According to the Corporate Tax Transparency report for 2020-21 issued by the Australian Tax Office (ATO), corporate entities paid an impressive $68.6 billion in income tax. This is $11.4 billion more than was recorded in the previous financial year and the highest-ever tax collection. The report found that this record-high tax collection was due to high commodity prices, particularly high iron ore prices. Mining firms and banks were found to be the largest corporate taxpayers.
Of the 2,468 corporate entities that made returns, 1,376 were foreign-owned with an income of over $100 million, 563 were Australian public entities with an income of over $100 million and 529 were Australian-owned private companies with an income of over $200 million. The Australian public entities were found to have contributed 66.2% of the corporate tax collection, which was the highest amount of tax.
ATO Deputy Commissioner, Rebecca Saint confirmed that there was a high level of tax compliance amongst Australia’s corporates. 93% of corporates were found to pay taxes voluntarily, with the rate rising to 96% after the ATO’s compliance activities.
The ATO is stringent in its approach to ensuring tax compliance and has a Tax Avoidance Taskforce that works to ensure companies pay the correct level of tax. The task force has managed to raise tax liabilities by $17.2 billion since 2016. Its mandate has also been extended by another year with the government committing an additional $200 million to support its activities.
However, despite the record-high corporate tax collection, the report also found that 32% of corporate entities did not pay taxes during this period. The report covers 2,468 corporate entities and noted that 782 paid no taxes in 2020-21. Reasons for this included some companies making accounting losses and tax offset claims that lowered tax bills to nil. Saint said that there were legitimate reasons why companies may not have paid taxes during this time and assured that the ATO scrutinised nil tax returns.
113 companies also had assessments raised against them that totalled $3 billion. Saint said that part of $2.3 billion was being disputed by 19 taxpayers while the rest had already been paid to the tax body under a 50:50 payment arrangement. Saint confirmed that the ATO has specialist audit teams reviewing corporates in different sectors including energy, resources and financial services. Industry experts have raised concern over fossil fuel companies that paid zero tax in the 2020-21 financial year and are calling on the ATO to crack down on the sector.
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