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May 14th, 2013 
Peter Nolan
BIG business is the target of a federal government crackdown on so-called loopholes in the corporate tax system it says will deliver $4 billion in budget savings.
Treasurer Wayne Swan denied he had made business a soft target saying those areas targeted were being abused.
Multinationals, banks and miners were named as culprits in Tuesday’s budget for practices that were eroding the government’s tax receipts.
The move was criticised by industry groups as a tax grab when a long-term tax reform plan was needed.
The package was a centrepiece of tax reforms mapped out in the budget, including to superannuation, and comes as a $17 billion writedown in expected tax receipts over the 2012/13 financial year has been a major hit to the budget’s bottom line.
The government’s changes will prevent foreign multinationals artificially loading debt into their Australian operations and claiming tax deductions.
They will also implement a $1.1 billion program to make it more difficult for miners to claim up-front tax deductions on exploration work that they never carried out, usually when the discovery was made by a junior miner that sells them the rights.
Foreign miners and other investors are also being targeted for not paying foreign-resident capital gains tax, by taking 10 per cent of the sale proceeds from the purchaser of Australian property.
Other targets included banks shifting income offshore to reduce tax and sophisticated investors carrying out ‘dividend washing’, or repeatedly claiming tax benefits on dividend payouts.
Mr Swan denied that big business was a soft target in his government’s efforts to make budget savings, saying he supported an economy with strong demand, profitable businesses and Australians in work.
Treasury said the crackdown would save just over $4 billion over four years and ensure stable revenue to fund vital investments in Australia.
“If some taxpayers do not pay their fair share of tax, a higher tax burden will fall on Australian families and small businesses,” it said.
Tax Institute president Steve Westaway said while efforts to close loopholes were worthwhile, they would not have been necessary if the government had not ignored the long-term vision laid out in the 2010 Henry Tax Review.
“Tonight’s measures lack any holistic tax reform plan to correct fundamental flaws and restore sustainability of tax revenues,” Mr Westaway said.
The government says it has acted on a third of the review’s recommendations.
PricewaterhouseCoopers Australia chief executive Luke Sayers said Australia was too reliant on corporate tax as a source of government revenue.
“The measures announced tonight confirm we are still on a slow moving fiscal cliff, imbalances appear to be chronic, and our standard of living is at risk,” he said.
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