Protecting the corporate tax base

The Government will address a number of loopholes and abuses in Australia's corporate tax system. This will ensure that it remains fair, competitive and sustainable.

The Government is acting to protect our corporate tax base from erosion by closing down loopholes and abuses. Many of these abuses take advantage of design flaws, vulnerabilities and unexpected interactions from earlier Howard Government changes to the corporate tax system.

Protecting our corporate tax base will ensure that we have a stable source of revenue to fund vital investments that will underpin a stronger, smarter and fairer Australia.

If some taxpayers do not pay their fair share of tax, a higher tax burden will fall on Australian families and small businesses. Those businesses that do the right thing will be at a competitive

disadvantage and confidence in our tax system will be eroded.

The Government's response to the loopholes and abuses identified by the Commissioner of Taxation is informed by Treasury advice and follows targeted consultation with industry. The changes:

  • address aggressive tax structures that seek to shift profits by artificially loading debt into Australia;
  • better target resource sector concessions for depreciating assets to support genuine exploration;
  • improve the integrity of and ensure better compliance with the foreign resident capital gains tax regime;
  • close loopholes in the Offshore Banking Unit regime and the consolidation of business entities regime;
  • prevent sophisticated investors from engaging in 'dividend washing'; and
  • increase ATO compliance checks on offshore marketing hubs and business restructures.

These changes build on recent initiatives to improve the integrity and sustainability of the tax system and our corporate tax base through important reforms to the general anti‑avoidance rules and the transfer pricing rules.

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