Global Tax Advisor, May 19, 2015. In its 2015 budget Australia introduced measures to counter base erosion and profit shifting.
In its 2015 budget Australia introduced measures to counter base erosion and profit shifting (BEPS) (i.e., measures to combat "stateless" or low-taxed income earned from Australian sales).
The budget also contains measures to:
The new anti-avoidance measures to combat low-taxed income earned from Australian sales will apply where the following criteria are met:
If the criteria are met, Australia can assess tax (including withholding tax) as if there was an Australian taxable presence. In addition, Australia could impose a fine of 100% of the unpaid tax, plus interest.
The measures, which modify Australia's existing anti-avoidance rules, will apply as of January 1, 2016 with no grandfathering of existing arrangements.
Australia will adopt the OECD's new transfer pricing documentation requirements. Under the new rules, the Australian Taxation Office will receive the following information:
The measures will apply as of January 1, 2016 to companies with a global revenue of AUD$1 billion or more.
The budget proposes to double transfer pricing penalties to 50% (from 25%) when a taxpayer does not have a "reasonably arguable position".
The budget introduces new measures to charge GST on all imported intangibles and services that Australian resident end-users consume. The measures will apply to intangibles, such as digital supplies (e.g., movie downloads, games), as well as services, such as consultancy and professional services. However, the measures will not apply to physical goods that are ordered online.
The measures will apply as of July 1, 2017.
The budget reduces the corporate income tax rate to 28.5% (from 30%) for small business entities (i.e., entities with sales of less than $2 million). The 30% franking credit rate (i.e., represents the tax a company pays on profits distributed as dividends) will remain unchanged for all companies.
The measure will apply as of July 1, 2015.
For more information, contact your KPMG adviser.
Information is current to May 19, 2015.