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ATO Releases Corporate Tax Data

by Mary Swire,, Hong Kong

22 December 2015

The Australian Taxation Office (ATO) has published information on the tax affairs of more than 1,500 large companies.

The ATO has published an entity-by-entity listing of public and foreign-owned corporations reporting total income of AUD100m (USD71.8m) or more in 2013-14. The figures in the report are taken directly from tax return labels or amendments advised by the companies themselves before September 2015. It contains the following information for each company: its Australian Business Number (ABN), total income, taxable income, tax payable, and amounts of Petroleum Resource Rent Tax and Minerals Resource Rent Tax payable.

The ATO said that it anticipates releasing similar details of Australian-owned and resident private companies with a turnover of AUD200m or more in early 2016, following the passage this month of new transparency legislation.

Collectively, these 1,500 companies paid almost AUD40m in company tax in the 2014 fiscal year. Tax Commissioner Chris Jordan said that more than half of this group had been subject to an ATO review or audit over the past three years.

According to the report, 38 percent of these companies (579) did not pay tax in 2014, and 22 percent incurred a current year tax loss. Eight percent utilized prior year losses, and seven percent used franking credits and offsets.

Assistant Minister Kelly O'Dwyer told a press conference that "just because they don't pay tax doesn't mean that they are avoiding tax." She added that "there are some reasons why it would be that some companies are not paying tax at all – particularly circumstances where there might be losses – and indeed it is for those companies to explain why it is that they have not paid tax in any particular year."

O'Dwyer stressed that the public can be confident that the ATO has the powers it needs to collect information on the structuring and arrangements of multinational companies and to ensure "that they're paying their fair share of tax."

Jordan said: "Most large corporates, particularly domestic Australian companies, meet their tax obligations, notwithstanding that we do have some significant disputes with some of them. As for the role of foreign-owned entities operating in Australia, investment from these companies should not be premised on no or very little tax being paid on significant profits generated in Australia. Some of these foreign owned companies are overly aggressive in the way they structure their operations."

"We will continue to challenge the more aggressive arrangements to show that we are resolute about ensuring companies are not unreasonably playing on the edge. If they do, they can expect to be challenged."

Jennifer Westacott, Chief Executive of the Business Council of Australia, said that the publication was "an important input to the transparency and integrity of the Australian tax system." However, she added that the data should be interpreted carefully and pointed out that "companies do not pay company income tax on revenue (total income) – they pay it on profits after paying all expenses including wages, capital replacement, supplier costs, fleet costs, and other operating expenses."

"Many small- and medium-sized businesses, in particular, do not make a profit in a given year, and even large businesses go through cycles where profits from large investments take time to be realized," Westacott explained. She urged that tax integrity measures must not undermine Australia's competitiveness and cause businesses to locate in other countries at the expense of Australian jobs.

Responding to the report, John Osborn, Director of Economics and Industry Policy at the Australian Chamber of Commerce and Industry, noted that "of the 570 companies not liable for company tax, 346 made a loss in the most recent year, 120 made a loss due to carried forward losses, and only 113 made a loss due to tax credits and offsets."

"That means the majority of companies paying zero company tax did so because of losses and not because of system complexities. There are usually good justifiable reasons why individual companies have lower company tax liabilities than the 30 percent headline rate and we should not rush to judgments without understanding the merits of each company's circumstances."

TAGS: compliance | tax | investment | business | revenue guidance | corporation tax | audit | Australia | tax credits | tax authority | small and medium-sized enterprises (SME) | multinationals | legislation | tax planning | transfer pricing | tax rates | revenue statistics | tax reform | Tax

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