It is expected that the legislation, if passed, will result in at least $100 million in revenue during the 2018-19 and 2019-20 financial years, according to the explanatory memorandum. The new measures have a compliance cost impact of $16.4 million per year for 10 years.
Meanwhile, the Combating Multinational Tax Avoidance Bill 2017 includes further measures to ensure that multinationals pay the "right" amount of Australian tax in Australia.
The new legislation increases the maximum penalty for large multinationals by a factor of 100 in cases where they fail to lodge tax documents on time. The government is also doubling the penalties for large multinationals when they make false or misleading statements to the ATO.
The failure to lodge penalty for a significant global entity is $90,000, which would apply where a document is lodged up to 4 weeks late. The maximum penalty, where a document is late by more than 16 weeks, is $450,000.
For large entities, this means that failure to lodge penalties increase by a factor of 100, compared to the original maximum penalty of $4,500
Under the new legislation, the maximum administrative penalty for significant global entities that fail to comply with their tax reporting obligations will increase to $525,000.
The legislation also amends Australia's transfer pricing law, giving effect to the 2015 OECD transfer pricing recommendations.
"These recommendations provide greater clarity on how intellectual property and other intangibles should be priced, and ensure the transfer pricing analysis reflects the economic substance of the transaction rather than just the contractual form," Morrison said in a statement.
"Adopting these changes will keep our transfer pricing rules in line with international best practice and help ensure that profits made in Australia are taxed in Australia," he said.
Source: CIO Australia
Sign up for CIO Asia eNewsletters.