Tax avoidance rife among Australia’s largest companies
Amid all the hoopla over company tax cuts, it’s easy to forget that hundreds of companies across Australia haven’t paid corporate taxes in the last decade. From The ABC:
Qantas CEO Alan Joyce, one of the most prominent supporters of the Turnbull Government’s proposed big business tax cut, presides over a company that hasn’t paid corporate tax for close to 10 years.
Despite generating income of $106.4 billion, the flying kangaroo has avoided paying tax on that bounty since 2009, thanks to Australia’s generous tax concessions, depreciation provisions and the ability to offset company losses against past and future profits.
New analysis by the ABC reveals Qantas is not alone — its tax behaviour is consistent with about 380 of Australia’s largest companies. ATO corporate tax transparency data — confirmed in email exchanges with company representatives — reveals about one in five of the country’s biggest companies have paid no tax for at least the past three years.
Not one of Australia’s biggest airlines has paid corporate tax since at least 2013, including Virgin and its subsidiary Tigerair, Etihad, Emirates and Qatar…
At a time when Australian households have seen their electricity prices soar, the country’s leading energy retailer, EnergyAustralia hasn’t been paying corporate tax. EnergyAustralia paid no corporate tax for the decade to 2016.
Ten years after the global financial crisis — which they are largely responsible for creating — some of the world’s most prominent investment banks are collecting tidy sums of income in Australia and not paying corporate tax.
Among them is Malcolm Turnbull’s old employer, Goldman Sachs… Ditto for JPMorgan Chase which raked in $2.2 billion and hasn’t paid corporate tax since at least 2013.
Australian tax law has allowed foreign companies to shift profits to affiliates or parent groups offshore in the guise of payments for services.
They’ve also been entitled to lend money to their Australian operations at inflated prices to create excessive tax deductions in Australia.
This can all work to render the Australian business loss-making, therefore not required to pay corporate tax.
For local companies, the dividend imputation system is a unique tool that allows businesses to pass tax credits on to their investors.
Australia and New Zealand are now the only two OECD countries to offer imputation which results in around a third of corporate tax revenue in Australia being handed back to investors.
Over the past 30 years, a number of countries have abandoned dividend imputation, including the UK, Germany, Finland, Norway, Singapore and Malaysia.
Rupert Murdoch’s News Corp, which hasn’t paid corporate tax in Australia for at least four years… Foxtel had also not paid corporate tax.
Software giant Atlassian also pointed to R&D tax concessions when explaining why it too hasn’t paid corporate tax for the past two years on accumulated income just shy of $1 billion.
The big property and construction companies Lend Lease, Grocon, Stockland and GPT are also part of the corporate tax-free club.
The large scale tax avoidance helps to explain why Australia’s average and effective corporate tax rate is actually very low:
It also renders bunk the incessant calls for Australia to lower company taxes on tax competitiveness grounds.