With the election now complete and the Labor Party officially in government, attention has turned to the policies most likely to shape the next few years. Labor’s election commitments provide a clear indication of the areas expected to receive early focus. Two of the most prominent themes are multinational tax reform and changes to the childcare subsidy system.
Multinational tax avoidance reforms
Labor’s tax platform places significant emphasis on tightening rules applying to large multinational groups, with the stated aim of ensuring these companies pay an appropriate level of tax in Australia. A combination of measures is expected, including changes to debt deductions, intellectual property arrangements, transparency, and reporting obligations.
Limiting debt-related deductions
Labor proposes to limit debt-related deductions, including interest payments, to 30 percent of a firm’s profits. This measure is designed to address concerns about artificial debt arrangements created within multinational groups to shift profits offshore.
Businesses may be able to claim deductions above the 30 percent limit if they can substantiate them under:
• the arm’s length test
• the worldwide gearing ratio test
Restricting deductions for intellectual property payments
From 1 July 2023, Labor intends to deny deductions for certain intellectual property payments made to jurisdictions where the recipient does not pay what is considered sufficient tax. This is targeted at arrangements involving tax havens or low-tax countries where intellectual property is commonly held for tax minimisation purposes.
Increased public transparency
Large multinational firms will be required to publish high-level information about:
• the amount of tax they pay in each jurisdiction
• the number of employees in those locations
• key operational data
This is intended to increase public accountability and reduce opportunities for profit shifting.
Establishing a register of beneficial ownership
Labor has proposed introducing a publicly accessible registry showing who ultimately owns, controls, or receives the profits from companies and other legal entities. This aims to prevent the use of complex structures to obscure tax liabilities or conceal beneficial interests.
Reporting on tax risk to shareholders
Companies operating in jurisdictions with tax rates below the global minimum rate of 15 percent will be required to classify this as a material tax risk in disclosures to shareholders.
Government tenderer disclosure
Entities bidding for government contracts exceeding $200,000 will be required to disclose their country of tax domicile, strengthening transparency requirements for government procurement.
Childcare subsidy reform
Childcare affordability and accessibility were central themes in Labor’s election commitments. The proposed reforms aim to reduce out-of-pocket costs for families and support workforce participation.
Increasing the maximum childcare subsidy
Labor plans to increase the maximum childcare subsidy to 90 percent for families with a first child in care. Existing higher subsidy rates for second and subsequent children will be retained.
Support for school-aged children
The enhanced subsidy will also extend to outside school hours care (OSHC), increasing support for families with school-aged children who require before-school, after-school, or holiday care.
Longer term structural reform
In addition to immediate changes, Labor has indicated it will:
• work with the ACCC to explore price regulation in the childcare sector
• request the Productivity Commission to conduct a comprehensive review of childcare
• explore the feasibility of implementing a universal 90 percent subsidy for all families over time
These steps suggest a broader objective of reshaping childcare funding and improving affordability nationwide.
What this means for individuals and businesses
Many of the outlined measures will require consultation, drafting, and passage through Parliament before they take effect. Businesses operating internationally, especially those with complex financing or intellectual property structures, should monitor developments closely. Families with childcare needs should expect greater support, but also potential changes to pricing and regulatory oversight.
Frequently Asked Questions
Will there be new transparency requirements for multinational companies?
Yes. Labor proposes requiring large multinational firms to publish high level data on their tax paid in each country where they operate, including employee numbers and other key indicators.
Will government suppliers face new tax related rules?
Yes. Businesses tendering for government contracts worth more than $200,000 may need to declare their country of tax residence as part of mandatory reporting obligations.
What is Labor planning to do about multinational tax avoidance?
Labor intends to tighten rules on debt related deductions, block abusive intellectual property payment arrangements to tax havens and increase public reporting obligations for large multinational companies.
Speak to one of our accountants today if you have any questions or need assistance with the agenda for the government.
