14 Dec 2018
In Australia, ten companies pay 45% of all corporate tax, illustrating just how dependant the federal government is on the earnings of major corporations.
The fourth tax transparency report, released by the tax office, shows crucial details of 2,109 of the biggest companies operating in Australia for the 2016-17 financial year.
A soar in commodity prices has led to corporate tax rising by 20% between 2015-16 and 2016-17, marking an increase from €7.5bn to €45.7bn.
The major companies representing 45% of all corporate tax paid in Australia are the big four banks (Commonwealth Bank, Westpac, NAB, and ANZ), two biggest miners (BHP Billiton, Rio Tinto), two supermarket giants (Wesfarmers, Woolworths), and Telstra and AMP Limited. In total, they paid $20.8bn in corporate tax in 2016-17.
However, the report also revealed that 722 of the biggest corporations did not pay any corporate tax in 2016-17. This figure includes 100 firms that reported more than $1bn in total income.
This has sparked debate and increased attention directed towards faults in the tax system. However, according to the tax office, the tax compliance rate among Australia’s largest companies is now around 95% - which marks great improvement.
Additionally, the tax office says that sensitivity to economic conditions, reinvestment into the business, distribution of profits to other entities within the broader group, tax deductions and tax offsets can all have an impact on the amount of taxable income and tax payable in one year.
The ATO also released a tax gap report which revealed data from the 2015-16 year and refers to the difference between the actual total amount of corporate tax gathered from large corporate groups, and the amount the ATO estimates would be collected if every large taxpayer was fully compliant.
A large corporate group, as defined by the report, is one with a gross income exceeding $250m in a given income year.
In 2015-16, large corporate groups reported $1.7 trillion in gross income and paid around $40bn in tax. The ATO roughly calculated that the net income “tax gap” for that year was $1.8bn, or 4.4% of tax payable for this group, The Guardian reports.