November 1st 2024.
In the 2022-23 financial year, it was revealed by the Australian Taxation Office that almost one third of large Australian-owned companies did not pay any taxes. This was a significant increase from the previous year, where 831 entities fell into this category, but the percentage has remained consistent at 31 per cent. The ATO's Corporate Tax Transparency report showed that out of 1253 businesses with an income between $100 million and $200 million, none of them had any tax liabilities.
The reason behind this is that most of these companies were able to avoid paying taxes through accounting or tax losses. Some of them even used tax losses from the previous year to offset their tax bill, while a small number took advantage of tax offsets. However, the ATO has noted that there has been a decrease in tax avoidance in recent years.
ATO Deputy Commissioner Rebecca Saint stated, "We have seen a significant improvement in large business tax compliance, which is a result of the hard work and efforts of the ATO's Tax Avoidance Taskforce. Not only have we taken strong compliance actions, but we have also seen a voluntary improvement in tax compliance." In total, the ATO collected around $100 billion from big businesses, with nearly $98 billion of that being income tax. This was a record-breaking figure, showing a 16.7 per cent increase from the previous year.
Commissioner Saint also expressed her satisfaction with the result, stating, "This is a fantastic outcome for the Australian community. The amount of tax paid in 2022-23 was the highest since reporting began. When we include the additional tax revenue generated by the Tax Avoidance Taskforce, the total collected from large corporations was approximately $100 billion." This amount was less than 5 per cent of the tax not paid by big businesses.
The ATO has also stated that Australia's corporate tax compliance is exemplary and sets the standard for the rest of the world. This is a reflection of the ATO's years of dedicated efforts to promote and support increased tax compliance among large corporations through the Tax Avoidance Taskforce. According to their estimates, after ATO's compliance activities, large corporations paid 96 per cent of the income tax they were supposed to pay in the 2021-22 financial year.
Commissioner Saint added, "It is worth noting that large corporate groups have one of the highest net tax performances among all population segments." The mining sector contributed more than half of the total tax paid by large corporations, while oil and gas companies accounted for over 10 per cent. This shows that despite the challenges faced, there are still companies that fulfill their tax obligations and contribute to the overall welfare of the country.
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