Enhancing public confidence in Australia’s tax system

Digital disruption and globalisation

Digitisation and globalisation of the economy are positive developments that are reshaping the world.

A globalised economy means that companies have greater choice about where to locate their activities.

This also increases the opportunities for companies to use legal means to minimise their tax liabilities through multinational tax avoidance.

This is placing pressure on the international tax system which was developed almost 100 years ago.

Australia relies more heavily on corporate tax than most other countries. The vast majority of businesses do the right thing and pay their share of tax, but it is important that our tax system remains robust and sophisticated to deal with multinational tax avoidance.

Last year, the Government took important steps to further strengthen Australia’s defences against tax avoidance. These steps tightened Australia’s thin capitalisation rules to stop multinationals claiming excessive debt deductions and closed other tax loopholes.

It is important to ensure that any changes to our tax system do not compromise economic activity or deter investment, which ultimately costs Australian jobs.

Australia’s tax administration

Good policy and robust legislation requires the support of a well-resourced and skilled tax administration.

The Government is providing $87.6  million to the ATO over the next three years to continue the International Structuring and Profit Shifting programme. To date this programme has raised over $250 million in tax liabilities and is estimated to raise $1.1 billion in total.

The ATO now has more resources  than ever dedicated to dealing with multinational tax avoidance.

As part of this Budget, the Government is providing additional  funding  to the ATO to assist with their investigations.