Tax office probes company transparency

The tax office has raised $13 billion in liabilities since its tax avoidance task force was set up in 2016 to probe big businesses.

The Australian Taxation Office is currently working through its “Top 500” program of private businesses that control $207 billion net assets and report around $195 billion in total tax income.

The program, and its initial “Top 100” investigation of public and multinational businesses, aims to provide the community confidence that these groups are paying the right amount of tax.

Assistant commissioner Kasey Macfarlane said the Top 500 cohort uses complex structures that contain any combination of partnership and trust structures, operating both inside and outside tax consolidated groups.

“We have observed that large private groups tend to have lower levels of corporate governance and invest less in tax governance than public groups,” she said releasing the ATO’s initial findings on Tuesday.

“Large private groups also face less stringent regulatory reporting requirements and our ability to obtain certainty is frequently complicated by opaque group structures.”

Even so, after engaging with more than 400 groups so far, Ms Macfarlane said most large private entities report correctly and meet their taxation obligations, with more than 50 groups attaining the highest transparency rating.

“However, there is of course always room for improvement,” she said.

As well as the $13 billion raised in tax liabilities since the commencement of the task force in July 2016, it found a further $7.3 billion in cash.

The task force has also now expanded the ATO’s remit to the Top 1000 entities, which will allow engagement with large public and multinational companies with turnovers above $250 million.

The ATO has published two reports on its earlier Top 100 program which showed around 30 per cent attaining an overall high assurance rating.

“The success of this program cannot be undersold, as we saw a dramatic increase in the number of taxpayers achieving high assurance during 2020 from six per cent to 30 per cent,” Ms Macfarlane said.

“Four out of five of the largest businesses in Australia have obtained a high or medium assurance rating.”

In the 2017/18 income tax year, large corporate groups paid over 96 per cent of the theoretical total amount of income tax payable.

The goal is to reach 96 per cent upon lodgement and 98 per cent compliance after ATO action, Ms Macfarlane said.