Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

It is important to note that there will be no double taxation as a result of this measure, and in fairness I do not think the honourable member is intending to imply that, but people listening to this or reading this may take the implication that somebody may be paying tax in another jurisdiction and tax in Australia and therefore be disadvantaged by the lack of grandfathering in this measure. I need to be crystal clear that that is not the case. This measure is very clear that there will be credit in the Australian taxation system for any tax paid in a foreign jurisdiction.

The situation until this measure has been that these affected workers do not pay tax in Australia and therefore they would pay only the applicable marginal tax rate in the country in which they were working. In some cases that would be a tax rate broadly in line with the tax they would have paid in Australia. In other cases, in very low-tax jurisdictions—some jurisdictions in the Middle East spring to mind—they pay very little, if any, tax and therefore, if they now pay tax in Australia, of course they are going to be paying more tax in total as opposed to what they would have paid in the past. But, as for disadvantage, they will not be paying any more tax than they would have been paying under the Australian tax system. It is very clear in the measure that double taxation will be taken into account and there will be a credit for tax paid overseas, so in that respect the disadvantage that the honourable member mentioned refers to people paying the marginal rate of tax that they would be paying in the Australian system.

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