Treasurer Joe Hockey has broken a pledge to impose tough new tax avoidance rules on multinational companies that shift billions of dollars in profits between Australia and their international subsidiaries. The practice of global corporations loading up subsidiaries with debt and then claiming relief from the Australian tax man on the interest paid gives an unfair competitive advantage over local rivals, Treasury said in 2013. When some taxpayers avoid or minimise their tax in a sustained way, the tax burden eventually falls more heavily on other taxpayers, a Treasury issues paper found at the time. The Gillard government announced the abolition of deductions under section 25-90 of the Income Tax Assessment Act 1997 as part of a package to combat tax minimisation by global corporations, at a projected benefit to the taxpayer of $600 million. In November last year, Mr Hockey and the then Assistant Treasurer, Arthur Sinodinos, announced they would not legislate Labors package, saying it would impose unreasonable compliance costs on Australian companies with subsidiaries offshore. The current loophole favours the largest Australian companies such as BHP Billiton and Rio Tinto, currently under pressure from diving commodity prices. Instead, Mr Hockey – who has trumpeted a global tax crackdown on multinationals through the G20 process – and Mr Sinodinos pledged in November to introduce a targeted anti‑avoidance provision after detailed consultation with stakeholders. But in Mondays Mid-Year Economic and Fiscal Outlook, a single line on page 117 revealed: The government will not proceed with a targeted anti-avoidance provision to address certain conduit arrangements involving foreign multinational enterprises, first announced in the 2013-14 MYEFO.
Posted on: Tue, 16 Dec 2014 22:02:12 +0000
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