Simon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

INTERNATIONAL TAX AGREEMENTS AMENDMENT BILL 2014

This Bill will amend the International Tax Agreements Act 1953 to give the force of law to the new tax treaty signed by Australia and Switzerland on 30 July 2013.

Tax treaties facilitate trade and investment by reducing barriers caused by the double taxation of residents in the two countries. Australia has 44 bilateral tax treaties.

Australia and Switzerland share a close economic relationship and the new tax treaty—the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income and its associated Protocol—will strengthen this relationship.

The new treaty will update the existing bilateral tax arrangements between Australia and Switzerland, to align them with current Australian and international tax treaty policy settings. This is expected to further encourage bilateral trade and investment.

The new treaty will fulfil Australia's 'most favoured nation' obligations, contained in the existing tax treaty with Switzerland, to reduce its withholding tax rates on dividends, interest and royalties paid by Australian residents to Swiss residents.

The new treaty will also modernise the bilateral taxpayer information sharing arrangements and permit, for the first time, the exchange of taxpayer information for the purpose of preventing tax evasion. This greater transparency includes access to Swiss bank information that could help Australia better enforce its tax laws.

Maintaining a secure and sustainable tax system is central to the Government's efforts to repair the budget and, consistent with this objective, the information sharing arrangements provided by the new treaty will enhance the integrity of Australia's tax system. The new arrangements are also consistent with the Government's ongoing engagement with international efforts to improve tax compliance globally.

In addition to updating the rules that allocate taxing rights over certain income derived by Australian and Swiss residents, the new treaty will provide a number of benefits for taxpayers. These include rules to:

The new treaty will enter into force following the last notification that both countries have completed their domestic requirements which, in the case of Australia, includes the enactment of this Bill.

The Bill will also amend the International Tax Agreements Act1953 to clarify the meaning of the term 'immovable property' for the purposes of both the new treaty and any future Australian tax treaties that also use that term.

This will align the term 'immovable property' with the Australian domestic law term 'real property', and provide for consistent treatment of income and gains derived from such property across Australia's tax treaty network.

Full details of the measure are contained in the explanatory memorandum.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Mental Health) Share this | Link to this | Hansard source

Labor will be supporting the International Tax Agreements Amendment Bill 2014. The bill amends the International Tax Agreements Act 1953 to give the force of law in Australia to the Convention between Australia and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, and its protocol—the Swiss Convention—which was signed in Sydney on 30 July 2013. Once in force, the Swiss Convention will replace the Agreement between Australia and Switzerland for the Avoidance of Double Taxation with Respect to Taxes on Income, and protocol—the existing Swiss Agreement—which entered into force on 13 February 1981.

Labor welcomes the government's implementation of legislation to give effect to the revised Australia-Swiss tax treaty, which was signed on 30 July 2013. The revised treaty was the result of hard work by the previous Labor government. The revised Australian-Swiss tax treaty will enhance the already strong economic relationship between Australia and Switzerland by aligning the bilateral tax arrangements more closely with current Australian and international tax treaty policy settings. The revised treaty will also strengthen administrative assistance between Australian and Swiss revenue authorities, in particular by permitting them to exchange taxpayer information, including information held by banks and other financial institutions, in order to address tax evasion. This reflects the commitment of both governments to a fair tax system and is consistent with ongoing international efforts, including within the G20, to improve tax system integrity globally.

The revised treaty will enter into force after both countries have completed their respective domestic requirements. We welcome the government's move to give effect to this treaty through this legislation. However, the opposition is still concerned with the government's inaction on multinational tax avoidance through profit-shifting and transfer-pricing. This government has shown a significant gap between its rhetoric and its actions when it comes to ensuring that multinationals pay their fair share of tax within Australia. Since coming to government, the coalition has provided over $1 billion in tax breaks to multinational firms. It is a simple equation: every dollar that is avoided by multinational companies must be paid for by Australian taxpayers and businesses, or by cutting services. We have seen with this budget which side the government is on. It is the side of the billionaires and certainly not the battlers.

Cracking down on multinational profit-shifting is not just about making sure that firms pay their fair share of tax. It is also about making sure that the tax burden is fairly shared across companies. For an Australian company without subsidiaries in offshore tax havens, it is hard to compete against a multinational that is able to get away with paying a lower share of tax. Unfair tax arrangements also distort investment decisions by creating an incentive to invest overseas and put local companies at a disadvantage against international conglomerates.

The Prime Minister used his speech in Davos on the government's G20 agenda to argue:

… the G20 will continue to tackle businesses artificially generating profits to chase tax opportunities …

However, the only action the government has taken on multinational tax integrity is to dump Labor's thin capitalisation reforms and transparency measures.

Alongside repealing important measures to limit multinational tax avoidance, the government wants to repeal Labor's tax transparency reforms. These reforms would have ensured the public could see how much tax Australia's largest companies are paying. As United States Supreme Court justice Louis Brandeis famously wrote, 'Sunlight is said to be the best of disinfectants.' If a company is paying its fair share of tax then it has nothing to hide when it comes to its tax affairs.

If the government is serious about making sure companies pay their fair share of tax, why are they trying to let these same companies hide how much tax they are paying? Just as publicly available food inspector reports lead to cleaner restaurant kitchens, so too a little publicity about tax paid is likely to serve the public. The fact is that the government is not serious about making sure that multinational companies pay their fair share of tax. The budget shows that the government would prefer to take revenue from Australia's least wealthy citizens rather than from some of the world's wealthiest companies. Labor supports this legislation and looks forward to the government reversing its course to take greater action on multinational tax avoidance.

Simon Birmingham (SA, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

I thank Senator McLucas for her contribution to this debate, and the opposition for their support of this legislation. In regard to some of the comments Senator McLucas made, I want to reiterate that it is this government's intention to ensure that we do tackle tax avoidance wherever possible, in particular global tax avoidance. It is our intention in this space, as with any other, that the policy measures applied must be effective, coordinated and efficient. They must effectively work to tackle tax avoidance. In this global space they must be coordinated with other nations, and they must be efficient in that they do not add unreasonable or unnecessary red tape that does not contribute effectively to solving the problem.

Our concern with some of the measures of the previous government is that that they did not pass this test. But we are working hard, in particular through the G20 process, to try to get the type of coordinated action that can ensure everyone has confidence that a fair share of tax is paid, an appropriate share of tax is paid, by all companies.

In relation to this legislation, I note that the agreement with Switzerland was signed in 1980 and is one of Australia's oldest unamended tax treaties. This bill will give effect to the amendments that have been negotiated in the revised tax treaty between Australia and Switzerland. It will also clarify the meaning of 'immovable property' for the purposes of the revised Swiss treaty, and for other Australian tax treaties that use that term. So it takes important steps in modernising our arrangements, not just with Switzerland but with other countries affected by that provision. I commend the bill to the chamber.

Question agreed to.

Bill read a second time.