The government has declined to close a loophole that allows foreign investors to use "equity described as debt" to ensure they are taxed at zero or at most 10 per cent tax Sydney University Challis law professor Richard Vann told the AFR Tax Reform Summit in Sydney on Tuesday.

In a spirited exchange on tax rates, the chairman of the Commonwealth Grants Commission, Greg Smith, said Australians owned more investments in the rest of the world than the rest of the world owned in Australia.