New corporate tax data shows big Australian companies and multinationals paid more tax in 2019 – but about a third of the largest businesses in Australia are still not paying a cent.
On Thursday, the Australian Taxation Office is to release data showing the tax paid by each of more than 2,300 businesses that operate in Australia, including privately owned and publicly listed local companies as well as the local arms of multinational groups.
In total, the companies paid $56.1bn in tax in the 2018-19 financial year, an increase of $3.8bn on the year before that was mostly due to high prices for commodities including iron ore. This represents more than 60% of the total corporate tax paid that year, the ATO said.
The figures do not take into account any of the effect of the coronavirus recession, which the ATO has told Guardian Australia will result in some industries paying significantly less tax even as miners continue to contribute large amounts due to record iron ore prices.
Over the six years in which Gillard government laws requiring the ATO to report on the tax payments of the big end of town have been in force, the proportion reporting a nil contribution to the Treasury has fallen from 36% to 32% – a figure where it appears stuck.
However, the ATO says that some of the companies in the sample are part of larger corporate groups that do pay tax; on this measurement the proportion of non-payers drops to 22%.
The ATO deputy commissioner Rebecca Saint said there was a range of reasons why companies could legitimately be declaring losses.
“That can be because of where they’re at in the economic cycle, during the construction phase for example, but not yet generating revenue,” she said.
“They are then not going to be paying tax at that point, equally when they start to generate revenue they will have carry forward losses that they’re able to use in those forward periods that mean they won’t pay tax. We need to accept that that is completely legitimate and reasonable to expect.”
She said the ATO had a very good understanding of what the big end of town was up to.
“I think people can be confident that we’re able to detect and deal with tax planning within this population,” she said.
The ATO has in recent years used laws introduced when Joe Hockey was treasurer to crack down on efforts to shift corporate profits away from Australia’s relatively high tax rate of 30% and towards jurisdiction where the rate tends towards zero.
But despite success, particularly in the resources and tech sectors, that has brought billions of dollars of revenue onshore to Australia, it remains concerned about the use of complex international transactions designed to dodge tax.
Saint said the ATO’s current hit list included deals designed to spirit intellectual property away to tax havens, deals where importers attempt to avoid taxes on royalties and so-called “bifurcated hubs”, where payments to offshore subsidiaries are split up between different companies in an attempt to minimise tax.
The ATO has also begun using one of the weapons left to it by Hockey, the diverted profits tax. The DPT, which applies only to the globe’s biggest companies, allows the ATO to levy Australian tax if any of a dizzying array of accounting lurks has been used to shift profits earned here offshore.
Saint says a “small number” of DPT cases are in progress and one has reached the stage of issuing a formal tax bill.
“DPT does apply across all industry sectors,” Saint said. “We’re not focusing on one industry sector in particular, and that’s certainly the case for the small number of taxpayers where we are considering applying DPT.”
The tax data covers foreign-owned companies with income of $100m or more, Australian public companies with income of $100m or more and Australian privately held companies with income of $200m or more.
