Katy Gallagher (ACT, Australian Labor Party) Share this | Hansard source

The Common Reporting Standard is a multilateral policy initiative led by the G20 and OECD. The Tax Laws Amendment (Implementation of the Common Reporting Standard) Bill embeds the provisions of the common reporting standard into Australian tax law. It will help with the exchange of financial account information between tax authorities such as the ATO in countries which are party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

The Common Reporting Standard allows global tax authorities to automatically exchange information about the contents of company and individual bank accounts held overseas. Until now, multinational companies and wealthy individuals have often been able to avoid paying tax in one country simply by sending their money offshore to another jurisdiction so that tax authorities cannot see it. Under this standard, sometimes referred to as the CRS, certain financial institutions in Australia will report information to the ATO about financial accounts held by foreign tax residents. To be clear, we are talking about Australian banks reporting information about the financial accounts of wealthy foreign nationals resident in Australia for tax purposes. Once this information is reported to the ATO, it is shared with foreign tax authorities.

Importantly, as other countries such as Singapore sign up to the Common Reporting Standard, their banks will be required to report the financial account information of wealthy Australians to their respective tax collectors, such as the Inland Revenue Authority of Singapore. Such information exchanges are an important mechanism for combating tax avoidance and have the potential to be a very effective new weapon in the arsenal to combat global tax avoidance. Under the Common Reporting Standard there will be far fewer places to hide. More than 90 countries will now exchange information about what is held in bank accounts in their jurisdictions, allowing authorities to more accurately assess tax bills and better identify profit sharing and aggressive tax planning.

Before I address the bill, please allow me to respectfully remind senators that some countries who are a part of this joint G20 and OECD process have a financial year matching the calendar year, from 1 January to 31 December. The financial year in Australia, of course, starts midway through the calendar year, running from 1 August to 31 July. Unusually and notably, but not controversially, the first reporting period for this bill is for the six months from the middle to the end of the 2017 calendar year. However, we are concerned that with this bill the government is proposing a multistage implementation process, setting different reporting deadlines—one for individuals and a different one for corporate entities. Financial institutions would be required to report on high-value accounts held by individuals to the ATO by the middle of 2018 and report on high-value accounts held by corporate entities by 2019. However, no rationale has been given for delaying the reporting on corporate entity accounts by 12 months. We therefore propose amendments to the bill to align these two deadlines. This is consistent with Labor's ongoing efforts to strengthen Australia's tax system against tax avoidance. This is also consistent with Labor's ongoing efforts, acting in the best interests of the broader Australian community and in stark contrast to the coalition's willingness to tailor its tax policies to the preferences of big firms.

Labor wants the Common Reporting Standard to be implemented as soon as possible. It is disappointing that the Abbott-Turnbull government has committed us to a timetable which sees Australia lag behind most of the OECD and other advanced economies. More than 40 countries will be exchanging information on individuals in 2017. This group of so-called early adopter nations includes major economies such as the UK, Argentina, France, Germany, India, Italy and Mexico, as well as many European Union member states.

Over the past two years, Labor has repeatedly called for the Liberal government to sign Australia up to a timetable that matches these countries. Instead, the government has dragged its feet in bringing forward this legislation and Australia will not be exchanging information with other countries until late in 2018. That lines us up with countries like the Bahamas, Russia and the United Arab Emirates rather than with the leading G20 nations—hardly the actions of a government that is committed to fighting tax avoidance. There should be one reporting deadline, 2018, to ensure this information is available sooner. Labor will be moving an amendment to the bill to bring the deadline for reporting on corporate entities into line with that of individuals. We know that many of the Senate crossbenchers share our deep concern about big companies avoiding paying their fair share of tax and we urge senators to support Labor's amendment and ensure that the Common Reporting Standard starts capturing the information about companies' bank accounts sooner rather than later.