What the new multinational anti-avoidance law – MAAL 2, announced in the
Budget on Tuesday – is fundamentally about is the balance of power in a
We already have the laws in place to deal with artificial and contrived
structures, but if a taxpayer wants to play hard-ball, then this would make them think twice: penalties at 40 percent, and most importantly, paying the purported tax upfront.
In addition, that tax amount is based on information made available to the
Commissioner. So delays in providing the Commissioner with material will not be a good strategy.
Our anti-avoidance provisions now have four different hurdles for looking at
whether there is an inappropriate tax purpose. They are the 'sole or dominant
purpose' for general anti-avoidance; 'more than an incidental purpose' for
franking credit schemes; “one of the principal purposes” for avoiding a
permanent establishment and now “designed to secure” for structures designed to shift income. Whether we need four tests or could do with one is an interesting question. But this is certainly not simplification.
In addition, the Australian Taxation Office (ATO) is being funded with an
additional amount of $680 million for compliance work on multinationals and high net worth individuals. This is expected to raise about $3.7 billion over four years. This is a return of 5.4 times the amount of the investment.