Budget 2016: ATO taskforce to target multinational tax avoidance; “Google tax” to be modelled on UK

The Australian Tax Office will be given $679 million over four years to fund a Tax Avoidance Taskforce, which will be given the job of cracking down on tax avoidance by multinationals, private companies and high-wealth individuals.

Announcing the creation of the taskforce in the 2016 federal budget, Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer said in a joint statement the taskforce will be made up of 1,300 ATO officials, which will include 390 new specialised officers.

Led by Tax Commissioner Chris Jordan, the taskforce’s mandate will be to “secure more revenue for the Australian community and bring tax cheats to account”.

The taskforce will be required to deliver regular reports to the government – the first of which will be due by the end of this year – and any settlements proposed by the taskforce will be reviewed by a panel of former judges.

The government said it expects the taskforce to raise more than $3.7 billion in tax liabilities by July 2020.

“Those seeking to do the wrong thing will be left with no doubt that deliberate tax avoidance and evasion will not be tolerated,” said Morrison and O’Dwyer.

“Tax cheats will be tracked down and will face the full force of the law.

“It will put money back into the system and into the community while also deterring people from entering into aggressive tax planning arrangements.”

The creation of the taskforce builds on 2015 budget measures that were also designed to crack down on tax avoidance by multinational corporations.

Last year, the government outlined its Multinational Anti-Avoidance Law, which allows companies with global revenues of at least $1 billion to be fined a penalty equal to the amount of tax avoided, plus interest, as well as being forced to repay taxes owed.

“Google tax” modeled on the UK diverted profits tax

The government has also confirmed it will adopt a Diverted Profits Tax (DFT), which has been dubbed a “Google tax”.

The regulation will impose a penalty rate of tax on large multinationals that are found to have attempted to shift Australian profits offshore to avoid paying tax.

The tax will apply to large companies with global revenue of $1 billion or more, with companies that have Australian revenue of less than $25 million to be exempt unless found to be artificially booking revenue offshore.

On its own, the DFT is projected to raise $200 million in tax revenue over the forward estimates. However, together with existing anti-tax avoidance legislation, the government expects the combined measures to raise $650 million in tax revenue by 2020.

The tax will also operate alongside several other measures that are designed to strengthen Australian tax rules.

These measures include a Tax Transparency Code to encourage transparency, protections for whistleblowers who disclose information about tax misconduct to the ATO and increased penalties for companies with global revenue of at least $1 billion that breach tax reporting obligations. The maximum penalty for this offence will increase from $4,500 to $450,000.