In its latest corporate tax transparency report, the ATO said big business had demonstrated improved voluntary tax compliance following “intensive engagement” by the Tax Office in recent years.
During the 2019-20 financial year, $57.2 billion was paid by the 2,370 major companies covered by the report, 2 per cent more than in the previous financial year, making up 65 per cent of the total corporate income tax paid.
The group includes 1,378 foreign-owned companies and 513 Australian public entities with an income of $100 million or more and 479 Australian-owned resident private companies with an income of $200 million or more.
“While the tax paid by this population may fluctuate year on year, the overall trend couldn’t be clearer,” said ATO deputy commissioner Rebecca Saint.
“Corporates are placing a higher value on tax compliance, driving consistent and willing voluntary participation.”
Thirty-three per cent of the total companies covered by the report, or 782 companies, paid no tax during 2019-20, which the ATO noted may be explained through “legitimate business or economic factors”.
“The ATO actively verifies that losses in the large market are not created through contrived schemes, but can be traced back to commercial operations,” said Ms Saint.
“We subject companies that report sustained year-on-year losses to additional scrutiny.”
The number of companies paying no income tax was down from 36 per cent in 2013-14.
In October, the ATO revealed that the tax gap, or the difference between the actual tax collected by the ATO and the amount that would have been collected if taxpayers were fully compliant with tax laws, was 4.3 per cent or $2.6 billion for large corporates in 2018-19.
“Very few other revenue authorities calculate and publish tax gaps. This makes international comparisons difficult, but Australians can be reassured that large corporate groups are held to account more than any other sector of the economy,” said Ms Saint.
The tax gap for large corporates remains higher than in 2016-17 (3.6 per cent or $1.79 billion) and 2017-18 (3.8 per cent or $2.1 billion).
The ATO said that its tax avoidance taskforce has had a significant impact on corporate tax collections since it was established in 2016, helping to collect more than $10 billion in additional tax and driving improved tax compliance.
It had also led to the creation of its justified trust program, which the ATO said “requires the largest businesses to assure us they are paying the right amount of tax by having regard to objective evidence”.
Forty-nine per cent of the top 100 taxpayers achieved a high assurance under the program in 2021 compared to just 6 per cent in 2019.
“We attribute this to a combination of businesses recognising that investing in their tax governance has tangible real-world benefits – as well as a significant investment of time and resources by the ATO in scrutinising structures, transactions and tax governance frameworks,” said Ms Saint.
