Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer outline the outcomes of the G20 Finance Ministers' meeting for the nation's finances and how will action taken by G20 countries ensure that companies pay their fair share of tax?

Joe Hockey (North Sydney, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Higgins for her question and recognise that she has had a lot of experience and involvement in Treasury over the years. The fact is that in the modern taxation system and the modern digital world it is unfortunately easy for some companies to establish their taxable income liability in other jurisdictions, particularly smaller jurisdictions. Because of the mobility of capital, even if Australia took action by itself we would not be able to prevent major corporations minimising their tax liability in Australia. So we have a multipronged attack. The starting point, arising out of the G20, is it is hugely important that the globe, including a number of small islands which have been known as tax havens over a long period of time, takes action. There is a deep resolve within the G20 under the presidency of Australia to reformat the global taxation system. The Commissioner of Taxation said in a press conference on Saturday morning that as a result of what we have done at the G20:

This is resetting the tax rules, the way that countries operate over the next 50 - 100 years.

Of course, as we know, the modern taxation laws were first developed after World War I by the League of Nations. There has not been any reformatting of global tax rules for a long period of time.

Australia has a multipronged approach. Firstly, we will implement whatever measures we can domestically to ensure that companies that are earn profits here pay tax here. That is hugely important as a starting principle. Secondly, we want to ensure that wherever people open bank accounts information is shared with the Australian Taxation Office. So if they open bank accounts in other countries around the world there is a common reporting standard to be applied. For Australian financial institutions—even though the big banks are able to move now, smaller banks, smaller players, are unable to move—from 1 January 2017 that will apply here. Thirdly, we are focusing on a 15-point base erosion plan delivered by the OECD. The final point is that we are implementing a tax inspectors without borders policy.

Finally, I would just quote the head of the OECD, Angel Gurria. He said:

Had it not been for the very serious political support that we have gotten from the G20 presidency of Australia, really, we would not have gotten here.

The fundamental point is that we want to catch the tax cheats and we are going to do everything we can to get them.