The Australian Taxation Office (ATO) has published the Corporate Tax Transparency 2022-23 report, which is its tenth annual report on the topic.

Highlights for 2022–23

  • There are 3,985 entities in this year’s population, representing a net increase of 1,272 entities (46.9%) from 2021–22 and 1,040 entities are attributable to the lower total income threshold applying for Australian private entities from the 2022–23 income year.
  • Total income for 2022–23 was $3,138.4 billion, an increase of 23.3%.
  • Taxable income was $ 380.1 billion, an increase of 11.3%.
  • Tax payable was $97.9 billion, an increase of 16.7%.
  • Foreign-owned entities accounted for 41.3% of this year’s corporate transparency population and 41.5% of tax payable.
  • Australian public entities accounted for 15.1% of this year’s corporate transparency population and 47.9% of tax payable.
  • Australian private entities accounted for 43.6% of this year’s corporate transparency population and nearly 10.6% of tax payable.
  • Australian private entities with income between $100 million and $200 million accounted for 26.1% of the total corporate transparency population, 4.6% (or $142.9 billion) of total income, 2.4% (or $9.2 billion) of taxable income and 2.5% (or $2.5 billion) of the total tax payable.
  • Entities with income of more than $5 billion represented 2.2% of the corporate transparency population and accounted for 61.6% of tax payable ($60.4 billion).
  • Entities with income of between $250 million and $5 billion represented 42.1% of the corporate transparency population and accounted for 31.7% of the tax payable ($31.1 billion).
  • Medium entities – those with income of less than $250 million – represented the largest portion (55.7%) of the corporate transparency population and accounted for only 6.6% of the tax payable ($6.5 billion). The increase in the number of medium entities in this year’s corporate transparency population is due to the lowering of the total income threshold for Australian private entities.
  • Tax payable in the corporate transparency population was again dominated by the Mining, Energy and Water segment at 55.9% ($54.7 billion) of the total. This year the Mining, Energy and Water segment increased by $12.5 billion (29.5%) on last year.
  • Approximately 31% of entities paid nil tax (14% incurred an accounting loss, 7% incurred a tax loss, 2% utilised offsets, 8% utilised tax losses from prior year).
  • PRRT payable decreased 6.5% from $1,996.6 million last year to $1,867.1 million this year.

ATO comments

The ATO noted this is another record year of tax paid by large corporates.

‘This is a great result for the Australian community. Tax paid in 2022–23 was again the highest since CTT reporting started. When you include the additional tax revenue raised by the Tax Avoidance Taskforce for the year, we collected around $100 billion from large corporates in 2022–23,’ said ATO Deputy Commissioner Rebecca Saint

‘Tax paid by the oil and gas sector increased to $11.6 billion in 2022–23, with some oil and gas companies now amongst the largest taxpayers in Australia. This result was driven by a combination of commodity prices, the project production life cycle and ATO intervention.’

‘2022–23 is the second year in a row that the mining sector paid more tax than all other sectors combined, paying more than 5 times than they did in 2014–15.’

‘We continue to see improvement in the tax compliance of large businesses, reflecting how the ATO’s Tax Avoidance Taskforce has supported improvement in voluntary compliance in addition to strong compliance actions,’ Ms Saint said.

Deputy Commissioner Saint also reflected on the last decade of corporate tax transparency, highlighting the impact of the report on Australia’s largest taxpayers.

‘Providing transparency of corporate tax, the report has continued to improve accountability, encourage voluntary compliance and increase public awareness,’ Ms Saint said.

‘The first year of CTT showed large corporates paid nearly $40 billion in tax. Since this time, large corporates have paid more than half a trillion in tax in the last 10 years, before ATO compliance actions.’

‘Corporate tax compliance in Australia sets the bar for the rest of the world, and these results in part reflect years of sustained effort from the ATO’s Tax Avoidance Taskforce to drive and support increased tax compliance by large businesses,’ Ms Saint said.

‘Our tax gap estimates show that after ATO compliance activities, large corporates paid 96% of all income tax they should have for 2021–22. As they should be, large corporate groups are amongst the highest in net tax performance of all population segments. In part, this reflects the efforts of the Tax Avoidance Taskforce in holding large corporates to account.’

Entities with nil tax

According to the report, the percentage of those entities that paid no income tax has decreased from 36% in 2013–14 to 31% in 2022–23.

‘While there are legitimate reasons why a company may pay no income tax, the Australian community can be assured we pay close attention to those who pay no income tax to ensure that they are not trying to game the system,’ Ms Saint said.

 

Comments are closed.