Stephen Callahan provides a summary of the latest ATO corporate tax transparency report for 2014-15.
Today, we witnessed the second year of the Australian Taxation Office’s (ATO) annual reporting of large business corporate tax data. This marks the start of the ‘business as usual’ phase of this ATO public reporting of corporate tax transparency.
This year’s report includes:
The name and ABN of each company is listed, as well as information taken from three labels of their tax returns: total income, taxable income and income tax payable. It also includes 12 entities with Petroleum Resource Rent tax (PRRT) payable. As the Mineral Resource Rent tax (MRRT) was only applicable for the first three months of the 2014–15 financial year, there was no MRRT reported as payable for 2014–15.
Compared to 2013–14, this represents a net increase of 45 entities (2.4 percent) and a decrease in tax payable of $59 million (0.1 percent). There was also a reduction in tax payable for Australian public entities of $1,353 million, which was largely offset by increases of $1,095 million for foreign-owned entities and $199 million for Australian private entities.
This year’s report also includes a list of 41 entities meeting these requirements whose information was not available by the cut-off date to produce the 2013-14 report.
Whether it is a consequence of this public reporting or just coincidence, we are now witnessing a significant reinvention in the ATO’s compliance activities with this taxpayer segment.
These changes will commence in earnest in 2017 and run for four years. At the heart of this reinvention is an ATO desire to have greater ‘justified trust’ (the new favoured jargon of the ATO) in the tax performance of the top 1,000 corporate taxpayers. The program is part of the Tax Avoidance Taskforce which has the aim to build greater assurance around large multinational, public and private companies. This top 1,000 population broadly corresponds to companies that have total income of $250 million or more.
This initiative will involve streamlined assurance reviews by the ATO with an additional ‘business as usual’ reporting obligation back to the ATO to ensure ongoing justified trust can be demonstrated.
Thus, contemporaneously with ATO public reporting of corporate tax data, we are also seeing changes to the way the ATO will interact with those larger businesses going forward. Inevitably, this will require larger businesses to ask themselves whether existing internal tax risk management processes will also require some reinvention.