30 December 2015

Corporate Tax Transparency: ATO releases tax data on 1500 large corporations

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Just days after Treasurer Scott Morrison took the axe to welfare, family day care, health, and aged care services the Commissioner of Taxation Chris Jordan AO published the tax details of 1500 large corporate taxpayers. The report forms part of a much wider domestic and global push for improved corporate transparency.

The published report is an entity by entity listing of public and foreign owned corporate entities reporting total income of $100 million or more in 2013-14. With ASX data showing more than 20 per cent of companies make an accounting loss in any given year, no tax paid does not necessarily mean tax avoidance.

In a statement released at the time of the report Commissioner of Taxation, Chris Jordan AO said;

“I am confident of the ATO’s oversight of these large players in our economy, and of our ability to keep close watch on the revenue we receive. Any companies with unusual financial or taxation numbers are closely investigated by the ATO. Over half of these 1500 companies have been subject to ATO review or audit over the past three years, with the ATO’s risk and intelligence systems working all the time to ensure we can all have confidence in the tax system.”

“Within the OCED only Norway taxes companies more as share of the economy than Australia,” Jennifer Westacott, Chief Executive Officer of the Business Council of Australia said in a statement on December 17, 2015.

“The figures,” she added, “should be interpreted with caution. Companies do not pay company income  tax on revenue, they pay it on profits after paying all expenses including wages, capital replacements, supplier costs, fleet costs and other operating expenses.” She said.

“Profit margins will also vary by industry, reflecting different capital intensities.”

This no doubt makes sense to accountants and tax lawyers, but for the general public it is hard to understand how a company such as Unicharm Australasia, which owns the Babylove nappies and Be Fresh sanitary products, had a total income of $130 million, yet paid only $3 on a total taxable income of $10, while Steinhoff Holdings who is owned through the Netherlands and holds key brands Freedom Furniture, Snooze, and Buy (Leather Republic) had a total income of $431 million, but only a taxable income of $150 and paid $0 in tax.

Assistant Treasurer Kelly O’Dwyer told reporters in Melbourne that “just because they don’t pax, doesn’t mean they are avoiding tax.”

“We have strengthened the powers of the Australian Taxation Officer, we have doubled the penalties for the people who do the wrong thing and strengthened Part IVA of the Australian Tax Act,” Ms O’Dwyer said.

According to the ATO report the companies listed have paid a combined $40 billion in tax in 2014. Given the national total taxation revenue generated is approximately $67 billion to say all companies are dodging their taxation obligations would obviously not be fair or true. However, for companies such as QANTAS, Exxon Mobile Australia, Lend Lease, Virgin Australia, General Motors, Vodafone Hutchison Australia, Chevron Australia, Peabody Energy, News Corp, Transfield, Tiger Airways, Infigen Energy and Adani Abbott Point Terminal to not have any taxable income payable for the 2013-14 period does reinforce the need for an overhaul of the Corporate Tax laws in Australia and also shows the importance of companies supported by Australian’s in turn supporting our country by paying a fair and equitable tax amount.

Mike Cullen has recently returned to Akolade after a period as the conference producer for one of Australia's leading economic think tanks. Mike began working in the conference industry in 2007 after looking for a career change from the high pressured world of inbound customer service. Mike has worked for some of the most well-known conference and media companies in the B2B space and in his spare time is working on his first novel in a planned Epic Fantasy trilogy.

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