For-profit nursing-home providers to answer allegations they are shifting profits offshore while receiving vast sums of government funding

This article is more than 2 years old

This article is more than 2 years old

A Senate inquiry has been announced into allegations of multinational tax avoidance among Australia’s largest for-profit nursing home providers.

The inquiry comes on the back of a damning report by the Tax Justice Network, which suggested big aged-care providers were shifting profits offshore and paying minimal tax, while simultaneously receiving vast sums of taxpayer funding.

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The report alleged big companies used common profit-shifting tricks, including the use of excessive related-party loans, to reduce their taxable income in Australia.

The Senate on Thursday referred the matter to an inquiry, which will aim to report by 14 August. It has been tasked to investigate the use of “tax avoidance or aggressive tax minimisation strategies” in the sector, and whether they have caused any impact on service delivery or “value for money for government”.

The news was welcomed by the Australian Nursing and Midwifery Federation, which commissioned the Tax Justice Network report.

ANMF - Australian Nursing Midwifery Federation (@anmfbetterhands) #Breaking:The Senate has voted for an inquiry into the financial and tax practices of for-profit aged care providers. It’s time they're scrutinized & held accountable for how they spend our taxpayer money. https://t.co/SljQwq36jN #auspol@jennymcallister @KKeneally @HumanHeadline pic.twitter.com/J8KU9ZI5s5

The federal secretary, Annie Butler, said the inquiry would help determine whether government subsidies were being spent on service delivery, as intended.

“Companies that receive millions of dollars via Australian government subsidies should be required by law to meet higher standards of transparency in financial reporting,” Butler said.

“Proof of government funding being directly spent on the care of elderly residents needs to be mandated as a pre-requisite to receiving a subsidy.”

Two of the biggest companies named in the report – Bupa and Opal Aged Care – denied any wrongdoing and said they comply with all Australian taxation and disclosure requirements.

Bupa recorded a taxable income of $352m from a staggering total income of $7.5bn in 2015-16, and paid tax of $105m. The report accused it of reducing its taxable income in Australia using massive related-party loans and debt from a corporate restructure, among other things.

Opal Aged Care had a total income of $572.2m in the same year, but had a taxable income of just $7.9m, and paid $2.4m in tax.

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Opal was also accused of lowering profits in Australia using related-party loans, and the Tax Justice Network questioned whether it was renting its own aged care residences from a separate but related corporate entity to minimise tax.

Report author, Jason Ward, welcomed the inquiry and said he hoped it would help shine a light on the opaque tax structures used in the sector.



“These large for-profit aged care companies have been remarkably silent in response to the report, but other stakeholders have been deeply concerned about our findings,” Ward told Guardian Australia. “There seems to be strong support for our recommendations to require companies receiving over $10 million in annual government funding to be fully transparent.”



“We hope this is the beginning of a process to increase transparency and accountability around all government contracting with for-profit companies. The contracting out of public services by government to for-profit companies has blown out of control.”

