Labor will launch a fresh assault on the tax affairs of multinational companies including tighter controls on debt loading in Australia to generate an extra $5.4 billion in revenue over a decade.
Bill Shorten will reaffirm Labor's previously announced commitment to changing existing thin capitalisation rules to ensure companies can only deduct interest on debt up to their worldwide gearing ratio.
This is an area Labor has emphasised following the Tax Office's victory in a recent transfer pricing case involving Chevron.
A Labor government would also remove the tax advantages that can be gained by companies structured as multiple-entry consolidated groups over Australian-owned groups.
The Tax Office would also get an extra $50 million year for compliance activity and a "community sector representative" would be appointed to the Board of Tax.
'These are tax dollars legally owed'
Finally, privately held companies with turnover of $100 million or more would be included in the ATO's annual tax transparency report. The threshold at present is $200 million.
"All told, Labor's new measures to make multinationals pay their fair share will deliver a budget improvement of $5.4 billion over the decade," Mr Shorten will say during a lunchtime address at PwC's Sydney office on Wednesday.
"That's not money ripped from the vulnerable or cut from higher education – these are tax dollars legally owed to this country by wealthy corporations.
"This is Labor's approach – a fairer tax system for a stronger budget."
Under the thin capitalisation changes, companies would no longer e allowed to claim up to a 60 per cent debt-to-equity ratio for their Australian operations.
"Instead, deductions would be assessed on the debt-to-equity ratio of a company's global operations. So if company's global debt-to-equity ratio is 30 per cent, it will only be able to claim tax deductions on the equivalent ratio of debt in Australia."
