Australia signing up to global tax effort

AUSTRALIA is onboard for the international effort to upgrade a creaking 100-year-old global tax system.

AUSTRALIAN Tax Commissioner Chris Jordan told a Senate committee on Tuesday the present tax architecture was developed in the early 1920s for the now defunct League of Nations.

It also depended on the physical presence in a country to drive taxing rights.

The growth of digital delivery meant that old framework was being relied upon to assert that there was no taxing right in Australia, Mr Jordan said.

Parliamentary secretary Steven Ciobo is flying to Paris to attend a ministerial council meeting of the Organisation for Economic Co-operation and Development this week to sign up to a common reporting standard agreement that allows for information to be exchanged between tax authorities.

Mr Ciobo said it was an important step in ensuring that all taxpayers comply with their domestic tax obligations.

“It will help catch taxpayers using hidden offshore bank accounts to evade Australian tax,” he said in a statement.

G20 leaders and finance ministers will receive the OECD’s full guidelines on tackling multinational tax avoidance in Turkey later in the year, a project it has been working on for the past two years.

The federal government also flagged in the budget that it will work with business to develop a code on public disclosure of greater tax information by large corporates.

Treasury deputy secretary Rob Heferen views this first attempt by the government as a voluntary compliance code.

“If that doesn’t work then it will revisit the issue and possibly go another path,” he told the estimates hearing.

Greens senator Christine Milne couldn’t understand why there was the need to consult with business for two years rather than the tax office just applying it now.

Mr Heferen said the government has tabled draft laws giving the tax commissioner powers to pursue profits shifted to another country from activity that should have been taxed in Australia.

The ATO also confirmed it is investigating 195 properties that have possibly been purchased illegally by foreign investors.

However, acting second tax commissioner Neil Olesen was unable to provide senators with a breakdown of price ranges.

“I wouldn’t be surprised if a fair slab of them were towards the top end of the market,” he said.