Australia Rethinks Publicizing Company Tax Details
Tough tax disclosure laws introduced by the former Labor Government represent “an invasion of privacy and intrusion for Australian private companies,” Prime Minister Tony Abbott has said.
Abbott made the comment during a joint press conference with the Assistant Treasurer Josh Frydenberg. The press conference followed a meeting of the Government’s coalition parties, where attendees discussed the application of the new rules to private companies and wealthy individuals.
The legislation would require the Australian Taxation Office (ATO) to report information about corporate tax entities with a total income of AUD100m (USD76.8m) or more. From July, information about their revenues, taxable income, and income tax payments would be made public.
“It was pretty clear that there is a lot of antagonism in the community and among members of the Coalition Party Room about this particular legislation. It is purported to be a way of preventing large multinational companies from hiding their affairs but in fact it’s become, it seems, an invasion of privacy and intrusion for Australian private companies. So, we are looking closely at this,” Abbott said.
Frydenberg added: “Every company, whether it’s a private or a multinational, has tax obligations which we expect them to meet. This information, whether it’s a tax payable or taxable income or total income, is already in the hands of the ATO and we are questioning whether there is a real justification for releasing the details about privately owned Australian companies, as opposed to multinationals, into the arena where there could be serious commercial and personal risk.”
Commenting on the situation, Michael Croker, Head of Tax at Chartered Accountants Australia and New Zealand (CA ANZ), said: “The ATO already holds detailed information about each large company’s tax affairs. Public disclosure seems more about naming and (possibly) shaming without acknowledging the key issue which the ATO focuses on: ‘Has this company paid the correct amount of tax according to the law?'”
CA ANZ said that the publication of private company data raises legitimate concerns about shareholder rights to privacy and the differential treatment of private companies vis-à-vis other business structures. It also pointed out that as the disclosure will not convey the various tax adjustments relevant in arriving at taxable income, there is great potential for misunderstanding and damage to a company’s brand and reputation.
“Those concerned about international tax planning undertaken by multinationals will learn little from the domestic disclosure rules about the complex world in which such companies operate. Much more is to be gained from Australia recently signing up to enhanced tax data sharing as part of the Organisation for Economic Cooperation and Development’s Base Erosion and Profit Shifting project and expanded intelligence sharing arrangements between the ATO and tax authorities in other jurisdictions,” Croker concluded.
