In a classic bit of “disappointed but not surprised” news, almost a third of Australia’s big ‘ol corporations didn’t pay any income tax in 2020 to 2021. And adding insult to injury — that number includes more than half of the mining, energy and water corps. Great!
This info comes from the Australian Taxation Office’s corporate tax transparency report for 2020-2021, which was released earlier this week. It includes 2,468 “entities” — and approximately 32 per cent of those paid “nil” tax.
Income tax is based on how much profit a company makes, not how much revenue.
The report outlines the “significant challenges” facing many industries during that financial year cos of the COVID-19 pandemic. It also said the tax paid during the period was the highest since corporate tax transparency reporting began.
According to the ATO, there are a couple of reasons why a company might not pay any tax.
“Where a corporate entity has tax deduction that exceeds its income, it can incur a tax loss and pay no tax for that year,” the report explains. Companies can also use things like tax offsets to reduce the amount of tax they pay.
It says some entities might not pay tax — but they’re part of larger corporate structures which includes other entities which have paid tax, per The Guardian.
“When we analyse this population at the group level, the percentage with nil tax payable drops from 32 per cent to 20 per cent because at least one entity in the group did pay tax,” the ATO said.
Has your brain expanded yet? Mine certainly has.
Some of the companies which paid no tax include Adani Mining Pty Ltd, Ampol, ExxonMobil and Woodside Petroleum.
Just remember when you hear all that talk about how Australia’s coal and gas exports pay for schools and hospitals – mining and energy companies are around twice as likely to be paying no income tax (zero) compared to other sectors. pic.twitter.com/KC7XtMrAYc
— Michael Mazengarb (@MichaelM_ACT) November 3, 2022
Virgin and Qantas also paid no income tax, while Chevron paid just $30 of income tax.
“We pay close attention to companies not paying tax,” said ATO deputy commissioner Rebecca Saint, per News.com.au.
“We hold those companies that report continual year-on-year losses to an additional layer of scrutiny.
“While it’s true some large entities paid no income tax, we’re seeing through our justified trust program that there are high levels of compliance by these entities, and taking decisive action where there’s not.”
The number of companies not paying any income tax peaked in the 2015/16 financial year at 36 per cent. So we’re down a couple of percentage points from that.
Still, that’s a whole lot of companies not coughing up any mulla.