Protecting the integrity of the corporate tax base

As well as international engagement, the Government is taking immediate action to close loopholes and protect the corporate tax base from erosion. This includes by:

• addressing aggressive tax structures that seek to shift profits by artificially loading debt in Australia (see figure below);
• closing loopholes in our Offshore Banking Unit regime and closing loopholes that allow investors to engage in 'dividend washing';
• better targeting of the immediate deduction for resource exploration so that it is only available for genuine exploration activity;
• improving the integrity of our foreign resident capital gains tax regime and addressing low levels of voluntary compliance;
• increasing ATO compliance checks on offshore marketing hubs and business restructures; and
• closing loopholes in the consolidation regime and levelling the playing field between Australian consolidated groups and foreign-owned multiple entry consolidated groups.

The Government is also reforming the transfer pricing rules for multinationals, improving the effectiveness of the general anti-avoidance provisions in the tax law and fixing interactions between the consolidation rules and other areas of the tax system.

Debt loading structures eroding Australia's corporate tax base