Last month, the Australian government unveiled the Re:think tax discussion paper, which catalyses deliberations regarding the future trajectory of our tax system. An essential topic highlighted in the paper revolves around the tax system’s predicament in light of evolving global economic conditions. Chapter 5 delves into Australia’s comparatively elevated corporate tax rate and acknowledges that our dividend imputation system cannot entice foreign investment. Moreover, the paper examines the implications of digitisation and globalisation, elucidating how multinational corporations can exploit legal avenues to redirect profits to jurisdictions with lower tax burdens. These concerns are of particular interest to tax accountants.
The other exciting concepts raised in the paper are the possibility of a new flow-through entity (like an S-Corporation in the US) and mutual recognition of franking credits between Australia and New Zealand.
More generally in the media, there has been continued discussion in the media about tackling profit-shifting issues, most recently with statements following last week’s G20 treasurers meeting in the United States regarding Australia and the UK working together with the OECD in “developing the very best practises that will ensure that companies that are earning profits pay tax in the jurisdictions where they earn profits”.
Despite the press coverage of these issues, it is unlikely that the forthcoming Federal Budget to be handed down on 12 May will include any significant immediate changes in international tax.
If you have any queries in relation to the above, feel free to reach out and contact us.
Kreston Stanley Williamson Team
Current as of April 2015
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