One third of top Australian companies pay less than 10pc tax; Government missing out on at least $8b per year

Updated

A third of Australia's largest companies are paying a fraction of the full 30 per cent corporate tax rate.

A report by the Tax Justice Network - an international group focused on investigating tax avoidance - and the United Voice union says almost a third of companies listed on the ASX 200 pay 10 per cent or less in corporate tax.

This is substantially less than the statutory 30 per cent corporate tax rate.

Some companies, such as James Hardie and Westfield Retail Trust, pay zero tax.

Rupert Murdoch's 21st Century Fox pays 1 per cent tax and casino group Echo Entertainment pays 5 per cent tax.

The report says the government is losing out on at least $8.4 billion in tax each year, which is substantial but may be the tip of the iceberg.

According to the research, 57 per cent of all ASX 200 companies have subsidiaries in tax havens.

Dr Mark Zirnsak from the Tax Justice Network says Australia's tax laws provide such a level of secrecy that it is almost impossible to know exactly how much tax is not being paid.

"There should be registers of who really owns companies to avoid people being able to set up artificial shelf companies for the purposes of tax avoidance or tax evasion," he said.

Corporate tax on G20 agenda

The net is starting to be closed; Australia, as part of the G20, has agreed to a system where tax authorities share information to make it harder for companies to profit shift.

Last week Federal Parliament moved to tighten up rules around artificial debt loading - a measure corporations have been legitimately using to cut their tax bills, by borrowing from an offshore subsidiary at often inflated rates and using the interest repayments here as a tax offset.

A spokesperson for Treasurer Joe Hockey said the Federal Government was moving to further clamp down on tax loopholes, including through the G20, as well as introducing greater transparency of international bank accounts and a white paper on tax reform due to commence before the end of the year.

Opposition shadow assistant treasurer Andrew Leigh accused the Government of ignoring some corporate tax reforms.

"Last year, after coming to office, the Government announced that it had decided to leave one loophole open, allowing debt shifting and the use of offshore banking units," he said.

Calls for parliamentary inquiry

Dr Zirnsak says many of the measures companies use to cut their tax liability are completely legitimate and nothing illegal is being done, but it shows that rules need to change.

David O'Byrne from United Voice says a parliamentary inquiry is needed.

"Most Australians are saying, 'I'm paying my tax, small business pays their fair tax, and I think it's important that corporate Australia and the big end of town pays their fair share'," he said.

Deputy commissioner of taxation Mark Konza says there are many allowances and offsets legitimately available under the current rules.

"That can reduce the overall amount of tax payable," he said.

"For example, you can have carry-forward losses, companies may be coming out of the GFC period, they're bringing losses forward and they're allowed to apply that to their current profit and that will reduce their tax; other incentives are research and development allowances."

Topics: tax, business-economics-and-finance, multinationals, australia

First posted