Second Reading Speech
Dr LEIGH (Fenner - Assistant Minister for Competition, Charities and Treasury, Assistant Minister for Employment)I move:
That this bill be now read a second time.
This bill is part of a package of three bills which together will enact a 15 per cent global minimum tax and domestic minimum tax for multinational enterprises operating in Australia with an annual global revenue of 750 million Euros (approximately A$1.2 billion) or greater.
Schedule 1 to the bill implements consequential and miscellaneous provisions necessary for the administration of the global and domestic minimum taxes in Australia, including amendments to ensure the taxes interact appropriately with existing Australian taxation laws.
Specific amendments are proposed to be made to the following Acts:
- The Administrative Decisions (Judicial Review) Act 1997;
- the Income Tax Assessment Act 1936;
- the Income Tax Assessment Act 1997;
- the International Tax Agreements Act 1953; and
- the Taxation Administration Act 1953.
Extensive consultation has taken place with stakeholders to inform the policy and legislative design of interactions set out in the bill's amendments.
At a basic level, these amendments will not affect Australia's existing corporate income tax rate or rules, which will continue to apply to multinational enterprises operating in Australia. The global and domestic minimum taxes will only apply after the application of the income tax rules.
The amendments, moreover, do not alter or weaken the application of existing Australian taxation integrity measures such as the hybrid mismatch and controlled foreign company rules.
The integrity measures in our income tax law have a proven track record of success against tax planning schemes and will largely continue to apply in priority to, and separate from, the application of the global and domestic minimum taxes.
However, to ensure that relief from double taxation is provided where appropriate, a credit will be available to taxpayers under foreign income tax offset rules for any top-up tax paid under a foreign jurisdiction's domestic minimum tax, subject to certain integrity safeguards.
In a similar vein, the controlled foreign company rules will be amended so that they take into account top-up tax paid under a foreign jurisdiction's domestic minimum tax.
Franking credits will also be available to taxpayers who pay top-up tax under Australia's domestic minimum tax, representing a corporate tax paid on domestic profits.
An amendment has also been included so that Australia's bilateral tax treaties will be overridden in the event of any inconsistency between them and the application of the global minimum tax.
These points aside, the amendments contained in this bill are designed to administratively accommodate the application of the global and domestic minimum taxes in Australia.
The bill will commence at the same time as the Taxation (Multinational - Global and Domestic Minimum Tax) Bill commences, that is, the day that bill receives royal assent, with application to fiscal years commencing on or after 1 January 2024.
Full details of the measure are contained in the explanatory memorandum.
Debate adjourned.