Corporate Tax Transparency Report for 2016–17

This is the fourth annual report on corporate tax transparency released by the Australian Tax Office (ATO).

The report is based on the 2016–17 income tax returns of around 2,100 large corporate entities operating in Australia who paid $45.7 billion, or almost two-thirds of total company income tax payable for that year.

“The transparency report reflects a bounce-back in the energy and resources sector, which led to a strong increase in tax revenue from the large corporate sector overall,” ATO Second Commissioner Jeremy Hirschhorn said in a media release.

The initial impacts of the Multinational Anti-Avoidance Law (MAAL) emerge in the 2016-17 data, as companies have restructured to comply with the requirements of the law.

“In coming years the full effect of the MAAL will flow through as multinational companies book billions more in sales locally.

“The report will also reflect restructures made by companies to avoid paying the Diverted Profits Tax and increased compliance thanks to Country-by-Country reporting.

“Increasingly, the data will also reflect our approach to resolving past matters in requiring future compliance to be locked in,” Mr Hirschhorn said.

The ATO is required under law to publish tax information by certain large companies each year.

This year’s tax transparency report covers:

  • 1,721 Australian public and foreign-owned companies with an income of $100 million or more
  • 388 Australian-owned resident private companies with an income of $200 million or more
  • 14 entities with petroleum resource rent tax (PRRT) payable
  • tax payable according to the tax returns as lodged – it does not include subsequent audit activity.

Large Corporate Tax Gap Report for 2015-16

The ATO has also released tax gap analysis for the 2015-16 income year, which found an increasing level of tax compliance among large corporate groups, those with gross income of over $250 million in an income year.

In the 2015-16 income year, the estimated tax gap for large corporate taxpayers was 4.4 per cent. This is an improvement on the previous analysis of the 2014-15 income year, when a 5.8 per cent tax gap was recorded.

“[W]e can also confirm the estimated level of compliance of large corporate groups has increased from 94% to over 95%, the vast bulk of which is paid voluntarily,” Mr Hirschhorn said.

“While the level of performance is already world-leading, we are confident our strategies in conjunction with new laws and resources will result in continued improvements over the coming years.”

The report also found high levels of compliance with PRRT obligations, with the gap estimate for the 2015-16 income year showing 98% of PRRT is paid voluntarily.

  • PRRT payable by entities within the tax transparency report rose by close to $100 million to $946 million in 2016-17 primarily due to higher oil prices. There were 14 entities in this population compared to nine in 2015-16.
  • PRRT payable is expected to exceed $1 billion in 2017-18. On average in 2017-18, crude oil prices were up 25% and the Australian dollar was up 2.6% against the U.S. dollar.

 

The reports are available on the ATO website:

Corporate Tax Transparency Report for 2016–17

Large Corporate Tax Gap report for 2015-16

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