Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The International Tax Agreements Amendment Bill (No. 1) 2006 is essentially driven by the need for changes to Australian tax law to facilitate the pursuit of nonresidents living in Australia who have foreign tax liabilities. The government is seeking to aggressively align the Australian international taxation system with the OECD model tax convention. Article 27 of this convention provides for mutual assistance in collection of tax debts. Under many of Australia’s tax treaties there are reciprocal obligations to take measures to pursue persons who have tax debts in one of those jurisdictions. This usually requires a change in the enforcement and investigation powers in each hosted jurisdiction.

There are a number of Australian residents with foreign tax liabilities. The current statute law does not permit the commissioner to seek to retrieve these funds directly. In order to pursue the matter, the commissioner would need to take common-law action on a case-by-case basis. Schedule 1 allows the commissioner to create a register of taxpayers with foreign country tax debts and apply the tax collection conditions operative under Australian tax statutes. Provisions are also included to allow conversion of payments in foreign currency from foreign governments to repay Australian tax debts under the reciprocal arrangements of the OECD tax treaty system.

Schedule 2 gives the commission information-gathering power for overseas tax debts. This follows from measures in schedule 1 and permits exchange of information between nations otherwise captured by tax secrecy laws. The schedule on the protocol with New Zealand aligns the Australia-New Zealand tax protocol with the OECD model tax treaty, clarifies where information can be exchanged and modifies the agreement to provide for enforcement action by officials on behalf of the other country. There is also a most favoured nation clause, which ensures Australia benefits from the reduction New Zealand makes under treaties with other nations.

Labor supports these measures, as it is generally committed to the adoption of the OECD model tax treaty. In particular, there is no reason why Australian tax authorities should not cooperate with countries in the pursuit of tax debts if a satisfactory double tax treaty is in place. I am sure the minister will be very pleased with the brevity of my contribution to the debate.

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