The legislation, which passed the Senate this week, will strengthen the ATO’s ability to combat contrived structures and multinational tax avoidance.
IPA technical policy general manager Tony Greco told Public Accountant that the measures would restore SME faith in compliance.
“A lot of small businesses were asking, I pay 30 or 40 per cent in tax so how are entities with billion in turnover playing just 1 or 2 per cent? [That sentiment] filters down to tax compliance and the wider community,” Mr Greco said.
“Australia relies on high levels of voluntary compliance so when multinationals aren’t paying their share, people are going to start claiming extra work-related deductions and small businesses start to be more aggressive on their tax planning. It starts to impact on the broader taxpayer community [given] compliance might change if people feel as if they’re being unfairly treated,” he added.
The Federal Government has forecast that the new tax will bring in around $100 million annually from 2018/2019, with Mr Greco saying it is already having an effect.
“[The ATO has] already seen a lot of restructuring within multinationals and that is very much caused by these new measures,” he said.
“They’re already paying indirect taxes like GST so they already have a taxable presence in Australia and we’re reaping money from them as we speak where previously these transactions were only caught on impact tax to some level,” he added.
While the OECD is still in the process of finalising its base erosion and profit shifting (BEP) measures to fight tax avoidance on a global scale, Australia is one of a handful of countries taking action early.
“Countries like Australia have decided to pre-empt some of those BEP announcements and effectively address the leakage now,” Mr Greco said.
“These measures are based on our tax landscape and what we require to stop these multinationals from minimising their tax footprint in Australia through structuring.”
