Monday, 3 June 2013
I thank the member for Greenway for her contribution. I would inform the House that this budget contains $4.2 billion worth of measures to protect the corporate-tax base and to close corporate-tax loopholes. That is a matter that the government has been diligently working towards over a period of time. This is not the first package of measures that we have brought forward. We have previously introduced measures on transfer pricing: the first phase, which has now passed through the parliament; we introduced a bill that contained the second phase of our transfer-pricing reforms; and also changes to part IVA, the general anti-avoidance provisions.
I make the point that on each occasion, when we have brought forward these measures to close down on corporate tax loopholes, those opposite have voted against the measures. It really does beg the question: at a time when we are facing what those opposite would have you believe is a budget emergency, why on earth would we be allowing some of the most profitable companies operating in our economy to take advantage of these loopholes and avoid paying their fair share of tax? It does not make sense. It is not fair. It is not fair to their competitors who do not shift profits and pay their fair share of tax. It is not fair to families, pensioners and small businesses around this country who pay their fair share of tax—and ultimately end up paying a higher share of tax as a result of the lack of contribution of those who should be paying more.
The member referred to the double-Irish-Dutch sandwich. That is one particular arrangement. But there are some complex questions that relate to intangibles and transfer pricing generally that need to be tackled in a multilateral way. What we have done through the budget, in addressing some of these matters in a unilateral way, is tackle debt-lending practices. To be clear on these practices, one particular scenario that was brought to our attention by the Commissioner of Taxation involves a mature company here in Australia that is a subsidiary. Its parent is offshore, on another continent. The offshore parent wants to invest in a target company that is in a third continent and, rather than the parent acquiring shares directly in the target company, they will loan money to the mature Australian operation. The Australian operation will then acquire shares in the third entity and, as a result of that, the dividends coming back to the Australian entity will be tax exempt. Then a deduction will be claimed on the interest expense incurred by the mature Australian operation and the money will be effectively shifted back to the parent company—all along achieving a tax deduction here in Australia but with no tax being paid.
Silence is what we have heard from those opposite when it comes to these practices. I see the member for Casey shifting uncomfortably in his chair, because he was left in the chamber to do the dirty work because the member for North Sydney, who had carriage of that bill for the opposition, was out there blogging. As a consequence of his blogging he could not be in the chamber and the poor old member for Casey had to come in and do the dirty work. He had to get up and vote against these new measures to introduce new reforms for transfer pricing and to tackle general anti-avoidance through tightening up part 4A.
Now the irony of this was that when the member for North Sydney was given the opportunity in his Press Club address to indicate whether or not he felt our existing transfer pricing rules were adequate, he said, 'No, they are not adequate.' They are not adequate, yet the proposals that we have brought forward to strengthen these rules he has voted against. He did not vote against the last lot because he was blogging, but he voted against the first round, and he sent the member for Casey in to do his dirty work on the second round of reforms.
Now, there is still hope for the opposition, because there is always an opportunity with bills that are now before the Senate for the members of the opposition to have a change of heart and to take a tougher line on tax avoidance. I encourage them to do that because I think that is what many people within their communities would expect. (Time expired)