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Opposition calls on Apple to pay its "fair share" of tax

The Federal Opposition is taking the hard line on multinational companies that avoid tax, including a subtle swipe at Apple for paying less tax in Australia than local retailer Harvey Norman.

Image by Ken Teegardin, CC BY-SA 2.0

The Federal Opposition has announced plans to crack down on multinational profit shifting and tax avoidance, calling out the likes of Apple for not paying their "fair share" of taxes in Australia.

Leader of the Opposition Bill Shorten said the new plan introduced by Labor would bring back at least AU$1.9 billion in taxes over the next four years by changing the way multinational companies claim tax deductions, granting extra resources to the ATO and imposing tougher restrictions on "hybrid structures" designed to reduce tax.

In a statement co-signed by Mr Shorten, Shadow Treasurer Chris Bowen and Shadow Assistant Treasurer Andrew Leigh, the gap between what some multinational and Australian companies pay was highlighted.

"Last year one of the largest companies in the world paid AU$80 million in Australian tax, on local revenue of just over AU$6 billion," the statement read. "The local retailer Harvey Norman paid more tax -- AU$89 million -- on a quarter of the revenue."

While Shorten didn't mention Apple by name, the figures match those cited in a Labor Party case study on its "Fair Share" campaign page. These numbers show that Apple paid AU$80.3 million in tax in 2013-14, equivalent to roughly 1 percent of its total sales income for the year, compared to Harvey Norman's AU$89 million tax bill.

Acknowledging that the accounting methods used by multinationals are often incredibly complex -- one tax loophole is known as the "Double Dutch Irish sandwich" -- Shorten said Australian companies shouldn't be required to pay more simply because they don't use these complex systems.

"How much tax you pay shouldn't depend on how much you can afford to pay your tax lawyer and specialist accountants," said Mr Shorten in a press conference. "It isn't right that James Hardie pays less than James Smith the plumber."

Echoing to Mr Shorten, Shadow Assistant Treasurer Andrew Leigh said many multinational companies were using profit shifting loopholes and "effectively double dipping across countries" to dodge taxes. According to Mr Leigh, these multinational companies need a tax break "like Prince Philip needs a knighthood."

Mr Leigh added that Labor's measures would help to recover lost taxes and would be more effective than "Joe Hockey's thought bubble of a Google tax."

Federal Treasurer Joe Hockey has previously spoken out against multinational tax avoidance, saying that Australia was missing out on up to AU$3 billion a year in revenue because of the practice. In addition, Mr Hockey announced a plan late last year to embed auditors within 10 multinational companies that operate in Australia in order to address the problem. While the companies were not named, major IT names such as Google were believed to be in the Government's sights.

This measure was one of a number called out for commendation by Assistant Treasurer Josh Frydenberg in response to Labor's proposed tax reforms.

In a statement, the Assistant Treasurer said Labor was making "policy announcements without any actual detail" and if the Opposition was serious, it would have released full details and costing. He also pointed to comments from the Business Council of Australia and the Australian Chamber of Commerce and Industry respectively, which said the measures had "the potential to slow economic growth" and cost jobs.

"Far from handing back money to multinationals, the Government has got on with the job of shoring up our tax base in a manner that can be implemented," Mr Frydenberg said.

CNET has contacted Apple for comment.