CANBERRA: Australia Taxation Office’s priorities in the area of international tax enforcement, with an especial focus to be placed on the energy and resources sector and pharmaceutical industry.
His comments, published by the ATO on March 29, focused on the work of the new Tax Avoidance Taskforce, established in 2016, to tackle multinational tax avoidance and avoidance by wealthy individual taxpayers.
On the energy and resources sector, he said the ATO will be looking specifically at exploration expenditure, hubs (particularly marketing hubs), and related-party financing such as debt funding, the use of derivatives to avoid interest withholding tax, and cross currency interest rate swaps.
“With Australia set to become the world’s biggest exporter of liquefied petroleum gas by 2022, the oil and gas industry is a particular focus for us. With big developments and long term contracts being a feature of the LPG industry, it is important we get the pricing right from the start or it could all end in tax tears,” he said.
“The fragmentation of business structures in order to re-characterize income from trading income earned by a company to passive income earned by an associated trust is also a concern,” he continued. “These fragmented arrangements are then sold as highly tax effective stapled securities. Recent arrangements have been pushing the envelope of what can be put on the trust side. The Government is also examining this issue from a policy perspective.”
Next he discussed the transfer of intellectual property offshore, describing it as a growing concern for the ATO: “We are investigating arrangements that result in the migration or artificial allocation of intangible assets, and rights in those assets, to offshore related parties by multinationals. Valuation issues also arise in these matters.”
