The Australian Taxation Office (ATO) has published the fifth annual report on corporate tax transparency, which provides insights into the operation of Australia’s corporate tax system and the tax affairs of the largest companies operating in Australia.

ATO Deputy Commissioner Rebecca Saint said the report includes tax information of more than 2,200 entities and shows combined total income tax paid of $52.3 billion in 2017–18.

‘The entities covered by this report contributed over 60% of all corporate tax paid in 2017–18. The significant increase of $6.6 billion in tax payable was primarily driven by strong commodity prices,’ Ms Saint said.

‘Significantly, over $7 billion of sales income is now being booked in Australia as a result of companies restructuring in response to the Multinational Anti-Avoidance Law (MAAL).’

‘As the ATO foreshadowed last year, the Petroleum Resources Rent Tax payable has exceeded $1 billion. This is despite a reduction in the number of payees, and is primarily driven by higher oil prices.’

The report also shows the proportion of entities with nil tax payable has decreased over the past three years, from 36% in 2015–16 to 34% in 2016–17 and 32% in 2017–18. The largest decline in the proportion of nil tax payable by ownership type over this period was in Australian public entities, although the proportion fell across all ownership groups.

The ATO is required under law to publish tax information reported to the agency by certain large companies each year. This year’s tax transparency report covers 2,214 corporate entities, of which:

  • 1,197 are foreign-owned companies with an income of $100 million or more;
  • 1,017 are Australian public or private entities, of which;
  • 594 are Australian public entities with an income of $100 million or more;
  • 423 are Australian-owned resident private companies with an income of $200 million or more.

Many companies also provide additional information about their tax affairs as part of the Board of Taxation’s Voluntary Tax Transparency Code.

‘Over the five years to 2018, all industry segments reported growth in the number of reporting companies, total income, taxable income and tax payable. The report also shows that the number of large companies paying no tax continues to decline,’ Ms Saint said.

‘Paying minimal or zero tax may be a result of companies making a loss, utilising losses from prior years or having projects operating in start-up phase. However, groups that consistently report losses or unusually low taxable income are more likely to attract ATO attention.’

‘The positive trend we are now observing is that many companies have ceased generating accounting losses and are now offsetting profits by utilising losses from prior years. We expect many companies to exhaust these losses and begin paying income tax in the coming years.’

‘However companies that consistently report sustained losses do raise a red flag. The community should be reassured that we closely scrutinise the tax affairs of the largest companies.’

‘As part of the Tax Avoidance Taskforce, we have a robust compliance program with specialist tax teams engaging directly with large companies to ensure they meet their obligations. We take firm action where we see tax avoidance.’

‘There will be no lessening of our efforts to hold multinationals to account. Additional funding provided to the ATO has enabled the Tax Avoidance Taskforce to be extended to 30 June 2024 and expanded to cover even more large companies.’

The Corporate Tax Transparency Report for the 2017-18 Income Year is available here.

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