The taxman will put the Australian operations of multinationals including Google and Apple under the microscope as part of an investigation of complex schemes used by global companies to minimise tax.
With governments scrambling to protect their corporate tax bases, new Tax Commissioner Chris Jordan has signalled he will step up scrutiny of multinationals that use aggressive tax strategies.
Before his first speech as commissioner on Thursday, Mr Jordan revealed plans to conduct a review of how much money is being made in Australia by high-profile global firms that have gained attention for shifting profits around the world.
The review will also assess whether multinationals are abiding by the letter of the law, and seek to make "full use" of available penalties if not.
Under current rules, many global companies are not required to file tax returns here because technically they do not earn income in Australia.
Google, for instance, argues its sales to Australians take place in Singapore. Accounts show it paid $74,000 in Australian tax in 2011 - an amount disputed by the company - but it is estimated to have made up to $2 billion in revenue.
While Mr Jordan would not name companies, he said he would look at high-profile cases, and Assistant Treasurer David Bradbury last year took the rare step of naming Google and Apple.
With few figures available on what profit-shifting costs the budget, the ATO will examine how much revenue these firms are making in Australia in order to make a judgment about how big the problem of tax base "erosion" is. "The whole argument of these structures is they don't have Australian-sourced income, therefore they don't have to put a tax return in. And I'm going, 'Well, gee, I'd like to know what sort of money is running through these structures'," Mr Jordan told BusinessDay.
The review will be carried out in the coming months and will report its findings to a Treasury inquiry into tax minimisation by multinationals. As well, the review will assess whether the multinationals' minimisation schemes are strictly following the law.
"Is it legitimate for the businesses to be left alone to adopt very aggressive structures? Part of my role is to ensure businesses operate within the law. I want business to clearly know, if they choose questionable or very aggressive practices, there will be consequences," Mr Jordan will say in Thursday's speech.
There is a dearth of information on how much federal coffers lose to tax schemes by multinationals, but Mr Jordan said he thought it was a significant problem.
"I've got a feeling that it is large, but we honestly just don't know at this point in time the magnitude of the problem," he said.
Mr Jordan, a former tax adviser who has worked with Labor and Coalition governments, was the first external appointment to the ATO in its 100-year history.
Google, Apple and eBay have been named as a tech companies that use complex strategies to minimise tax.