Scott Morrison (Cook, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I move:

That the amendments be agreed to.

The government supports the Senate amendments to the Tax Laws Amendment (Implementation of the Common Reporting Standard) Bill 2015. The bill is part of the government's commitment to ensure that Australia is at the forefront of the fight against tax avoidance, and avoidance both by individuals and by multinationals, as we stressed again at the meeting of the G20 on the weekend where Australia was, in fact, the leading voice when it came to what was being done to crack down on multinational tax avoidance. We received particular commendation from the OECD for the good work that we are doing in that area. This bill is part of the government's commitment to do this and the Common Reporting Standard is an international framework developed by the OECD, working with non-OECD G20 countries to tackle and deter cross-border tax evasion.

The government's bill will help ensure that all taxpayers pay their fair share of tax by requiring financial institutions to provide tax authorities with information on individuals with offshore accounts, regardless of where their financial accounts are located. The Common Reporting Standard primarily addresses tax evasion by individuals who are illegally concealing offshore investment income. The timetable in the bill for exchanging information aligns with the OECD's recommendations for jurisdictions seeking to implement the CRS as fast as can be expected and in line with other countries that are adopting the CRS.

Collaborating with other countries is essential because it is the information that they exchange with Australia which contributes to catching offshore tax evaders. The CRS complements the OECD's country-by-country report, which relates to companies and hence combats multinational tax avoidance. Australia is one of the first countries to commit to implementing country-by-country reporting with the legislation that was passed in this place last December that, regretfully, was not supported by the opposition.

The government supports the amendments passed by the Senate to ensure that provisions operate as intended. These changes correct a technical anomaly in the original bill so that statements relating to the pre-existing individual accounts that are high-value accounts as of 30 June 2017 must be reported to the tax commissioner by 31 July 2018. The changes ensure that this timing is required regardless of whether the reporting financial institution conducts its due diligence procedures for these accounts between 1 July 2017 to 31 December 2017 or 1 January 2018 to 31 July 2018. The timing provisions in the bill have been carefully crafted to ensure that we align with the OECD guidance on collection, review and exchange of information. The government also supports the proposed amendments to require the Commissioner of Taxation to publish an annual report providing aggregated de-identified data on financial holdings of foreign nationals in Australia.

Indeed, the government measure is a key initiative that sees Australia join a coalition of over 96 jurisdictions that have committed to implement the Common Reporting Standard. The standard will build on the ATO's current information exchanges. In 2014-15 total tax liabilities raised as a direct result of exchange of information with Australia's treaty partners was approximately $255 million. People who do not comply with their Australian tax obligations undermine the integrity of the tax system. The standard will improve the integrity of the tax system by engendering confidence in the community that taxes are not being evaded. The standard will also encourage greater voluntary compliance as taxpayers will be now safe in the knowledge that it has just got a whole lot harder to hide funds offshore without the tax office tracking you down.

This legislation, along with the combating multinational tax avoidance legislation and implementing a GST on digital goods measure, shows the resolve of the government to ensure that multinational companies pay their fair share of tax on profit earned in Australia. These are measures that Labor did not pursue whilst in government and instead decided to do nothing. In addition, the government has also made a condition of foreign investment in this country full compliance with our provisions in relation to multinational tax. This includes not engaging in base erosion, profit shifting and transfer pricing that would seek to undermine the revenue base in Australia.

We commend these amendments and we look forward to their support. But we also note that those opposite have not been fellow travellers with the government on multinational tax avoidance. They have frustrated our legislation at every turn and opposed this government's efforts, which are consistent with international practice, to ensure that multinationals pay their fair share of tax.

Andrew Leigh (Fraser, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The details of multinational tax can sometimes be complicated but the principles are straightforward: all firms should comply with the law and pay their fair share of tax. Labor's history on multinational tax is a proud one. In 2013, former Treasurer Swan and Assistant Treasurer Bradbury brought to this place a $4 billion multinational tax package and improvements in tax transparency. Both measures were opposed at the time by the coalition. Upon winning office, the coalition failed to legislate part of that plan. It opposed transparency and, in a dirty deal with the Greens, on the last sitting day of last year, wound back tax transparency.

At every turn, it has been Labor that has led the debate on tax transparency. In the first half of this parliamentary term we put forward a plan that deals with debt deductions and hybrid mismatches and provides the tax office with the resources it needs to deal with multinational tax avoidance. I want to commend Senators Ketter and Dastyari for their hard work in the other place on highlighting the importance of this issue.

The bill that is before the House on the Common Reporting Standard is a bill on which the former Treasurer, Joe Hockey, had to be dragged kicking and screaming into signing Australia up. This bill contains important Labor amendments agreed to by the government last week. Labor amended the bill to bring forward the reporting date so that the Australian Taxation Office can begin exchanging company information sooner—not leaving it until the end of 2019, as the government would have wished. Labor also successfully amended the bill in the Senate to ensure that the tax office publishes an aggregated report of financial Australian holdings by foreign residents from each individual tax jurisdiction. That better ensures public transparency about Australia's place in global money flows. Tax transparency groups have called for these amendments, and Labor was pleased to be able to champion them in the other place.

This morning I moved in this place a private member's bill that will increase the penalties on multinationals for doing the wrong thing—not $5,400, a lower penalty than you would pay for pushing the line in a Gold Coast arts venue or streaking across the SCG, but a more significant penalty of $270,000, which recognises that failing to lodge country-by-country accounts could seriously undermine the integrity of our tax system. I hope those opposite will support my private member's bill as, in the other place, they supported Labor's changes to the Common Reporting Standard.

The issue of multinational profit shifting is not an issue on which Australia is at the vanguard. There are over 40 countries that will begin reporting before Australia does—from the UK to South Africa and from Iceland to India. Australia is not lagging behind those countries because of factors outside our control; we are a laggard because of the choices of the Abbott-Turnbull government. When the group of early-adopter countries laid out their timetable for exchanging information, they called it 'ambitious but realistic'. Labor believes that is the right timetable. But the former Treasurer and the current Treasurer are happy to see Australia drag its heals on the Common Reporting Standard. They would have had us reporting on a timetable with the Bahamas, Russia and the United Emirates. Labor's amendments to this bill have made it a better bill and have ensure that we can report on the Common Reporting Standard appropriate information on an appropriate schedule. Labor will continue to fight for better multinational tax laws.

We do not believe the dirty deal done between the Liberals and the Greens to take two-thirds of large private firms out of the tax transparency net was a good deal for Australians. When we saw the release of the information on public companies last December, Australians learned that one in four big public companies paid no tax. But they will not learn those same details for big private companies, because two-thirds of them have been exempted from transparency laws by the deal done between the Liberals and the Greens. With inequality at a 75-year high, and with a community outcry on multinational tax avoidance, we believe the right thing to do is move quickly on the Common Reporting Standard to improve transparency. We urge the government, as they backed Labor's amendments to this bill, to also support Labor's multinational tax plan. (Time expired)

Question agreed to.