This quick guide is an update of the Parliamentary
Library’s 2019 FlagPost on the same subject (Corporate Tax
Transparency Report),
with some additional content and information.
On 12 December 2019, the Australian Taxation Office (ATO)
released the fifth
Corporate Tax Transparency Report (also referred to as the 2017–18
Report of Entity Tax Information). This paper explains what
the Report is and outlines why it should be used cautiously in drawing
conclusions about whether particular businesses are avoiding tax. It also
contains information about the Voluntary
Tax Transparency Code and illustrates how that information can be used to
supplement the Corporate Tax Transparency Report.
What is the Report of Entity Tax Information?
The Corporate Tax Transparency Report (CTTR)
discloses total income, taxable income and tax payable for public and foreign
owned corporate tax entities with Australian income exceeding $100 million and
Australian private companies with income exceeding $200 million. The CTTR also
discloses which entities have paid Petroleum Resource Rent Tax (PRRT) and the
amount of PRRT they have paid.
Voluntary Tax Transparency Code
The CTTR is complemented by the ATO’s Voluntary
Tax Transparency Code (the Code) which provides a framework for businesses
to voluntarily provide further information explaining their tax affairs,
including why they may appear to be paying a low amount of tax relative to
their total earnings and details of disputes with the ATO. For example:
- Qantas’
2017 Voluntary Tax Transparency Code Report and 2018
Voluntary Tax Transparency Code Report explained that Qantas used carried
forward tax losses from previous years to reduce its tax payable
- Google’s
2017–18 Tax Transparency Code Report provided a detailed breakdown
explaining why its effective tax rate was 17 per cent for 2018 and 16 per cent
for 2017, as well as disclosing that Google was expecting a higher corporate
tax bill in 2018 due to a ‘combination of adjustments for prior years and
prepayments for the current year, as per notices issued by the ATO’
- BHP’s
Economic Contribution Report 2017 disclosed a $1.01 billion tax dispute with
the ATO for the 2003–2013 income years relating to its Singapore marketing
business
- Coca-Cola
Amatil’s (CCA) 2018 Tax Transparency Report explained that the reason CCA’s
effective tax rate for 2017 was 19.3 per cent (compared to 28.9 per cent in
2018) was due to ‘the recognition of previously unrecognised capital losses to
offset a capital gain arising from the Richlands property sale and a dividend
from an offshore subsidiary which is exempt from Australian tax. (The
underlying profits from which this dividend has been paid have been subject to
corporate income tax in New Zealand at the rate of 28%)’
- ExxonMobil’s
Tax Facts disclosed that the ATO issued ‘amended income tax assessments to
ExxonMobil Australia Pty Ltd for the 2010 and 2011 income years, which may also
have implications for the 2012 to 2017 income years. While we paid an amount of
$42 million to the ATO in 2018 relating to the 2010 and 2011 income years, we
stand by the pricing of our loans and resolution of the amended returns may
require negotiations extending over a number of years’
-
a number of businesses, including ANZ,
CBA,
Qantas,
disclosed they have entered into an Annual Compliance Agreement (ACA) with the
ATO. As explained by the Australian
Treasury, ‘ACAs are voluntary administrative arrangements which set out a
framework for managing the compliance relationship between the ATO and a
taxpayer. Taxpayers will generally approach the ATO to enter into an ACA. The
ATO will decide on a case-by-case basis whether an ACA is suitable. A taxpayer
with an ACA may still be subject to compliance action in relation to matters
outside the scope of the ACA’. The ATO’s
webpage on Annual Compliance Agreements has additional information about
ACAs.
As
at 30 April 2020 there are 170 signatories to the Code and 367 reports have
been published since 2014.
CTTR Background
The CTTR was enacted
by the Gillard Government in June 2013, with Assistant Treasurer David
Bradbury stating:
Improving the transparency of
Australia’s business tax system will encourage enterprises to pay their fair
share of tax and discourage aggressive tax minimisation practices. It will
allow the public to better understand the business tax system and engage in
debates about tax policy.
Reflecting the Coalition’s long-standing
opposition to the disclosure of tax information of private individuals, the
Turnbull Government amended
the CTTR in November 2015 to remove privately owned companies from having
their information publically disclosed. According to the Explanatory
Memorandum this would ensure that the disclosure of information under the
CTTR:
does not affect the privacy and personal security of the
ultimate owners of Australian-owned private companies. It also removes the risk
that the release of the information will harm Australian-owned private
companies’ market environment.
However, in December 2015, privately owned entities were
again included in
the CTTR, but at a threshold of $200 million income (compared to the
original $100 million threshold when first enacted in 2013) as the result of an
amendment
moved by the Greens in relation to the Tax
Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015.[1]
The decision to limit the reporting obligation to private
entities with at least $200 million Australian income remains controversial
with the ALP
pledging to restore the $100 million threshold in May 2017.
Limitations and criticisms of the
CTTR
There are a number of limitations with the data contained in
the CTTR that ultimately reduces its usefulness in analysing a business’s tax
performance.
Limited information
The CTTR does not detail operating profits, tax losses or
tax offsets, the inclusion of which would provide a clearer picture of an
entity’s tax position and allow commentators to draw conclusions based on more
meaningful information, and enhance the public debate around multinational tax
avoidance.
Although the Voluntary Tax Code provides a framework for
businesses to provide this additional information, the voluntary nature of the
Code means that only a small percentage of businesses subject to the CTTR have
chosen to do so, and the majority of businesses who have signed the code are Australian
(as
at 30 April 2020, there are 170 signatories and 367 publications—285 of these
publications were by Australian businesses, 67 foreign businesses and 15 dual
listed businesses).
Although Google
signed the Code in 2018, a number of other large US tech-firms have
rejected it, with IBM commenting
that they would not sign the Code because of concerns about competitors knowing
too much about its operations and a stated desire to protect the company's
clients.
Source of information and amended
assessments
The CTTR is based on information contained in an entity’s
tax return in the year it is lodged. This means that where an entity’s tax
return is amended in later years, the information for a previously published
year may not represent the actual amount of tax owing for that year. Therefore,
as the CTTR is published at a point in time, the previously published CTTR will
not be amended to reflect the ‘correct’ amount of tax owing for that year where
there has been a settlement or litigation. For example, previous years CTTR’s do
not reflect the following additional payments of tax:
As such, where this occurs, the CTTR can be misleading as to
how much tax was actually paid for a given year.
Identifying businesses
It may be difficult to identify a business where it comprises
several taxable entities, or where its tax information is not disclosed under
their trading or business name. For example:
- BHP has multiple entities listed in the CTTR (including BHP
Billiton Ltd, BHP Iron Ore (Jimblebar) Pty Ltd, BHP Billiton Mitsui Coal Pty
Ltd and BHP Billiton (Aus) DDS Pty Ltd)
- Fonterra is listed under its parent entity, New Zealand Milk
(Australasia) Pty Ltd and Saputo is listed under its Australian Company Number in
the 2017-18
CTTR
- Glencore Holdings was listed as GHP 104 160 689 Pty Ltd in the
2013-14 and 2014-15 CTTRs
- a number of entities are listed under their Australian Company
Number rather than business name (for example, the 2017–18 CTTR contains five
such entities with approximately $3.7 billion total income).
Snapshot of CTTR data
The tables below provide a summary of the information
contained in the CTTR’s, as well as the largest ten taxpayers as disclosed by
the CTTR.
Table 1: Overview of CTTR data 2013–2017
| CTTR Report |
No. of reporting
entities |
Total income
reported |
Total taxable
income reported |
Total tax paid |
No. of $0 tax
entities |
PRRT collected |
| 2013-14 |
1,859 |
$1,774 billion |
$178.09 billion |
$41.92 billion |
676 |
$1.77 billion |
| 2014-15 |
1,945 |
$1,797 billion |
$169.47 billion |
$42.01 billion |
704 |
$1.20 billion |
| 2015-16 |
2,109 |
$1,839 billion |
$173.51 billion |
$38.59 billion |
770 |
$0.85 billion |
| 2016-17 |
2,159 |
$1,869 billion |
$190.61 billion |
$45.79 billion |
751 |
$0.95 billion |
| 2017-18 |
2,246 |
$2,010 billion |
$219.32 billion |
$52.38 billion |
727 |
$1.16 billion |
Source:
Report of Entity Tax Information, data.gov.au.
Numbers rounded
Note: this table includes information
relating to previous years that were included in the CTTR report for a later
year (that is, they were processed after 1 September due to late lodgement or a
substituted accounting period). As such, the numbers presented in this table
may differ to the information provided in the ATO’s yearly summary of the CTTR data.
Top 10 taxpayers 2013–2018
The tables below have been compiled using data from published
CTTR reports.
Table 2: 2013–14 CTTR
| Entity |
Tax paid |
Previous year
ranking |
| 1. BHP Billiton |
$3,950,825,604 |
N/A |
| 2. Rio Tinto |
$3,050,569,573 |
N/A |
| 3. CBA |
$2,872,351,385 |
N/A |
| 4. Westpac |
$2,428,665,547 |
N/A |
| 5. NAB |
$2,260,156,675 |
N/A |
| 6. ANZ |
$1,964,803,966 |
N/A |
| 7. Telstra |
$1,741,846,820 |
N/A |
| 8. Wesfarmers |
$1,093,140,349 |
N/A |
| 9. Woolworths |
$910,864,515 |
N/A |
| 10. Fortescue Metals |
$737,898,334 |
N/A |
Source: Report of Entity Tax Information, data.gov.au.
Table 3: 2014–15 CTTR
| Entity |
Tax paid |
Previous year
ranking |
| 1. CBA |
$3,107,074,610 |
3 |
| 2. Westpac |
$2,853,558,937 |
4 |
| 3. Rio Tinto |
$2,733,767,906 |
2 |
| 4. NAB |
$2,688,097,025 |
5 |
| 5. ANZ |
$2,072,457,658 |
6 |
| 6. BHP Billiton |
$1,718,329,663 |
1 |
| 7. Telstra |
$1,712,473,178 |
7 |
| 8. Shell |
$1,028,943,536 |
55 |
| 9. Wesfarmers |
$958,824,629 |
8 |
| 10. Woolworths |
$898,750,445 |
9 |
Source: Report of Entity Tax Information, data.gov.au.
Table 4: 2015–16 CTTR
| Entity |
Tax paid |
Previous year
ranking |
| 1. CBA |
$3,290,941,018 |
1 |
| 2. Westpac |
$2,966,534,486 |
2 |
| 3. NAB |
$2,428,532,833 |
4 |
| 4. ANZ |
$1,971,453,910 |
5 |
| 5. Telstra |
$1,738,271,313 |
7 |
| 6. BHP |
$1,325,839,334 |
6 |
| 7. Rio Tinto |
$1,049,914,886 |
3 |
| 8. Wesfarmers |
$930,590,946 |
9 |
| 9. AMP |
$681,156,104 |
12 |
| 10. Woolworths |
$496,872,267 |
10 |
Source: Report of Entity Tax Information, data.gov.au.
Table 5: 2016–17 CTTR
| Entity |
Tax paid |
Previous year
ranking |
| 1. CBA |
$3,937,948,031 |
1 |
| 2. BHP Billiton |
$3,271,853,069 |
6 |
| 3. Westpac |
$3,242,341,803 |
2 |
| 4. ANZ |
$2,359,485,957 |
4 |
| 5. NAB |
$2,028,419,563 |
3 |
| 6. Rio Tinto |
$1,820,598,868 |
7 |
| 7. Telstra |
$1,644,403,585 |
5 |
| 8. Wesfarmers |
$1,184,714,668 |
8 |
| 9. Fortescue Metals |
$1,031,795,895 |
12 |
| 10. AMP |
$821,170,941 |
9 |
Source: Report of Entity Tax Information, data.gov.au
Table 6: 2017–18 CTTR
| Entity |
Tax paid |
Previous year
ranking |
| 1. CBA |
$4,311,044,402 |
1 |
| 2. BHP Billiton |
$3,523,250,116 |
2 |
| 3. Westpac |
$3,251,197,116 |
3 |
| 4. Rio Tinto |
$3,170,873,230 |
6 |
| 5. ANZ |
$2,198,812,305 |
4 |
| 6. NAB |
$2,077,978,074 |
5 |
| 7. Telstra |
$1,511,514,175 |
7 |
| 8. Wesfarmers |
$1,250,026,416 |
8 |
| 9. Mitsubishi Development |
$938,985,777 |
11 |
| 10. AMP |
$905,083,030 |
10 |
Source: Report of Entity Tax Information, data.gov.au