Australian Government Finally Moving To Close Tax Loopholes, Even The Australia Tax

Both the current Coalition and previous Labor Governments have long been looking to close tax loopholes that have seen big multi-nationals able to shift profit offshore in order to allegedly avoid paying tax in the Australian market. After a concerted effort by both sides of politics, those loopholes are slowly being closed according to Treasurer Joe Hockey.

Image: Getty

Speaking in a Ministerial Statement delivered to the House Of Representatives this morning, Hockey said that the government is working to improve Australia's tax system to ensure that profits that are earned here are taxed here, and not shifted overseas.

The Treasurer recognised the work of the previous government, and noted that action was now being taken in the form of legislation now before the Parliament.

The second tranche of the Coalition Government's plan for tax action is to tell the Australian Taxation Office (ATO) to get tougher on big multi-nationals accused of dodging their tax burden in this country. The Treasurer has also asked the ATO to look into the Australia Tax:

The Australian Taxation Office has extensive investigative powers and can take appropriate measures to ensure that multinational companies operating in Australia are not just complying with our laws but also paying their fair share.
I have asked the Commissioner of Taxation to double his efforts in this area by undertaking more extensive enquiries and audits of multinational companies considered a risk to Australian tax collections.
Australian consumers often pay much higher prices compared to United States consumers for identical IT hardware, software, music, games, sporting equipment and fashion, to mention a few. Members would also be aware of media reports detailing some companies selling these products pay little tax in Australia despite their products selling for much higher prices in Australia than elsewhere around the world.
Part of the Commissioner’s efforts will be examining whether these are location specific profits being generated and then shifted out of Australia. In such cases, Australia’s transfer pricing rules could apply to determine whether the appropriate amount of profit from Australian sales was booked to Australian operations. These rules, of course, are based on the OECD’s internationally-recognised transfer pricing rules.

Shadow Treasurer Chris Bowen used the Ministerial Statement as an opportunity to once again hound the government for a response to the IT Pricing Inquiry, which has already dealt with these issues.

The campaign to close tax loopholes and crack down on so-called transfer pricing in the Australian market, especially amongst big tech multi-nationals like Apple and Google, has been discussed in Parliament as far back as February 2013.

Since then, the Treasurer vowed to work with the G20 nations to simultaneously close these tax loopholes around the world.

The moves to close tax loopholes in Australia through legislation and a tougher tax office come a day after a story was published by Fairfax detailing how the ATO is "losing" the war against potential tax dodging multi-nationals, because of deep cuts to staff operations.

Read the Treasurer's full address here

Trending Stories Right Now