13 December 2018

Big business paying their fair share of tax


Joint media release with
The Hon Josh Frydenberg MP

New Australian Taxation Office (ATO) analysis released today shows that the Coalition Government's plan to ensure big businesses pay their fair share of tax is working.

The ATO Large Corporate Tax Gap report found an increasing level of tax compliance among large corporate groups, those with gross income of over $250 million in an income year. In 2015-16 large corporate groups reported $1.7 trillion in gross income and paid approximately $40 billion in tax.

In the 2015-16 income year, the estimated tax gap for large corporate taxpayers was 4.4 per cent. This is a significant improvement on the previous analysis of the 2014-15 income year, when a 5.8 per cent tax gap was recorded.

The tax gap is an ATO estimate of the difference between the total amount of income tax collected and the amount the ATO estimates would have been collected if every one of these taxpayers was fully compliant. For large corporates, the ATO estimates that the tax gap primarily reflects differences in interpretation by the company and the ATO on complex areas of tax law.

This improvement follows the Liberal and National Government investing $679 million over four years into the ATO to establish and fund the Tax Avoidance Taskforce and bolster the ATO's resources in targeting avoidance activity by multinational enterprises, large Australian public and private groups, and wealthy individuals operating in Australia.

This investment has also enabled the ATO to expand a program that ensures a faster and more intensive approach to tax compliance for the largest 1,000 public and multinational groups.

This investment has already paid for itself many times over, with the ATO raising more than $12 billion in liabilities since inception of the Taskforce on 1 July 2016, netting almost $7 billion in cash.

We have also continued to support the OECD's Base Erosion and Profit Shifting action plan to address multinational tax avoidance and have legislated new laws including the Multinational Anti-Avoidance Laws, the Diverted Profits Tax, new hybrid mismatch rules and tightening of thin capitalisation rules.

Ensuring corporate taxpayers pay their fair share of tax helps us to provide tax relief for individuals and small and family businesses, and the essential services that Australians rely on.

The report is available on the ATO's website.