to raise $1.1 billion in total.

So there are significant things that are being undertaken. We will work closely with academics, tax professionals and the business community in ensuring the OECD's profit-shifting agenda is carried out as well. It is one of these things on which international collaboration is important in getting a result. That is because, as I said before, every country faces these problems, so we are not alone in this area. It is consistent with work being progressed by the OECD, importantly, on the Action Plan on Base Erosion and Profit Shifting that will be finalised later this year, and the government will consider what steps need to be taken to strengthen Australian laws at this time. The OECD has expressly asked countries to look at their domestic laws; we are doing so, and we are strengthening our anti-avoidance laws.

In closing, this law will affect entities with annual global revenue of $1 billion or more, so it is very targeted. The G20 countries have all agreed that the country-by-country report will only be shared between tax administrators. So we are taking a lead internationally and taking correct action in Australia so that multinationals pay their fair share of tax. So the federal government is taking action. The ATO is delivering and we look forward to results to help increase the sustainability of our tax system.