17 December 2015
Transcript - #2015079, 2015

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Press conference, Melbourne

SUBJECTS: Tax transparency

MINISTER O’DWYER:

The Australian taxpayer needs to be confident that multinational companies that operate in Australia pay tax in Australia, if they are making money in Australia. Today's report by the Australian Taxation Office includes details of around 1,500 large companies. The information includes the company’s name and ABN, its total income, taxable income, and tax payable.  I want to stress that over half of these 1,500 companies have been subject to an Australian Taxation Office review and or audit over the past three years.

The Australian Taxation Office is working hard all the time to make sure that the Government and the public can be absolutely confident in our taxation system, and that everyone is paying their fair share of tax.

Irrespective of the publication of the Australian Taxation Office data today I want to make the point that the Australian Taxation Office has always had the powers to be able to interrogate multinational companies on the tax that they need to pay. They have been able to always make those assessments and they have always been able to ensure that they pay the right amount of tax.

In fact in 2015 more than in any other year, the Australian Taxation Office has had increased powers and resources to do their job to make sure that everyone is paying their fair share of tax.

The Opposition's so called multinational tax policy is really seeking to change the thin capitalisation rules. This change, though, would deter investment and it would deter jobs.

It is at odds with a recent finding of the Board of Taxation review which actually supported the retention of this test, and it is despite the fact that the Government has already made changes to the thin capitalisation rules, changes that will work unlike the changes that have been proposed by Opposition.

The Government has already made significant changes when it comes to increasing the powers of the Australian Taxation Office and it has done this by passing legislation through the Senate in the last Parliamentary sitting week that makes sure that multinational companies that try and avoid tax can’t do so.

In fact, we have led the efforts on the Base Erosion and Profit Shifting through Australia’s presidency of the G20 and in partnership with the OECD.  This legislation will make sure that those companies that book revenues offshore pay tax in Australia.

We have doubled the penalties for those companies that are transfer pricing or profit shifting, we have introduced country-by-country reporting to make sure that the Australian Taxation Office can assess the transfer pricing risk, and we have strengthened the anti-avoidance measures in Part 4A of the Tax Act.  We have also made sure that the Government has acted on behalf of tax practices pursued rules around tax treaties abuses and asked the Board of Taxation to consult on the OECD recommendations regarding hybrid mismatches.

Multinational tax avoidance legislation is critically important. The Government has acted on this and the Government was opposed by the Labor party that has been very big on talk but very short on action. It is surprising that those people who advocate increased tax transparency don’t support real action that increases the powers of the Australian Taxation Office and increases the penalties that will apply to people who are doing the wrong thing and the Government, on this particular issue, can provide confidence to the Australian people that we’re acting on those people who are seeking to harm the Australian community by abusing the taxation structures and the taxation system. Are there any questions?

REPORTER:

Is it ok that two thirds of Australian companies pay less than the corporate tax rate?

MINISTER O’DWYER:

Well let me stress that all of these companies, all of these companies, are paying their fair share of tax and all of these companies are subject to our Australian taxation laws and are strengthened Australian taxation laws. I want to stress that over half of these companies have been audited by the Australian Taxation Office within the last three years. The Australian Taxation Office have got around about $127 million in order to go about their business in making sure that people are not engaging in particularly restructures that make it easier for multinational tax companies to avoid paying their fair share and appropriate and right amount of tax. We also have Australian Taxation Office officials proactively working within these companies to make sure that they’re paying their fair share of tax. In fact for about 1,000 companies we’ve increased the number of Australian taxation officers that are in these companies from 30 to 80 and already the Government has been able to see the fruits of those efforts with more than $400 million in liabilities raised.

REPORTER:

But there are some 38 per cent of corporate entities aren’t paying income tax at all. Are you surprised by that number?

MINISTER O’DWYER:

  Well of course there are some reasons why it would be that some companies are not paying tax at all – particularly circumstances where there might be losses – and indeed it is for those companies to explain exactly why it is that they have not paid tax in any particular year. But as I said, just because they don’t pay tax doesn’t mean that they are avoiding tax and as I said before the Australian Taxation Office not only has the power but has strengthened power because of the legislation passed by the Government to increase the penalties to be able to get information and to be able to ensure that those companies pay their fair share of tax so that the burden is not falling to small businesses or family enterprises to shoulder the burden of company tax.

REPORTER:

Yeah but you know, I mean, you said they might have their reasons but particularly given the problem with bracket creep for personal income tax do you think that the average Australian would think that’s fair, that it would pass the pub test?

MINISTER O’DWYER:

Well as you know, the Government is actually looking at Australia’s taxation system to make sure it’s fit for purpose. We don’t think it’s fair that the average income earner is paying the second highest tax bracket rate and that they’re doing that as of next year. The average income earner shouldn’t be in the second highest tax bracket. We don’t think that is fair, but we also think it is critically important that multinational tax – multinational companies are paying their fair share of tax and that’s why the Government has been very quick to lead this debate through the G20, through our presidency of the G20, in swiftly ensuring that we bring forward legislation and we have it passed so that we are ensuring that multinational companies are not avoiding their fair share of tax. It’s a real pity that the Labor Party were big on talk but very short on action and that they didn’t support the Government in making those changes that increased the powers that the Australian Taxation Office has and increased the penalties to those companies that do the wrong thing.

REPORTER:

What’s the point of this report given it’s not naming and shaming businesses? Why bring out this report?

MINISTER O’DWYER:

As I said, the Australian Taxation Office has released information about the number of companies, and released partial information regarding their taxation and as I said, the Australian people can be absolutely confident that the Australian Taxation Office has all the powers that they need to ensure that they are getting the information about the structuring and arrangements in these multinational companies and making sure that they’re paying their fair share of tax. We have strengthened the powers of the Australian Taxation Office; we have doubled the penalties for those people that do the wrong thing. We have increased and strengthened the provisions of Part 4A of the Tax Act and that’s in addition to some of the changes we have already made in relation to thin capitalisation rules and ensuring that people are paying their fair share of tax that they would be paying in this country.

REPORTER:

You’ve made all these measures, what changes have taken place? Have you got increased revenue because of these changes you’ve made?

MINISTER O’DWYER:

I’ve already mentioned that we’ve seen increased liabilities already of $400 million as a result of more than 500 audits that have been made in relation to different companies. We have also been doing other things in relation to tax and making sure that people are paying their fair share of tax. The Government has announced this year the Serious Financial Crimes Taskforce. The Serious Financial Crimes Taskforce is led by the Australian Taxation Office and eight agencies. It builds off the very significant work by Project Wickenby. Project Wickenby of course led to 46 convictions of those people who have done the wrong thing and it also led to around about $1 billion – being raised in revenue. So the Government is absolutely committed to making sure that those people who are doing the wrong thing are brought to task and the full force of the law is applied to them, and that the Australian population can have confidence in our Australian taxation system.

REPORTER:

Take some companies like say Qantas or ExxonMobil – would you like to see them pay more tax? More income tax?

MINISTER O’DWYER:

I’m not going to make comments about particular companies. I think the important point to note here is that the Australian Taxation Office has all the powers that they need, particularly as a result of the Government’s legislation with the Multinational Company Tax Avoidance Legislation that was passed in the Senate in the final sitting week. Unfortunately that legislation was opposed by the Labor Party but through a number of crossbenchers and the Greens, we were able to get that legislation passed so that we could increase penalties on those people doing the wrong thing and make sure that we could get the information that is required so that those people who are engaged in transfer pricing and profit shifting couldn’t do it with ease and we could crack down on them and make sure they pay the right amount of tax.

REPORTER:

You said you’re comfortable with the powers that the ATO have, and they’ve got what they need and punters should be satisfied with that. How do you explain to people that their income tax is going up because of bracket creep? And yet there are a lot of companies, 38 per cent of them, that are not paying income tax. How do you explain that to people?

MINISTER O’DWYER:

People need to pay their fair share of tax and the Government is actually looking at our taxation system to make sure it’s fit for purpose. That doesn’t mean that the Government, like the Labor Party, simply want to increase taxes. That’s Labor’s solution. Labor’s solution is to simply increase taxes. When we look at our taxation system, we’re saying we want to reduce the overall tax burden, both for companies and also for individuals. We think it’s wrong that the average income earner will be in the second highest tax bracket as of next year. We think it’s wrong that small business is paying a really high amount of tax, company tax, in comparison with small businesses in other parts of the world. That’s why the Government has already taken action in this regard. We’ve already reduced the company tax rate for small business by 1.5 per cent, we’ve given a five per cent discount to those small businesses that are unincorporated entities. We’ve also provided additional measures for them such as the $20,000 instant asset write off to make sure that they can reinvest in their business. We’ve got to make sure our taxation system is fit for purpose. We’ve got to make sure that it will unlock growth and potential in our economy and that is exactly what the Government is focused on. Not on rhetoric, we’re big on action.

Thank you.