Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

Thank you, Acting Deputy Speaker Vasta; just to get the order back on track. It is with pleasure I stand to speak on the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015.

Dr Chalmers interjecting—

It is good to see my good friend the member for Rankin, as usual, contributing to the debate. On 4 June 2015, the government released exposure draft legislation for comment that would exclude Australian private owned companies from the ATO's obligation to publicly disclose certain taxpayer information. This legislation was originally introduced by those opposite and was opposed by the coalition when we were in opposition. It requires the ATO, from later this year, to publicly disclose information about all companies with a total income of $100 million or more. This legislation ignores the key concerns of key stakeholders and will have damaging commercial and reputational ramifications for the individuals and companies involved.

The previous Labor government's legislation would not have resulted in the ATO raising any additional revenue, as taxpayers must already provide the ATO with all the information relevant to making an assessment of their tax liability. If unamended, the current legislation, potentially presents significant risks to Australians by undermining taxpayer confidentiality and by exposing companies to greater commercial and security risk. Under the previous government's laws, towards the end of this year the ATO would have had to release the company's name and ABN, its total income, its taxable income and its tax payable. All this information published would be sourced from the entity's tax returns. One of the great things about our tax system for a private company or a private individual is the notion of confidentiality. This is central to the government's concerns about the existing legislation and one of the reasons we opposed it when we were in opposition.

This measure has the potential to undermine the confidentiality of taxpayer information, a fundamental tenant of Australia's tax system. As noted by the coalition in the Senate Economics Committee dissenting report:

Confidentiality of taxpayer information is fundamental to the administration of taxation law. Confidentiality is protected because ensuring the privacy of sensitive information, including commercial information, goes to public confidence in the administration of taxation law.

This is an issue that several Labor members have highlighted previously yet failed to apply in these particular circumstances. The honourable Leader of the Opposition in 2010 said:

The inconsistencies and ambiguities associated with the existing law have the potential to undermine its primary purpose—that is, to provide clear protection for taxpayer information. The taxation law has long recognised that such protection is fundamental to ensuring that taxpayers maintain their confidence in the operation of the tax system.

The importance of taxpayer confidentiality is reinforced by the OECD in Keeping it safe: the OECD guide on the protection of confidentiality of information exchanged for tax purposes. It says:

… taxpayers need to have confidence that the often sensitive financial information is not disclosed inappropriately …

Secondly, there is the issue of commercial risk. It has the potential to provide competitors, suppliers and upstream purchasers of goods or services of private companies with sensitive commercial information. As noted by the Commissioner of Taxation, Chris Jordan:

I think if you look at the history of the matter, it was really for multinational companies operating here, disclosing quite low revenue …

All of us in this place would support the notion that it is important that companies and individuals across our country pay the appropriate levels of tax.

There is also an issue around    personal and reputational safety concerns. During Labor's consultations in 2013, business stakeholders expressed the concern that the measure posed a risk to compliant taxpayers being unfairly targeted by activists and having their reputation tarnished. As the chairman and CEO of Godfrey Hirst Australia, Australia's largest carpet manufacturer, noted:

By publishing extremely limited information selected specifically to put the targeted taxpayers in the worst possible light, it invites (incites) public action against the target taxpayers and potentially those associated with them. There are national and international examples of such actions against companies involving physical damage, reputational damage and commercial boycotts.

A similar disclosure regime was also abandoned in Japan in 2005 after a recommendation from the Japanese Tax Advisory Commission, which found that there were 'various reports of the disclosure being a factor in causing crimes and harassment'.

Another issue is the effectiveness of the law. Around this, the government also has several concerns regarding the incomplete nature of the information. It ignores the fact that personal income tax is payable on the company's after-tax profits by its shareholders, who are often on the top marginal rate of 49 per cent. The information published is incomplete and misleading as it omits any reference to other taxes that private companies must pay, including the array of state taxes, fees and charges—from payroll tax to stamp duties and land tax, to local rates and charges, as well as federal fuel tax and levies. The publication of this information to a wider audience will not in any way enhance the ability of Australia's taxation authorities to collect additional revenue.

The 2015-16 budget also looked at the issue of multinational tax avoidance and produced a package including a range of domestic elements, including doubling penalties for large companies engaging in tax avoidance and profit shifting. The government is also actioning four key 2014 G20/OECD base erosion and profit shifting recommendations, including: implementing the OECD's country-by-country reporting from 1 January 2016, requiring multinational companies to report the amount of revenue, profit, income tax and economic activity annually for each jurisdiction in which they do business. Also, we are looking at incorporating the OECD's treaty abuse rules into our treaty practice. We are asking the Board of Taxation to consult on the implementation of the OECD's antihybrid rules. Importantly, we are commencing the exchange of information on preferential tax rulings through the ATO.

Country-by-country reporting to tax administrations will require large multinationals to report annually for each jurisdiction in which they do business the amount of revenue, profit, income tax and economic activity. For the first time, tax administrations will get a global picture of multinationals' operations. This is a significant step in improving transparency for tax administrations.

Every company that operates in Australia, whether private, public or multinational, is expected to meet their tax obligations. I am proud of our government's action on tax transparency. This government is committed to combatting tax avoidance, through the implementation of well-considered and balanced measures.

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