Corporate Tax Evasion

OUR POSITION

Corporate Tax Evasion bad – fixing it, good.

It’s in the best interests of Future Australians that we find a solution for this issue ASAP.

We’re not offering ‘our solution’ or making any promises about this matter.

Future Australia pledges to research this issue thoroughly, then publish simple & clear infographic(s) to inform Australians to explain the key elements of the ‘problem’ as well as the various ‘positions’ and ‘solutions’ offered by each party. Once you have the data – we’ll ask you what YOU think we should vote for in parliament.

That’s the pledge.

Research > Publish & Inform > Vote

…. we are a new (& seriously under-funded) movement. We’d love to have a team of researchers getting this data together for you right now… but alas, we’re not big enough to pay people yet! So bare with us, below we have outlined the facts available to us right now! Watch this space!

THE FACTS … as we know them…

Australian Taxation Office (ATO) Report of Entity Tax Information for 2014-15;

According to the most recent ATO Tax Transparency Report, 679 companies with more than $100 million in income paid no tax in Australia in 2014-15.

The list includes such household names as Walt Disney, Sydney Airport, Qantas, Origin Energy and News Australia.

These companies can collectively be considered to be amongst the biggest operating in Australia – both in terms of income, and the prominent position they enjoy in the public eye.

Some of them are not Australian owned, and they may pay tax in other jurisdictions. However, they all operate in Australia, generate revenue from the spending of Australians and utilise existing infrastructure – like roads and ports – that were paid for by Australians.

So there’s something deeply unfair about a system which allows them to not pay any tax in Australia.

Data for the most recent financial year has not yet been published (if this changes – please let us know here)

Why do some companies pay no tax?

In general, there are two reasons why corporate companies pay no tax in Australia.

1 – Some companies aren’t making any profit. The concept of “total income”, which is used to identify the companies included in the ATO report, relates to revenue – not profit. Thus, a company can have income (or revenue) of more than A$200 million, but that doesn’t necessarily mean it’s made profit. Its losses or outgoings may outweigh its income. Only companies making a profit have to pay taxes.

N.B. – Many of the companies that didn’t pay tax in 2014-15 were those in the energy/natural resources and manufacturing sectors – two sectors that were experiencing a downturn in that year and where profit margins were shrinking.

Proportion of entities with nil tax payable, by industry segment, 2013–14 and 2014–15. ATO corporate tax transparency report for 2014-15

2 –  The second reason could be tax avoidance or profit shifting, a.k.a. ‘transfer pricing‘. These situations arise when companies take advantage of the international tax system to reduce the amount of tax to be paid. For instance, companies may set up complex ownership arrangements that allow them to redirect profit to countries with lower tax rates.

While not necessarily illegal, these situations are closely monitored by the ATO to ensure that Australia receives its correct share of tax under international tax rules.

External Sources (Fact Check)

FactCheck: do 679 of Australia’s biggest corporations pay ‘not one cent’ of tax? (Source)

Who pays what? ATO names large companies that paid zero tax in 2014-15 (Source)

Making tax vanish in Australia – OXFAM (Source)

Other Party Positions on this Topic