Double his efforts: Treasurer Joe Hockey on Thursday morning.

Double his efforts: Treasurer Joe Hockey on Thursday morning. Photo: Alex Ellinghausen

Multinational corporations that use complicated schemes to avoid paying tax in Australia are set to be targeted, with Treasurer Joe Hockey demanding the Commissioner of Taxation "double his efforts".

Mr Hockey has also warned Australians with offshore investments to once again disclose their unreported foreign income to tax authorities before the end of the year if they want to avoid serious punishment.

On Thursday morning, the Treasurer delivered a statement to Parliament on the upcoming G20 global finance ministers and central bank governors meeting in Cairns this month, outlining the Abbott government's plans to prevent global companies from using "aggressive tax planning" to shift untaxed profits overseas.

A half-baked measure: Shadow treasurer Chris Bowen.

A half-baked measure: Shadow treasurer Chris Bowen. Photo: Alex Ellinghausen

He said the Abbott government would not "stand idly by" and allow multinational corporations to avoid paying their fair share of tax in Australia, warning that he has asked the Tax Commissioner to undertake "extensive audits" of companies "considered a risk to Australian tax collections".

"As the Prime Minister and I have both previously said, you should pay tax in the country where you've earned a profit. That's not just an essential tax principle, it is rational and fair," he said.

"[But] there is a small proportion of multinational businesses that set up sophisticated arrangements to avoid Australian tax. This is patently unfair – unfair on the Australian taxpayer and unfair on competitors doing the right thing."

"This government won't stand idly by while this is happening, and we are firmly committed to ensuring that Australia tax is paid on profits earned in Australia."

Parliament currently has before it legislation that tightens Australia's so-called "thin capitalisation" rules and legislation that prevents multinational corporations circumventing the proper application of those rules.

Mr Hockey said his government's amendments – due to take effect from July 1 this year – will ensure these thin capitalisation rules apply to "all debt expenses" claimable in Australia.

The Treasurer also criticised the former Labor government for leaving almost 100 tax measures unenacted and announcing other measures that would have imposed "unfair harm on Australian businesses" before they were voted out.

"Announcing half-baked measures that can't be implemented will only deter investment and penalised Australian businesses," Mr Hockey said. "That's why we won't proceed with them."

But shadow treasurer Chris Bowen fired back, slamming the government for cutting funding to the Australian Tax Office at the same time as it wants the agency to double its compliance effort.

"Simply asking the Tax Office and the Tax Commissioner to double his compliance efforts at the same time as reducing funding to the Australian Tax Office makes absolutely no sense at all," Mr Bowen said.

"We asked the Tax Commissioner to increase tax compliance efforts as well, but we gave him the resources to do it."

"Under this Treasurer, the staffing complement for the Australian Tax Office has been reduced by 4700 people over the next four years … [and] I say to the house very clearly that compliance will suffer as a result," he said.

The G20 finance ministers and central bank governors' meeting this month will be one of the last formal meetings before the G20 Leaders Summit in November, which will be held in Brisbane.

Australia is chair of the G20 Leaders Summit this year, and the Abbott government has made a priority of global tax compliance, and the pursuit of international profit-shifting.

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