Powered by MOMENTUM MEDIA
accountants daily logo

Hockey announces two major tax changes

Tax

Treasurer Joe Hockey has announced two “major” changes to the taxation system ahead of tonight’s federal Budget.

By Michael Masterman 8 minute read

The first deals with multinational anti-avoidance laws while the second will apply the GST to the supply of digital goods and services.

According to the Treasurer, the first measure deals specifically with the activities of 30 identified multinational companies that are “diverting profits earned in Australia away from Australia to no or low tax jurisdictions”.

“These contrived and very complicated arrangements have been used to avoid paying Australian tax,” Mr Hockey said.

“If we strengthen our own anti-avoidance laws to ensure the Tax Office has the powers to see through these contrived arrangements, then we will be able to recover the tax that should be paid in Australia."

Mr Hockey outlined tough new penalties for diverted profits, saying they will go further than those recently announced in the United Kingdom.

“The Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100 per cent of unpaid taxes plus interest,” he said.

The Treasurer also announced a second measure designed to “ensure a level playing field for the suppliers of digital products and services in Australia in relation to the GST”.

“It is plainly unfair that a supplier of digital products in Australia has to charge GST and an offshore supplier does not,” said Mr Hockey.

This initiative is expected to raise around $350 million over the next four years, with every dollar of revenue going to the states.

“I have consulted with the States and Territories and following further discussions at an official level we are releasing the draft legislation for review,” Mr Hockey said.

“The OECD has recognised this as a problem for some time and a number of companies are working constructively with governments.

“A number of other countries have or will introduce similar rules, such as Japan, Norway, South Korea, Switzerland and member countries of the European Union.”

You are not authorised to post comments.

Comments will undergo moderation before they get published.

accountants daily logo Newsletter

Receive breaking news directly to your inbox each day.

SUBSCRIBE NOW