The coming week promises to be a significant one on the economic and taxation fronts.
As members will be aware, the G20 leaders recently agreed that profits should be taxed where economic activities deriving the profits are performed and where value is created. They also committed to finalising work on the OECD BEPS Action Plan in 2015. However, Treasurer Joe Hockey has now said that the Government is contemplating additional legislative action, including ‘measures that will give the Australian Taxation Office the power to get the sort of information they need’. What such a change could add to the already extensive information gathering powers of the ATO remains to be seen, but it is clear that the Government is considering taking action in this area without waiting for the OECD work to complete in 2015. Coordinated global action in this area is paramount and unilateral action that is inconsistent with this global work must be avoided.
The latest state of the Budget will also be revealed next week with the release of the Mid-Year Economic and Fiscal Outlook (MYEFO). The deteriorating Budget position will segue neatly into talk of reforms needed to our tax system and the federation. We will see the first step in the Tax White Paper process - the release of the issues paper – in coming days. It will seek to generate debate about simplification; encouraging productivity and international competitiveness; improving incentives to work and encouraging savings.
We look forward to the debate and will keep members informed of developments.
Robert Jeremenko CTA