20 August 2015
by Joanna Mather
'Kidnap' exemption to be introduced to Parliament
An exemption that would allow 1000 privately owned Australian companies to keep their tax affairs secret moved a step closer when Assistant Treasurer Josh Frydenberg managed to swing Senate votes in favour.
Independent senator Nick Xenophon confirmed he will vote in favour of the exemption, even though he sits on the tax-avoidance inquiry that this week recommended maximum transparency for all public and private companies.
The government says it is worried about the personal safety and commercial interests of private companies caught up in new disclosure laws introduced by the previous Labor government.
The changes to the Tax Act require the publishing of taxable income and tax paid for an estimated 2300 companies with annual turnover of $100 million or more.
Mr Frydenberg will on Thursday introduce legislation that, if approved by the Senate, will exempt 1000 private Australian companies.
His argument is the companies are so closely held that revealing the information will give details of the owners' personal wealth.
"This is an important amendment to legislation that was poorly prepared by the previous Labor government, who ignored key concerns and feedback of stakeholders," Mr Frydenberg said.
Amendment is a 'narrow carve-out'
"The government's amendment is a narrow carve-out that will help protect the confidentiality and privacy of individual taxpayers," he said.
The family that owns beef exporter Teys Australia is worried it will be targeted by criminals on the basis of "perceived wealth" if the tax office publishes the information, echoing kidnap fears raised in a Coalition party room meeting earlier this year.
With Labor and the Greens joining forces to vote against the exemption, to be successful the government needs six of eight crossbenchers to support them.
Bob Day, David Leyonhjelm and Dio Wang have indicated they will support the government's exemption. Independent Victorian Senator John Madigan appears to be leaning toward a yes vote.
"While I agree in principle that the tax affairs of very large companies ought to be transparent, when it comes to private Australian companies we also need to consider the privacy and security concerns of those who stand behind them," he has previously said.
"On the face of it, the government's proposed exemption appears to strike the right balance between these competing concerns."
It is unclear how the four remaining cross-benchers will vote.
Revelation consequences worrying
Senator Xenophon is a member of a Senate committee that recommended "maintaining existing tax transparency laws, which apply to both private and public companies".
He has now distanced himself from that recommendation, and said he was worried that companies supplying supermarkets, for example, will be squeezed if their tax information is revealed.
The committee made 17 recommendations, mostly aimed at increasing transparency, including annual reporting to Parliament on "aggressive tax minimisation and avoidance activities" and a public register of tax avoidance settlements reached with the Tax Office.
Big business defended Australia's tax laws following the release of the interim report.
"Australia has some of the toughest tax integrity measures in the world," Business Council of Australia chief executive Jennifer Westacott said. "Company tax receipts are expected to be about $70 billion this year."
Ms Westacott said it was important to remember that the OCED was leading global action on profit shifting and Australia had played an important role in that.
"A multilateral solution will be vital to avoid countries going it alone with 'beggar thy neighbour' responses that could result in double taxation, much higher compliance costs and the undermining of legitimate commercial arrangements," she said.