IT’S one of the sweetest perks in the high-stakes tax minimisation game, and today Labor is promising to end it.
The pledge is contained in a raft of measures Labor says would add $4.8 billion to tax revenue over 10 years by targeting the practices of multinationals and wealthy individuals.
One of the practices it is taking aim at involves companies and individuals who use overseas tax havens.
They reduce their Australian payments by using the off-shore facilities, but that’s not the only saving they make.
They can claim an Australian tax deduction for the expense in going overseas to inspect their accounts.
Labor has pledged to scrap the deduction to ensure multinationals pay their own way.
The measures the Opposition is announcing today include big cash rewards for those who dob in rorters and a halt to “citizenship shopping” to live here but pay a lower tax rate elsewhere.
It also says that in government it would issue detailed public reports of how much tax is paid globally by big companies, in a bid to embarrass those which manage to pay little anywhere.
“Working Australians pay their taxes – it’s only fair that multinationals pay their fair share too,” Labor will argue.
“Labor will also close a loophole that allows companies to deduct bad debt from related party financing arrangements.”
The tax proposals released today include:
• An increase in penalties for individuals and entities promoting tax evasion and avoidance;
• A crackdown on citizenship shopping by requiring all individual Australian taxpayers to notify and declare to the Australian Taxation Office if they have residency or citizenship of any other jurisdiction, and the name of that jurisdiction;
• The introduction of public reporting of country-by-country reports, ensuring the release of high-level tax information about where and how much tax was paid by large corporations;
• Providing protection for whistleblowers who report on entities evading tax to the Australian Taxation Office and, where whistleblowers’ information results in more tax being paid, allow them to collect a share of the tax penalty (a reward of up to $250,000).
• The introduction of a publicly accessible registry of the beneficial ownership of Australian listed companies and trusts, allowing the public to find out who really owns our firms;
• The introduction of mandatory shareholder reporting of tax haven exposure, requiring companies to disclose to shareholders as a ‘Material Tax Risk’ if the company is doing business in a tax haven;
• The appointment of a community sector representative to the Board of Taxation to ensure community sector voices are heard in tax design and review processes.
Bill Shorten appeared on Channel 9 this morning to spruik the changes.
“You’ve promised to crack down on multinational tax loopholes for companies and individuals. Easier said than done, isn’t it?” host Karl Stefanovic asked.
“It is certainly easier said than done, but we have got to do it. I don’t think most Australians waking up this morning realise that some corporations and some very wealthy individuals are dodging about $5 billion in tax over the next 10 years by basically going to tax havens,” Mr Shorten said.
“There are some Australians who are able to claim citizenship or residency of another country, a low tax jurisdiction, and even though they earn money here, they shuffle money around and pay practically no tax in these tax havens. They even are able to fly over and inspect their tax accounts and claim that back off the Australian taxpayer.”
He said there is “only one party you can trust to clean it up”.
“The other thing we are going to do is reward whistleblowers. If you are doing something dodgy with your tax overseas and a whistleblower comes forward, the whistleblower is going to share some of the reward.
“What annoys me is there is one rule for some and another rule for most other people. What we want to do is make sure we have a fair tax system which covers everyone and treats everyone the same.”
Stefanovic suggested Mr Shorten was taking a risk by announcing the new policy.
“The reality is you don’t actually need to do anything. You don’t need to be on our show, you don’t need to say anything, you just need to be quiet and you will win the next election,” he said.
“The chaos has to end. What I’m not going to do is do that by doing nothing. We need to demonstrate to the Australian people that the system can work, that at least one of the major parties is working on policies for the future,” Mr Shorten replied.
“You don’t want to run the risk of bringing yourself undone. You are in the box seat, you’ve basically won the race,” Stefanovic pressed.
“No, it’s still got a long way to go. That would be arrogant to just assume the election is over,” Mr Shorten said.
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