Published on the 04/05/2016 | Written by Beverley Head
The 2016-17 budget painted a big red target on multinational technology companies that have shifted profits offshore to avoid paying tax…
Following legislative changes late last year, the Treasurer, Scott Morrison, announced the introduction of a Diverted Profits Tax (DPT) that will penalise companies which engage in this sort of behavior. It estimates this will raise $650 million over four years.
A similar move in the UK netted 130 million pounds sterling from Google alone.
Over the same period it will also invest $679 million in a 1300 person tax office tax force – including 390 new specialised roles – that will police the tax affairs of multinationals, private companies and high net worth individuals in a move anticipated to add billions to the Government’s coffers.
That will help pay for reductions to the corporate tax rate which are initially aimed at small and medium enterprises and start ups. From July the lowest corporate tax rate of 27.5 percent will be extended to businesses with revenues of up to $10 billion.
Over time (and in lockstep with the growth trajectories of many tech start ups) that threshold will grow. In a decade all businesses in Australia will face a 25 percent tax rate which the Treasurer Scott Morrison said would put Australia back in the centre of the global tax pack.
Whether that promise is enough to stop the flow of Australian tech start ups to lower taxing jurisdictions remains to be seen.
Tax reform is at the heart of the Budget, which will this year play a double role as election manifesto, with the Prime Minister, Malcolm Turnbull expected to call a double dissolution of both Houses of Parliament within days, with an election slated for early July.
The Budget has ticked off the major spending promises made in both the $1.1 billion National Innovation and Science Agenda (NISA) announced late last year, and in last month’s Cyber Security Strategy – but there were few surprises, with the exception of $100 million to establish a geoscience data bank of pre-competitive information intended to support exploration and investment in northern Australia and South Australia over the coming four years.
The value of data to Government was acknowledged in the budget statements of most departments with data matching, online services and analytics being rolled out to improve service delivery and improve public sector efficiency.
In health a new body, the Australian Digital Health Agency will kick off later this year, to encourage the uptake of MyHealth electronic health records. Currently only 2.7 million Australians have such records – but trials are underway of an opt-out (rather than the current opt-in) regime to attempt to boost uptake.
Education received the STEM and digital focused injections required to meet the NISA commitments, and the Budget also confirmed $1.5 billion of funding over the next decade for the National Collaborative Research Infrastructure Strategy. Wholesale university reform and a proposed deregulation is off the cards before 2018 however.
Hopes that the Government might add a pre-election fillip for the national broadband network proved unfounded. It’s strictly business as usual for the organisation, though the Budget papers note that the Government is now looking for the next round of funding for the enterprise with its $29.5 billion worth of equity being used up by the end of the next financial year.
It is conducting preparatory work for a debt raising.
The operations of the Digital Transformation Office are assured for the next four years as it directs a wholesale rethink of the way in which Government services are accessed and delivered. However the next financial year will prove its zenith when it will receive $34 million in funds and boast a headcount of 208. After that its budget and headcount will fall as the operational work falls away to individual departments.
Finally the Government’s flirtations with fintech continue. It announced a “blockchain sandpit” will be established that would allow the nation’s regulators to get up close and personal with the technology and work out what might be needed to ensure the safety and security of both Australians and the financial market.
