CPA head of policy Paul Drum says he expects the government to make serious progress on base erosion and profit-shifting agenda items this year, including the diverted profits tax (DPT).
“In respect to the diverted profits tax, there’s a process that’s under way at the moment, submissions have been called for, there’s a consultation paper out so we’re expecting that process is going to play out this year,” Mr Drum told Accountants Daily.
“The ink isn’t dry on the DPT about design features, but certainly we are expecting that a diverted profits tax will be implemented in the next little while as part of the 2017 government agenda.”
Mr Drum said 2017 will be a year of action, with the ATO given power to crack down on several major issues.
“Arguably, this could be the year where the rubber really hits the road and we see some results, whereas at the moment there’s been quite a bit transition in setting a lot of this up,” he said.
“The tax office is better equipped than ever before with some very powerful legislative weapons to go after some of these cases that have been giving them a headache and giving governments a headache for some time.”
While this is positive, Mr Drum is already urging the ATO not to waste any time in releasing guidance around any impending laws.
“With the diverted profits tax, we expect that once the law is actually passed, the tax office is going to have to release guidance documents, much the same as they’ve done with superannuation [changes],” he said.
“There has to be some guidance to the market about it rather than just some black letter law about how the ATO is going to apply the rules.”
Guidance is crucial to ensuring accountants understand the changes and can advise their clients appropriately, Mr Drum said.
“It’s not just about a new law, it’s about guidance for the market so that the accounting profession and tax advisers can actually advise their clients appropriately.
“So that’s going to be a very important part, it always is, the education, education on compliance. It’s a balancing act and certainly there needs to be guidance for the market to understand how the tax office is going to interpret the law and apply it.”