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ATO report reveals almost one-third of large corporations paid no income tax

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By Imelda Cotton - 
ATO report large corporations paid no income tax Australian Taxation Office 2021

Almost one-third of large corporations including more than half of Australia’s major mining, energy and water companies paid no income tax for financial year 2021, according to new government research.

The ninth corporate tax transparency report released this week by the Australian Taxation Office (ATO) has named and shamed 831 big businesses (or 31% of the total) which did not pay a cent of tax for the 12 months to end June 2022.

The investigation looked into 1376 foreign-owned companies with an income of more than $100 million; 563 Australian public entities with an income of more than $100 million; and 529 Australian-owned resident private companies with an income of more than $200 million.

Failure to cough up

While the amount of tax collected by the corporations increased due to skyrocketing mining profits and higher oil prices, there was a host of household names that failed to cough up at tax time.

Oil company Chevron paid just $30 of income tax in Australia, despite having a total income of $9.1 billion and a taxable income of $113 million.

The company published its own tax transparency report for the period, which claimed it owed nothing after weathering $1.8 billion in losses.

Other companies which reported no taxable income for financial year 2020 despite posting massive revenues included Ampol ($20 billion in revenue), BP Regional ($17.4 billion) and Viva Energy Group, which owns Shell-branded petrol stations ($12.8 billion).

Under the spotlight

The ATO’s transparency report for financial year 2020 also put a raft of companies under the spotlight including Adani Mining, Alcoa Australian Holdings, Anglo American Australia, ExxonMobil Australia, two Glencore entities, a Peabody Australia holding company, Santos (ASX: STO), two Shell Energy entities, Whitehaven Coal (ASX: WHC), Woodside Energy (ASX: WDS) and Yancoal Australia (ASX: YAL).

That report said there could be “genuine and legitimate reasons” why some companies might not pay tax.

The department said this included “extremely large companies” which would often post weaker revenues following a year of expansion or when facing challenging market conditions.

Reaping profits

Research has shown 168 of Australia’s biggest companies have paid zero tax since 2013 despite reaping profits totalling more than $9.85 billion.

The reasons why include being part of a property trust group (as is the case with Lendlease), where paying tax is the responsibility of the investor rather than the company.

Other companies — such as subsidiaries of BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) — are a part of corporate structures where a parent entity pays tax on their behalf.

Paying their dues

ATO deputy commissioner Rebecca Saint said some oil and gas companies had started paying their dues thanks to the work of her department.

“Following this report, tax payments from the oil and gas sector have increased to in excess of $11 billion for the 2023 year, with some of these companies currently some of the largest taxpayers in Australia,” she said.

“Even on a conservative estimate, around $4.4 billion of tax collections in the 2023 year was directly due to the ATO’s earlier interventions in the oil and gas sector.”