Corporates paid over $68 billions in income tax in 2020-21
The Australian Taxation Office’s (ATO’s) eighth annual report on corporate tax transparency (CTT) reveals the amount of tax paid by large corporates in 2020–21 is the highest since reporting started.
ATO Deputy Commissioner Rebecca Saint said despite the pandemic, Australia’s large corporate taxpayers generally performed well in 2020–21.
“This year’s report represents 2,468 corporate entities, who paid a combined $68.6 billion in income tax, $11.4 billion or 19.8% more than the previous year and the highest since reporting began,” she said.
High commodity prices were once again the key driver of the increase in corporate tax payments.
Australia has some of the highest levels of tax compliance of large business in the world with 93% of tax paid voluntarily, and 96% after the ATO’s compliance activities.
“These results demonstrate there are high levels of tax compliance amongst our largest corporates,” Ms Saint said.
The ATO is a world leader in combating tax avoidance by large corporate entities and the Tax Avoidance Taskforce (the Taskforce) bolsters our efforts to ensure companies pay the right amount of tax. Since 2016, the ATO has raised tax liabilities of $29.0 billion, with the Taskforce funding helping to generate $17.2 billion of this amount.
The ATO’s efforts to tackle tax avoidance have been further bolstered by the Government’s budget announcement that it will extend the Taskforce by a year and will also provide an additional $200 million per annum to expand the focus of the Taskforce. This brings the total investment in the Taskforce to $1.1 billion over the next four years.
“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.”
“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,” Ms Saint said.
There are also a number of examples of companies committing to long-term behavioural change, including restructuring and settling long-standing disputes with the ATO that include “locked in” outcomes for the future periods.
“This future focus ensures companies are paying the right amount tax into the future, saving taxpayers and the ATO time and money on future disputes.”
“We’re also seeing a shift in attitudes where many companies are now viewing tax compliance as an important part of their social contract. Being a good corporate tax citizen is increasingly being worn as a badge of honour with many companies now publishing their ATO ratings,” Ms Saint said.
The percentage of entities paying no income tax has decreased to 32% from a high of 36% in 2015–16. There are many genuine reasons why companies might pay no income tax.
“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.”
“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,” Ms Saint said.
