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John Passant

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Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
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Sick kids and paying upfront

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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The Google tax and the tax office ‘auditing’ mutlinationals

My letter today to the Australian Financial Review

John

Without seeing the detail of the so-called ‘Google tax’, as a former Assistant Commissioner of Taxation in the international area of the ATO it appears to me there is one possibly insurmountable problem, Australia’s double tax agreement with Singapore.  (Phillip Coorey and Fleur Anderson, ‘Treasurer poised to impose “Google tax”‘ AFR Tuesday 9 December page 1.)

Under that treay (and all Australia’s tax treaties) Singapore has taxing rights over the income of its resident companies. As a company incorporated there Google Singapore is subject to income tax in Singapore and not Australia, including on profits which are sourced from Australia.  The exception is when Google Singapore has a permanent establishment (PE) in Australia, for example a branch physically located here. Australia then has taxing rights over the income attributable to that PE.

I understand when an Australian contracts with Google Singapore (by for example placing an advertisement on Google) they do so through a server not located in Australia rather than by dealing directly with its branch here.  This means that our treaties, and indeed all our and other country tax treaties,  based as they are on 19th century concepts of physical presence, make collecting tax from Google Singapore almost impossible to do because Singapore, not Australia, has the taxing rights over Google Singapore profits arising in Australia.  (I am assuming the Australian PE of Google Singapore has little role in earning the income here.) Without a change to our Singapore, and indeed all the other tax treaties,  any income tax imposed on Google by Australia will in all likelihood be invalid under the treaty.

My suggestion is to impose an operating fee on Google and other taxpayers carrying on business in Australia but paying little tax here. Twenty percent of estimated turnover might be a starting point.

And while I have your attention on tax matters, Joe Hockey’s announcement that ten multinationals have ATO auditors embedded in them is a joke. Only ten?  Are the other hundreds of multinationals all squeaky clean?

Further, that doesn’t address the fact that for the last decade the International area of the ATO has been destroyed and its expertise wrecked, lost or dispersed.  With 2200 staff cuts so far in the last twelve months (and an extra 2500 planned for the end of 2017), more of that international and audit experience has been or will be lost. The beneficiaries of the massive job cuts in the ATO by the former KPMG partner and current Commissioner are the rich and powerful.

Putting a few auditors into ten multinationals isn’t going to change that. It is a smokescreen to cover the destruction of international expertise and capacity in the ATO and institutional changes within the organisation which favour tax avoiding big business at the expense of the rest of us.

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