MALCOLM TURNBULL’S IDEA OF HELPING STARTUPS: GIVE TAX BREAKS TO WORLD’S BIGGEST FIRMS
Malcolm Turnbull has buried a huge tax loophole for big businesses in the fine print of his Innovation Statement.
The Prime Minister talks a lot about supporting Australian startups and new businesses, but this decision could instead end up funneling millions in tax breaks to some of the world’s biggest firms.
Currently, these assets must be claimed as tax deductions according to a timetable set by the Australian Tax Office– meaning their value can only be claimed back over either 8 or 20 years.
The Government now wants to let companies choose their own depreciation schedules instead. This means they may claim tax breaks over a much shorter period and dramatically boost their profits in the process.
Importantly, the Government has not limited this tax break to small firms or local startups. Any company doing business here which acquires intangible assets will be able to write them off this way – including the world’s biggest technology firms and other corporate behemoths.
As the Senate’s corporate tax inquiry has heard, shifting money around from one arm of a company to another under the guise of paying for intangible assets is already a standard trick in the tax avoidance toolkit. Adding another tax incentive into this mix will likely lead to even more money draining away offshore.
At a time when Australia is supposed to be closing down tax loopholes that let huge companies avoid paying their fair share, Malcolm Turnbull must explain why he has just thrown open a new one.
The Government’s costing for this measure appears to completely underestimate the real impact on the Budget.
The instant asset write-off measure for small business included in the 2015 Budget is set to cost $1.8 billion over two years, for a scheme that caps deductions at $20,000. Does anyone really believe it will be cheaper to offer huge corporations an uncapped ‘Instant IP Write-Off’?
Malcolm Turnbull needs to explain how much this decision will really cost the budget bottom line, and what other cuts he plans to make to give the world’s biggest firms a tax break.
Perhaps we should not be surprised that when Malcolm Turnbull praises agility and innovation, he really has in mind agile accounting and innovative income tax avoidance.
THURSDAY, 10 DECEMBER 2015
MEDIA CONTACT: JENNIFER RAYNER 0428 214 856