Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I welcome clarification, but that is my understanding. Instead, this measure, as I understand it, will potentially provide reputational risk to privately owned entities and shareholders, so private companies. In their submission to the Treasury discussion paper of April 2013, Godfrey Hirst Australia Pty Ltd, Australia's largest carpet manufacturer that has a base in Geelong and has a turnover exceeding $300 million, noted that the disclosure relates only to companies and stated:

… for those which are privately and closely held it will be an easy task for commentators to apply the tax paid (or not paid) to the owners. Publication of the data would give information that could be detrimental to shareholders, including to their safety.

How will that allow for better informed debate?

Reconciling total income to taxable income is set out in the tax return and provided to the ATO. The reconciliation contains numerous adjustments, each of which is allowed under the tax law and reflects established tax policy, and can include: dividends from tax sources overseas that are exempt when they get to Australia, so it is all additional income; dividends from taxed Australian sources that have franking credits attached; prior year losses which are offset against taxable income; as well as tax incentives such as the R&D offset, which the government ripped $1.1 billion out of this year apparently. An Australian group with major operations in overseas subsidiaries would have a large total income but a comparatively small taxable income because of exempt dividends. So that information may well be used by other countries to punish Australian entities operating in their countries. Why would you want to do that? Why would you want to make it harder for Australian exporters operating in other jurisdictions to deal with those jurisdictions by publishing this information in Australia about how well they are doing in other jurisdictions when they do not do that with us? This government feels the need to lead in every regard, no matter what the cost is to Australian employers.

Without additional guidance the information that the bill compels the commissioner to make available to the public may well be grossly misleading. Far from improving transparency, public release of the information referred to in proposed section 3C of the Tax Administration Act is likely to reduce transparency. It misleads unless there is additional context. So, no doubt, companies will be required by the activism of advocacy groups to explain the apparent disconnect between the tax they have paid and their income. Let it be done if that is the government's view, but it is an additional significant cost and it is additional significant regulation and it makes us less competitive. The government always feels the need to make us less competitive, because of its unintended— (Extension of time granted)

Secondly, the Assistant Treasurer's second reading speech contends that the increased transparency is intended to discourage aggressive tax minimisation practices by large and multinational businesses. I have no issue with making life extremely difficult for those who break the law and I want the tax office to go after them with the full force of all the available resources, but I make this point: do not make it too hard to do business in Australia by imposing regulation on businesses that are complying with the law because they may then find that this additional regulatory burden in Australia just makes it too hard to stay here.

The basis of our legal system is summed up by the Tax Institute in its submission to a Treasury discussion paper released in April. They said:

… a taxpayer's obligation to pay their “fair share” of tax in Australia cannot be imposed via any means other than clearly defined laws, as made by the Australian Government. Taxpayer obligations should begin and end with compliance with the tax law.

I agree. In recent years the ATO's risk assessment practices have expanded to include a number of tools that help the ATO determine how compliant particular corporate groups may be. New methods of risk determination include prelodgement, review of the tax return, the reportable tax position schedule and the international dealings schedule. The question is: have the ATO got sufficient powers? I would contend that yes, they have. Of course they have. If they have not then let them prove their case.

What I am saying is that you do not just give the ATO more powers, and you do not just give everyone unfettered access to everyone else's information without having proper accountability. I would say to the government: think carefully before you do this stuff. Do not go down the path, time and time again, of knee-jerk reactions to populism like the member for Lyne. Think carefully about what needs to be done. But, most importantly, think carefully about what our competition is doing, because there are other places to invest in other than Australia.

If foreign corporations operating in Australia feel as though Australia is simply picking them out when no other jurisdiction, other than Denmark, is going down this path, then it is easy for them to move out, and that just costs jobs. And it could be the difference between a major operation continuing to manufacture in Australia or moving their operations overseas. It could be that little bit extra that makes it just a little bit harder to do business in Australia and tips the board to decide that it will go to New Zealand or South Africa or China or the United States or any other jurisdiction. This added burden of regulations, added burden of red tape—it just keeps adding, adding, adding to the difficulties of doing business in Australia. That is why we are sticking with our commitment to move amendments (2) and (5) as circulated in my name.

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