Taxation Principle and Planning

Taxation Principle
and Planning

Introduction
• The connection of MAAL revolves around
“Pt IVA of the
ITAA 1936” and the newly introduced
“sec 177D”.
• If the taxpayer is found to be in breach of MAAL, the
commissioner has the power of cancelling the deemed tax
benefit which will be enlivened within the
“ITAA 1936” .
• The corporate tax rate of 30% will be applied and the
penalties of around 120% to evaluate the tax benefit might
be implemented within
“TAA 1953”.

Intent of MAAL legislation:
• The main objective of MAAL provisions is to apply the principle purpose
test where an individual has entered in the scheme with the principle
purpose of getting tax benefit and to lower or defer one or greater than
one taxpayer’s liabilities to impose tax under the foreign law that are
connected with the scheme.
• This law makes sure that multinational enterprises pay their fair amount
of tax on the profits that is earned from Australia.
• The MAAL counters the erosion of Australian tax base by the
multinationals by using artificial and contrived arrangements in order to
avoid attribution of profits to the permanent establishment in Australia.

Central constituents of MAAL
• The concept of significant global entities (SGE)
• Making of supplies to unrelated Australian customers
• Activities that are undertaken in Australia
• Determining whether the arrangements contained
principle purpose of obtaining an Australian tax benefit.