CANBERRA: Australia’s biggest 900 companies claimed tax deductions and exemptions worth a total $25 billion last year – enough to wipe out two-thirds of the current federal budget deficit at a stroke.
As Treasurer Joe Hockey prompted a national “conversation” about tax reform, including the prospect of a higher and broader GST, the Australian Tax Office’s own data showed the top 900 companies paid an “effective tax rate” of just 19.3 cents in the dollar on pre-tax profits in 2014. The corporate tax rate is 30 per cent.
Australian Tax Office data shows the nation’s top 900 companies paid an effective tax rate of 19.3 per cent.
Companies now pay proportionately less tax on their income than the average wage-earning Australian.
Mr Hockey and Treasury have flagged a tax cut for business to boost international competitiveness but the Tax Office’s numbers show that, on average, Australia’s biggest companies are already paying less than Britain’s statutory rate of 21 per cent after they have taken a range of concessions and write-offs.
Once loss-making companies, which pay no tax, are excluded the effective tax rate paid by Australia’s top 900 companies is about 21 per cent.
The figures are contained in a Tax Office briefing document of August 2014, obtained under Freedom of Information.
The figures compare closely with a Tax Justice Network report, revealed by Fairfax Media in September, which found the top ASX 200 companies contributed an average 23 per cent over the past decade. The report, which found companies like James Hardie, Sydney Airport, Echo Entertainment – owner of Sydney’s Star City Casino – and Downer EDI paid less than 10 cents in the dollar in company tax, was rubbished by the corporate lobby, including the Business Council of Australia and the Corporate Tax Association.
It was also dismissed by Mr Hockey who said the review, part-funded by United Voice, a union which represents low-paid childcare and hospitality workers, was “wrong”.
An ATO spokesman stressed that the top 900 included super funds, which pay 15 per cent tax on profits, and stapled securities like property trusts, which don’t pay company tax but pass on the tax obligation to investors. He said their inclusion lowered the average rate paid but could not quantify by how much.
Although the ATO briefing document refers to “taxable income”, a spokesman for Mr Hockey said the table actually showed “accounting profit”.
The Tax Justice Network, which includes charities, churches and other not-for-profit groups, said the ATO figures proved there is a significant gap between the statutory rate and what companies end up
