The federal treasurer, Joe Hockey, recently announced that Australia will assist in global efforts to combat cross-border tax avoidance and tax evasion by requiring Australian financial institutions to report on foreigners holding assets in Australia.
The information will be provided to the Australian Taxation Office (ATO) who will then share it with other tax authorities around the world. Foreign tax authorities will provide the ATO with information about Australians who have assets and income overseas. So far more than 60 countries will be participating in the scheme.
The Australian Government will join the scheme in 2017, despite some Australian businesses lobbying to delay implementation of the arrangement until 2018.
The ‘automatic exchange of information’ between tax authorities has been one of the main asks of the Tax Justice Network globally, of which the Vic/Tas synod is a member and acts as the secretariat for the Tax Justice Network Australia.
Automatic exchange of information makes it harder for tax cheats to hide their assets and income from tax authorities and acts as a significant deterrent to tax avoidance and evasion.
“It has been great that Uniting Church members have been among the Australians writing letters to the federal government urging it to fully participate in automatic exchange of information between tax authorities,” Dr Mark Zirnsak of the synod Commission for Mission said.
“Survey work by the Tax Justice Network Australia shows overwhelming community support for meaningful government action to crack down on tax cheats.”
Developing countries are particularly harmed by tax avoidance and tax evasion activities. Estimates suggest lost revenue to these countries far out-strip the total funding they receive in aid.
The ATO reported in its 2012-2013 annual report that existing exchange of information cases with other governments contributed to around $480 million of adjusted tax, penalties and interest.