Out of 1539 of Australia’s largest corporate entities, 38 per cent did not pay any tax in 2013-14.
Tax Commissioner Chris Jordan has released the tax details of corporate entities with $100 million or more annual turnover – 985 of which are foreign-owned, and 554 of which are Australian foreign entities.
There were 579 local and foreign-based companies that paid no tax in 2013-14 which had a combined turnover of $405.9 billion and a taxable income of $4 billion.
The nil result is either because they did not pay any tax, had offsets against profits that reduced their tax to zero, or, they made a loss, which the Tax Office reports as nil.
Certain industries in the 2013–14 income year were still recovering from the global financial crisis with significant carried forward losses, bad debts or restructuring activities underway.
Transfield with $2.8 billion turnover, had taxable income of $16 million, and zero tax.
Chevron, which recently lost against the ATO in the Federal Court, but will be challenging the decision, had turnover of $3 billion but paid not tax.
Adani’s Abbot Point Terminal in Queensland – with a turnover of $268 million – also paid no tax.
CSL had $2.1 billion turnover, $160 million in taxable income and paid zero tax, however the company said the turnover figure included overseas profits already taxed, and tax owing was offset by credits for its R&D work in Australia.
News Australia, which had a turnover of $3.9 billion between its Australian arms, had $97.2 million in net income last year and paid $4.2 million in tax.
Steinhoff Holdings (owned through the Netherlands and with key brands Freedom (furniture), Snooze (bedding) and Buy Leather Republic) had a total income of $431 million, taxable income of $150 and paid no tax.
Fairfax Media had $1.7 billion in turnover, $69.8 million in net income and paid $16.1 million in tax.
Some paid tax, but much not much relative to income. For instance, Macquarie had turnover of $8.1 billion but paid just $127.9 million in tax.
Macquarie runs a March financial year. In the year to March 2015 it declared that net profit rose 27 per cent from $1.28 billion to $1.62 billion, after tax that rose from $827 million to $899 million.
RACV and RACQ both paid no tax despite net incomes of $119 million and $54.6 million.
Nappy maker Unicharm Australia paid just $3 in tax last year (enough to buy an 80-pack of its baby wipes) out of a $10 profit. It had a turnover of $130 million over the same period.
Tax minimisation not taken lightly
Labor Senator Sam Dastyari, who has chaired the Senate inquiry into corporate tax avoidance, told Fairfax Media: “It’s time to bring these practices to an end. It doesn’t pass the sniff test that all these companies have legitimate reasons for paying no tax.”
He said tougher anti-avoidance measures passed by the Coalition go part of the way to stopping corporate tax avoidance, but it was “nowhere near enough”.
Australian Greens leader Richard Di Natale said: “they might be able to afford the best tax lawyers to help them stay ahead of the parliament but they won’t be able to escape the court of public opinion”.
“It will now be up to these companies to justify their tax arrangements.”
Tax Commissioner Chris Jordan said: “tax should matter to these companies”. “It is not something to be taken lightly.”
While “no tax paid does not necessarily mean tax avoidance”, he said “any companies with unusual financial or taxation numbers are closely investigated by the ATO”.
“…We do have some significant disputes with some of them”.
“Some of these foreign owned companies are overly aggressive in the way they structure their operations.”
Tax Justice Network spokesman Mark Zirnsak said many companies had made no effort to explain their tax affairs to the general public and many had not filed financial reports with ASIC.
“Any company that now complains it is facing tough questions about its tax affairs only has itself to blame,” he said.
Energy and resources were the sectors with the highest level of non-payment. Fossil fuel companies such as Exxon Mobil Australia, Chevron Australia, Peabody Australia, and Whitehaven are among those that paid no tax for 2013-14, Greenpeace Australia head of campaigns Dominique Rowe said.
“What we’re seeing is a series of tactics, such as companies writing off their losses, in order to avoid paying tax,” she said.
BCA warns against misinterpretation
Business Council of Australia chief executive Jennifer Westacott cautioned against misleading interpretations of data.”Companies do not pay company income tax on revenue (total income) – they pay it on profits after paying all expenses including wages, capital replacement, supplier costs, fleet costs and other operating expenses,” she said.
Ms Westacott said many small and medium sized businesses did not make a profit in a given year, “and even large businesses go through cycles where profits from large investments take time to be realised”.
She said the companies listed accounted for $40 billion of the $67 billion in company tax paid in 2013-14.
Australian Chamber of Commerce and Industry boss Kate Carnell said: “We must face the fact that weaker economic conditions are hurting the bottom line for many businesses and it’s not surprising that loss making companies are not liable for profit taxes.”
ATO challenging aggressive arrangements
The ATO would continue to challenge the more aggressive arrangements. “We are resolute about ensuring companies are not unreasonably playing on the edge,” Mr Jordan said. “If they do, they can expect to be challenged.”
As Fairfax Media reported, over half of the companies on the list have been subject to ATO review or audit over the past three years.
He said the federal government was working with the Board of Taxation to go further and develop a voluntary code so that companies can tell their own tax story.
“Large corporates now have to consider the impact of their tax information as a factor in managing their reputation with the markets, their shareholders, their consumers and in the Australian community,” he said.
The ATO’s list is the result of tax disclosure laws passed under the former Labor government that require the Commissioner to publish the tax details of public companies with $100 million or more annual turnover.
The tax information of about 300 private companies will be reported in March next year.