Profit-shifting a huge issue for Australia

A top Treasury official says profit-shifting by corporations probably matters more to Australia than almost any other country.

That's because Australia has a high dependence on corporate tax, and why it has been a key driver of pursuing the OECD work on so-called base erosion and profit-shifting through the G20.

"This is a huge issue for us," deputy Treasury secretary Rob Heferen told a Senate inquiry into tax avoidance on Thursday.

Mr Heferen warned about the risk of overreaching, saying Australia did not have the luxury of enacting laws that attempted to deal with tax avoidance but in substance prevented legitimate value-creating activity form taking place.