Australian banks defend their corporate tax affairs after Swiss HSBC revelations

Australia’s largest banking and finance institutions have defended their corporate tax affairs and have rejected claims the tax system is “fundamentally flawed”, in submissions to a Senate inquiry.

On Monday an international investigation exposed how the Swiss arm of the HSBC bank helped wealthy clients dodge taxes around the world. Leaked files revealed that hundreds of prominent Australians held HSBC Swiss accounts.

The Senate inquiry will examine the adequacy of corporate tax laws and the effectiveness of the Australian Tax Office (ATO). It was launched before the HSBC reports were published, in response to a report from the Tax Justice Network that said scores of Australian companies were minimising tax liabilities.

So far more than 70 organisations have lodged submissions, with many corporations defending their tax practices.

The ANZ bank disputed the findings of the Tax Justice Network report, and said it was “concerned by the current debate”.

“The report suggests ANZ, among others, has underpaid its Australian corporate tax liabilities. As this submission will demonstrate, ANZ has paid, and continues to pay, its Australian tax liabilities in full in accordance with the tax laws,” it said.

Macquarie Group, which includes Macquarie Bank, said: “With regard to Australia’s tax system, it should be noted that in addition to the taxation requirements of offshore countries, Macquarie also adheres to Australia’s controlled foreign company tax provisions so that income generated in countries regarded as not having a comparable corporate tax system is treated as Australian taxable income and is taxed at the Australian rate.”

AMP acknowledged that it used offshore entities, and chose locations based on a range of factors.

“The selection of a particular location requires balancing various commercial, legal, investor and cost (including tax) factors. Commonly used fund locations include Luxembourg, which is the second largest fund centre in the world (only the USA is larger),” its submission said.

The submission said the company “does not shift to, or accumulate profits in low/zero tax jurisdictions” and “does not use the secrecy rules of jurisdictions to hide income/assets”.

The Corporate Tax Association – which represents more than 100 companies, including the Commonwealth, ANZ, NAB and HSBC Australia banks – said it “objected to views that paint a picture that the Australian corporate tax system is fundamentally flawed and that corporate taxpayers in Australia are inappropriately minimising their tax bill”.

But it acknowledged the importance of transparency, and said it had been encouraging its members to “provide more useful and concise information about their own tax performance”.

Each banking body was asked to provide information on the effective tax rate it paid.

ANZ did not do so, saying the tax rate “was a result, not a target”.

AMP said its rate was 23.3% in the year to 31 December 2013. It noted that was “lower than the general corporate tax rate of 30%”.

“This results from intended government tax policy and/or accounting rules. All treatments and adjustments are perfectly legitimate and not as a result of aggressive tax planning.”

Macquarie Group said its effective tax rate was “has been 38% or higher for each of the last four reporting periods”.

Public hearings will be held in the next few months, with the committee due to report by June.