Corporate Tax Transparency Report Revealed

In March, the Australian Taxation Office (ATO) published the tax details of some 300 Australian-owned resident private companies with an income of $200 million or more.

“This transparency measure gives the community the chance to see a small part of the corporate tax data that the ATO holds. It is also an opportunity for us to talk about how we engage with these companies and the confidence we have in our compliance approach,” said ATO Commissioner of Taxation, Chris Jordan.

“Wealthy individuals and their businesses are substantial contributors to the Australian economy. The 321 companies included today reported income tax payable of around $2 billion in 2013-14, with an additional $1.6 billion reported by their associated entities.

“As with the December report relating to large public and foreign-owned corporates, there are some taxpayers with nil tax payable for the reporting period. No tax paid does not necessarily mean tax avoidance.”

What tax critics say

Despite the statement that no tax paid does not necessarily mean tax avoidance, a number of associations were quick to criticise no-tax-paying companies.

Mark Connelly, Campaign Director at GetUp!, said the tax system was broken when 98 out of 321 major companies paid no tax at all, including McDonalds Asia Pacific Consortium, Arrow Energy Holdings and Grocon Group Holdings.

“When major corporations don’t pay tax, we all pay more, and we all suffer in terms of poorer schools and underfunded hospitals” he said in response to the ATO report.

“The greed of big corporates is blowing a billions wide hole in our national budget – and Malcolm Turnbull’s proposed answer this week is to give corporations a $9 billion tax cut. At this rate, Australian taxpayers will have to start paying corporations money for doing business here.

“Every tax dollar dodged places pressure on the health and education budget, meaning children miss out on the opportunities for their best future or we risk giving people second-rate care that jeopardises their cure or well being.”

The Australian Greens Party was also critical, claiming that the tax data strengthens case for ending unfair tax breaks in Budget.

“With some large companies earning billions of dollars but paying no tax, the Treasurer should be asking if our corporate tax laws are tough enough, not trying to cut the company tax rate,” said  Greens Treasury spokesperson Adam Bandt.

“Serious questions need to be asked about why some companies had taxable income in the tens or even hundreds of millions of dollars but paid no tax at all.”

“The first step was to shine a light onto their tax affairs, now we must end the unfair tax breaks that allow the most wealthy Australians to pay less tax.”

The Labor party was also critical, with Andrew Leigh claiming that many big firms appear to be dodging their fair share (of tax).

“It says everything about Malcolm Turnbull’s priorities that he would put company tax cuts at the centre of his budget, even as so many big firms appear to be dodging their fair share,” he said.

No tax does not mean avoidance

Just as quick as the critics, Chartered Accountants Australia and New Zealand was quick to defend the ATO tax data, reiterating the ATO’s statement that the data results not be seen as indicative of tax avoidance behaviour.

“Private companies are just that: private” said Michael Croker, Head of Tax, “But their tax arrangements, as well as those of related entities and family members, are well known to the ATO and closely monitored.”

Private groups typically have complex structures to cater for diverse operations and investment activities. Mr Croker said taxes paid by these related entities and associated family members has not been disclosed today. “Nor does the published data explain why a named entity has paid little or no tax.”

“That’s why the Commissioner of Taxation has also had to publish general information about the tax law which may have contributed to this outcome, such as carry forward tax losses, high business deductions, or the tax free treatment of dividends from offshore subsidiaries,” he said.