fairness in tax and benefits
Multinational and foreign-owned companies will no longer be able to avoid tax by shifting profits to other countries. Australia will work with other governments to share tax and income information. The Government will also introduce a Multinational Anti-Avoidance Law to require businesses to pay tax in Australia on the profits they make in Australia.
Closing the GST loophole
Consumers buying digital goods and services from overseas will have to pay GST on their purchases. This includes e-books, games, movies, music, consultancy and legal services and more.
Foreign investment that is in our national interest is welcome in Australia. The foreign investment rules will be strengthened with the ATO taking over regulation of foreign investment in real estate and ensuring stronger enforcement of the rules. Application fees for all foreign investment applications will be introduced from 1 December 2015. Lower thresholds for screening of agricultural land and agribusiness investments will be implemented.
TRANSFORMING WELFARE technology
The Government will modernise Australia’s welfare system: a $60 million investment will save people time and effort by offering easier and smarter online services. For example, no longer will parents need to spend hours filling out 60 pages of paperwork to apply for the Family Tax Benefit. They will be able to fill out an online form in minutes.
Diverting profits from australia
The Government is taking action on multinationals that exploit loopholes and artificially structure to avoid paying tax in Australia or elsewhere in the world. This is contrary to the intention of international agreements. To the extent this erodes Australia’s tax base, individuals and other businesses may face higher rates of tax in the future. This will hurt the economy and jobs if action is not taken.
The following animation explains how some multinational companies operating in Australia avoid paying tax and the impact this has on Australians.
Strengthening Australia’s tax and welfarE system
Building tax, foreign investment and welfare systems that support future growth and prosperity
REFORMS TO BUILD FAIR AND SUSTAINABLE SYSTEMS
Most Australians pay the right amount of tax. They pay about 95% of Australia’s tax revenue.
The Government is reforming parts of the tax system to make it fairer. The Multinational Anti-Avoidance Law will ensure foreign and multinational companies pay their share of tax. The penalties for breaking the law will be equal to the tax owed, plus interest. OECD recommendations for countries to share tax information and prevent treaty abuse are also being implemented.
The Government is also consulting with business to develop a voluntary code of conduct on the disclosure of greater tax information by large companies.
Other measures include tougher penalties, stronger enforcement and more transparency around residential real estate investment. Fees for all foreign investment applications will be introduced from 1 December 2015. Fees will range from $5000 for a house worth less than $1 million, and increase with the value of the investment.
Foreign investment is welcome, provided it’s done transparently and is in Australia’s national interest.
Australia’s GST system will take another step into the 21st century by applying GST to digital products and services sold to people in Australia, including e-books, music, movies and consulting advice bought online from overseas suppliers. Similar laws exist in other OECD countries. It means that local companies, who do collect GST, will no longer be disadvantaged compared to their international competitors.
For Australian businesses, the GST compliance programme means that the ATO will be better equipped to continue to identify fraudulent GST refunds, fraudulent (or non-existent) returns, and outstanding GST debts.
Changes to the personal tax system will reduce some unfair tax benefits, including some fringe benefits taxes in the health and not-for-profit sectors.
FBT exemptions for ‘meal entertainment’ will face a new cap of $5000 for people who work in the not-for profit and public health sectors. Fly-in fly-out workers will no longer be able to claim the Zone Tax Offset as it aims to compensate people for the difficult living conditions in remote areas.
The Government spends around $154 billion, or 35% of its total expenditure, on welfare. An IT upgrade will make it easier for people to apply for benefits online making processing time significantly faster. To make the system fairer and simpler, some benefits will be streamlined to stop people double dipping on payments and to make it easier to detect welfare cheats.
To explore these and other Taxation and Welfare measures, download the full Fairness in Tax and Benefits glossy.