PRESENTER:
I imagine it’s news to the Minister for Revenue and Financial Services Kelly O’Dwyer that the election’s been changed by the entry of Harry Styles in the fray. Good morning to you Minister.
KELLY O’DWYER:
Good morning. Yes indeed I wasn’t aware of that!
PRESENTER:
Nope. You get all the big news first on FIVEaa. Now it’s great to have you on the show Minister. We began our program at 6am by talking about this eye-watering figure, almost $3 billion, the size of the tax bill the ATO has sent to seven of the world’s largest multinational companies. Do you think that these businesses are deliberately trying to duck their requirements in terms of taxation or are these very, very large clerical errors we’re talking about here?
KELLY O’DWYER:
I think it directly relates to the fact that the Government has changed the laws. The Government has changed the laws to give us the strongest tax laws in the world, amongst the strongest tax laws in the world. And we have given the Australian Taxation Office now the powers and the penalties to be able to go after big multinational companies to make sure that they’re paying the right amount of tax that is owed to the Australian people. Because at the end of the day, this money that is owed to the Australian people pays for roads, it pays for hospitals, it pays for schools, and we would be derelict in our duty if we didn’t go after every cent of it.
PRESENTER:
The report in the telegraph this morning says that the Tax Avoidance Taskforce has audited 71 multinational companies that are coming to Australia and hundreds of other companies are being reviewed for compliance. Has the ATO or do you have any sense of how much lost revenue we’re potentially talking about here?
KELLY O’DWYER:
Well for seven of the companies, the figure is upwards of around $3 billion. And that’s all coming to a head before 30 June. And we know that there have been around about 1,000 people forensically going through these very big large multinational companies to look at their accounts, to look at exactly what they’ve been doing with shifting profits offshore or debt dumping, and that’s been part of our Tax Avoidance Taskforce that this Government has set up. And there have been 175 affected taxpayers who have been in discussions with the Australian Taxation Office in relation to their structures.
PRESENTER:
Minister, late last year the taxation office released its corporate tax transparency report. The opposition seized on it immediately highlighting that more than one third of large firms reported zero tax payable and as such, they didn’t pay any tax. Does this crackdown mean that the process has to change, the assessment process has to change, because this seems to be after the fact that these companies are pursued.
There are some companies that don’t pay tax for justifiable reasons, because they’ve had very significant losses for instance, and that’s part of very established tax law. But there are other instances where there are artificial structures that have been set up, very elaborate structures where people are putting marketing hubs, for instance, overseas and they’re shifting profits offshore, which are clearly designed to try and avoid taxation payments being made in Australia where profits are being made. Now that’s not right and that’s why the Government has in fact changed the law to make it very, very clear that these assessments can be raised against these companies. It was very unfortunate that when we passed this law we didn’t get support from the Labor Party at the time to do it but we got it through anyway and we’re seeing the fruits of those law changes right now with these assessments that are currently being raised.
PRESENTER:
Are you comfortable, Minister, with the characterisation of these big seven companies as tax dodgers when two of them, Rio Tinto and BHP, feature as among the ten biggest tax contributors in this country. Do we need to be careful that we don’t compare the BHPs with the Googles for example?
KELLY O’DWYER:
I haven’t been describing specific companies in any particular way…
PRESENTER:
No, that’s been the broad reporting of it, that’s been the characterisation of it.
KELLY O’DWYER:
…But what I would say is that there are companies who do pay a lot of tax but they don’t get to determine how much tax they pay. The laws of this country determine that. Tax is not an optional extra that people pay. The vast majority of Australians do the right thing. Mums and dads, they pay their tax and they need to know that everyone else is doing their fair share as well and as the minister for revenue I am absolutely determined that people can have confidence in our taxation system, that it has integrity, because if we don’t get every dollar that’s owed to the Australian people paid by multinational companies, then the burden does fall onto mums and dads and that’s simply not fair.
PRESENTER:
Just in terms of the politics of all this, Minister, the big story over the last couple of weeks was the push by the Turnbull Government to bring in corporate tax relief and obviously with the politics being the art of the possible, it was a less heroic tax cut than you had originally envisaged on account of the dealings you had with our own South Australian Senator Nick Xenophon. Is the Government trying to establish a balance here where you say we want businesses to operate in a more competitive, low tax environment however, they’ve got to do the right thing, they’ve got to pay absolutely every cent of what they’re required to pay.
KELLY O’DWYER:
That’s right, they absolutely do. Like I said, it’s not an optional extra, people can’t choose not to pay it. But we actually did have a very big win on the tax cuts that are being legislated – 3.2 million businesses across Australia that employ more than 6.5 million Australians, which is basically over half the workforce, are going to be able to benefit from these company tax cuts. And in your state in South Australia, the companies that will be receiving this and the businesses that will be receiving this tax cut, there are over 190,000 of them.
PRESENTER:
And they’re the ones that are the engine room of the economy but I think the view very strongly of our listeners is you’ve got to make sure they all pay their way. So to that end the statements from the ATO this morning are music to people’s ears. Kelly O’Dwyer, Minister for Revenue and Financial Services, thanks very much for joining us on FIVEaa breakfast.
KELLY O’DWYER:
Thanks David, thanks Will.