James Gordon discusses the 2015-16 ATO corporate tax transparency report.
On 7 December 2017, the Australian Taxation Office (ATO) published the third year of the Corporate Tax Transparency Report for the 2015-16 income year. 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 nine entities with Petroleum Resource Rent Tax (PRRT) payable.
A snapshot of the corporate tax transparency reports over the first three years is as follows:
|Entities that did not pay tax||732 (35.8%)||679 (35.6%)||676 (36.6%)|
|Tax payable by taxpaying entities||$38.212Bn||$41.856Bn||$41.915Bn|
KPMG’s On a Page…2015-16 Tax Transparency Report provides a summary of the ATO’s disclosures. It should also be noted that a private member’s Bill Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017, which remains to be debated, is proposing:
Companies should review their data and understand the narrative underpinning their tax performance. This should be communicated with key internal stakeholders – in particular where numbers differ from initial expectations e.g. tax on taxable income is not equal to 30 percent. Tax leaders should also engage internally to prepare the business to address questions from external parties such as employees, customers and the media.
Many taxpayers are linking their tax performance narrative in terms of the ATO’s published tax data to disclosures made in response to the Voluntary Tax Transparency Code. As a topic of interest to the media and public and a focus in the ATO’s Justified Trust program, Boards and Management of companies should consider how adopting the Code contributes to demonstrating good tax governance and transparency on an emerging aspect of Corporate Social Responsibility.