More than 700 of the largest Australian and international companies didn't pay any tax in the last financial year, despite many generating a taxable income.
According to the Australian Taxation Office’s 2015-16 Report of Entity Tax Information, household names including Atlassian, IBM, ExxonMobil Australia and Adani amassed a collective $500 billion in untaxed revenue for the 2015-16 financial year.
ATO Deputy Commissioner Jeremy Hirschhorn said most entities were voluntarily paying tax on time, and that these findings did not necessarily indicate any wrongdoings on their part.
“In 2014-15, large corporate groups paid 91 per cent of their tax due voluntarily, with a further three percent raised through ATO compliance activities.
“In the last financial year alone, we issued more than $4 billion in amended assessments relating to prior years to public groups and multinationals, and we have already issued a further $1 billion in amended assessments this financial year.
These amounts are not reflected in the corporate tax transparency data,” said Hirschhorn.
At present, Australian corporations are required to pay 30% statutory tax.
Several unavoidable reasons may cause a company to fail to lodge their tax returns, including information from third parties being unavailable, delayed reporting due to structural changes (such as mergers, acquisitions and consolidation), and instances where there was no legal obligation, such as where the company only existed as a name without operating.
Further, many companies did not pay tax as they did not generate any taxable income.
Hirschhorn said it was important to note that income tax by these entities is payable on profits, not gross income, and that losses are made for both tax and accounting purposes.
Entities that failed to generate taxable profit included Acer with $283.4 million revenue, Fuji Xerox Asia Pacific with $135 million revenue and MYOB with $295 million revenue.
Entities accruing losses included solution provider NEC Australia, with $443 million revenue, and telcos iiNet and NBN Co with $197 million and $460 million revenue, respectively.
The report highlighted a $3.6 billion taxable income decline from the previous fiscal year – down from $41.9 to $38.2 billion – with the number of entities paying no corporate tax increased from 678 to 732.
Hirschhorn said this was not driven by a failure to pay tax, but rather by the energy and resources segment. This saw a decline in average AUD prices for iron ore by 16%, and cooking coal by 10%.
The report analysed over 2000 entities, a 7.3% spike in the corporate transparency population from the previous year: 1,693 Australian-owned public and international entities, with a total income of $100 million or more per entity, and 350 Australian-owned resident private companies, with a total income of $200 million or more per entity.
Hirschhorn said Australia has one of the strongest tax systems in the world and the ATO is committed to maintaining a high level of compliance.
“This is being achieved through the establishment of the Tax Avoidance Taskforce, and the introduction of new laws such as the Multinational Anti-Avoidance Law (MAAL), the Diverted Profits Tax (DPT) and Country-by-Country reporting (CbC).
“In addition, we expect to begin to see the impact of the MAAL in the 2016-17 data as companies restructure to comply with the requirements of the new law,” he said.