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ATO Publishes Corporate Transparency Report

by Mary Swire,, Hong Kong

15 December 2016

The Australian Taxation Office (ATO) has published the tax details of 1,904 large companies operating in Australia, which together accounted for 63 percent of company tax payable for 2014-15.

The ATO's corporate tax transparency report includes 1,579 Australian public and foreign-owned companies with an income of AUD100m (USD74m) or more, and 325 Australian-owned resident private companies with an income of AUD200m or more. Together these companies accounted for AUD42bn of the company tax payable for 2014-15.

The name and Australian Business Number of each company is listed, along with total income, taxable income, and income tax payable. The report also includes entities with Petroleum Resource Rent Tax payable.

The figures in the report are taken directly from tax returns lodged and processed, or amendments advised by the taxpayers concerned, by September 1, 2016. The report does not include any figures resulting from ATO-initiated assurance and risk assessment activities.

The ATO said that there are some taxpayers in the report with nil tax payable for the reporting period. "No tax paid does not necessarily mean tax avoidance, and assumptions about an entity's compliance with their tax obligations, or those of their associated groups, cannot be made solely on the basis of this data," it explained.

Tax Commissioner Chris Jordan added: "These companies may have incurred an accounting and tax loss in the current year or in prior years, and are now using those to reduce current taxable income. Many companies are now publishing information describing any losses or other economic factors that contribute to their taxable position." Jordan also noted that 56 companies have agreed to adopt the Board of Taxation's Voluntary Tax Transparency code.

The Commissioner stressed that "these large players are subject to the watchful eye of the ATO." He said the Office continually engages with the top 100 public or foreign companies. These companies alone paid AUD30bn in tax, with the next 1,100 paying a further AUD10bn. In the case of private businesses, the ATO takes a "group approach – engaging one-to-one with the top 320 groups."

Jordan added that the ATO has renewed its focus on providing early warnings to taxpayers and their advisers, to set out its expectations and "allow them to make more informed tax planning decisions."

Turning to the future, Jordan said he expects the figures to change over time. He pointed out that many companies subject to the new Multinational Anti-Avoidance Law are "still restructuring their affairs and identifying the value of the services conducted in Australia."

"As more value is attributed to sales forces in Australia we would expect more companies to be reporting over the thresholds and would be included in future reports."

On the other hand, Jordan said he anticipates a further drop in the profitability of the energy and natural resources sector, and a reduction in the tax paid by that sector in 2015-16. This would be partially offset by stronger performances in other industries, such as the banking and finance sectors.

TAGS: compliance | tax | business | tax compliance | tax avoidance | energy | accounting | banking | corporation tax | Australia | tax authority | tax planning | tax rates | services

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