The ATO’s latest corporate tax transparency report has revealed that the amount of income tax paid by large corporates jumped 19.8 per cent or $11.4 billion in 2020–21 to $68.6 billion.
This was primarily driven by the mining, energy and water industries, which paid $7.3 billion more in tax over the financial year due to strong commodity prices and high export volumes.
Increases in tax payable were also seen in the wholesale, retail and services ($2.8 billion) and banking, finance and investment ($1.1 billion) segments, while lower growth was seen in manufacturing, construction and agriculture ($323 million) amid challenging conditions.
A $118 million decline in tax payable in the insurance segment in 2022–21 was also reported.
While the number of entities paying the petroleum resource rent tax (PRRT) decreased from 12 to 10, the amount payable increased from $881.1 million to $926 million. The ATO said that this reflected the increased profitability of PRRT-liable companies driven by oil prices.
Of the 2,468 corporate entities covered by the report, 32 per cent paid no tax in the last financial year, down from 36 per cent in 2015–16.
“We pay close attention to companies not paying tax. We hold those companies that report continual year-on-year losses to an additional layer of scrutiny,” said ATO Deputy Commissioner Rebecca Saint.
“While it’s true some large entities paid no income tax, we’re seeing through our justified trust program that there are high levels of compliance by these entities, and taking decisive action where there’s not.”
According to the ATO, Australia has some of the highest levels of tax compliance in the world. Its latest estimates covering the 2019–20 financial year show that 93 per cent of tax was paid voluntarily, increasing to 96 per cent after amendments including compliance activities.
The Albanese government committed a total of $1.1 billion in funding for the ATO Tax Avoidance Taskforce over the next four years in the federal budget last month.
“The increased investment in the Tax Avoidance Taskforce, is a strong show of support for our ongoing efforts in holding big business to account. The increased investment by the government will allow the Taskforce to expand its initiatives to new and emerging areas of business tax risk,” said Ms Saint.
“The Tax Avoidance Taskforce is able to identify and take action against those companies that don’t pay the right amount of tax and Australians should be confident that those seeking to avoid their obligations are being held to account.”
In a joint statement, Assistant Treasurer and Minister for Financial Services, Stephen Jones, and Assistant Minister for Competition, Charities and Treasury, Andrew Leigh, said that the government is committed to improving compliance, closing loopholes and enhancing transparency in Australia’s tax system.
“Today’s transparency report helps the public and the government understand how the system is working and where the gaps are,” said Mr Jones.
“We invested in increasing tax compliance in last week’s budget and this data will help us target that additional funding.”
