Business News NSW Northern Rivers

Corporate Tax Transparency report highlights trend towards willing compliance

Published

3 years ago

10 December 2021

JeffG

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Corporate Tax Transparency report highlights trend towards willing compliance

The Australian Taxation Office’s (ATO’s) publication of the seventh annual report on corporate tax transparency showcases the trend towards improved voluntary tax compliance among large corporates.

Deputy Commissioner Rebecca Saint explained that the report reflects the ATO’s intensive engagement with the top end of town in recent years.
“While the tax paid by this population may fluctuate year on year, the overall trend couldn’t be clearer. Corporates are placing a higher value on tax compliance, driving consistent and willing voluntary participation,” Ms Saint said.

The Tax Avoidance Taskforce (the Taskforce) has had a significant impact on corporate tax collections. Since its inception in 2016, the Taskforce has proven very successful. In addition to contributing to the ATO collecting over $10 billion in additional tax from public and multinational businesses it has driven improved tax compliance.

The resources of the Taskforce have allowed the ATO to establish the Justified Trust program, which requires the largest businesses to assure us they are paying the right amount of tax by having regard to objective evidence.

“This is a significantly higher level of scrutiny than the previous approach of investigating identified risks,” Ms Saint said.

“Our reports on the Top 100 shows that the number of taxpayers achieving a high assurance rating increased from 6% in 2019 to 49% in 2021. We attribute this to a combination of businesses recognising that investing in their tax governance has tangible real-world benefits – as well as a significant investment of time and resources by the ATO in scrutinising structures, transactions and tax governance frameworks.”

“The health of the tax system is underpinned by willing participation, which is shown by four out of five of the largest businesses in Australia having obtained either a high or medium assurance rating.”

“Low assurance ratings prompt the ATO to conduct comprehensive and intensive reviews where we are more likely to use audits to resolve issues.”

“Although we cannot disclose the assurance ratings of individual taxpayers, we note that many are using a justified trust rating as a key performance indicator. We are seeing businesses with “high assurance” tax ratings informing their shareholders, employees and other stakeholders.”

The corporate tax transparency report also shows that the proportion of companies that have paid no income tax remains steady at 33% in 2019-20. This reflects a decline from 36% since the first report in 2013-14.

It is important to note that data in the report is taken directly from tax returns and does not reflect any intervention or compliance work after lodgment of the returns.

There are many reasons why companies pay no income tax. Income tax is paid on profits not revenue and legitimate business or economic factors may see companies pay no income tax due to operating losses, utilising losses from prior years, or projects operating in a start-up phase.

Many single entities that did not pay tax are members of a tax paying corporate group. At the economic group level, a total of 2,061 economic groups or standalone entities were to some degree in scope for the transparency report. Of these, 78% had a tax liability through one or more member entities.

“The ATO actively verifies that losses in the large market are not created through contrived schemes, but can be traced back to commercial operations. We subject companies that report sustained year-on-year losses to additional scrutiny,” Ms Saint said.

Corporate Tax Transparency Report

The ATO is required under law to publish tax information reported to us by certain large companies each year. This year’s tax transparency report covers 2,370 corporate entities, of which:
1,378 are foreign-owned companies with an income of $100 million or more
513 are Australian public entities with an income of $100 million or more
479 are Australian-owned resident private companies with an income of $200 million or more.

The companies in the report paid a combined total of $57.2 billion, or around 65% of all corporate income tax in 2019-20.

Since the first report in 2013-14, there has been growth in total income, taxable income, and income tax payable. In 2019-20, the growth in these amounts has been largely driven by the mining sector, which accounted for around 44% of tax payable.

While the report reflects the impact of the early stages of the COVID-19 pandemic (particularly on the wholesale, retail and services sector), it does not provide additional detail on recipients of JobKeeper or other stimulus payments.

Oil and gas sector

The highly concentrated taxpayer base of the Petroleum Resources Rent Tax (PRRT) allows a high level of ATO scrutiny.12 corporate entities paid $881 million in 2019-20, this is a slight decrease from the $1.06 billion paid by 11 corporate entities 2018–19. The decline in PRRT is primarily due to a fall in oil prices.

Large corporate groups income tax performance

Most large businesses do the right thing and are paying the right amount of tax, as reflected in our estimate of the large corporate group income tax gap.

For 2018–19, we estimate a net gap of 4.3% or $2.6 billion after ATO engagement, meaning large corporate groups paid over 95% of the theoretical total amount of income tax payable in 2018–19.

“Very few other revenue authorities calculate and publish tax gaps. This makes international comparisons difficult, but Australians can be reassured that large corporate groups are held to account more than any other sector of the economy,” Ms Saint said.

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“Australian lightweight champion from lil ol’ Swan Bay”

Published

3 days ago

3 December 2024

Liam

Sunny McLean with his coach, Scott Smith. Boxing Northern Rivers News

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“Australian lightweight champion from lil ol’ Swan Bay”

By Samantha Elley

Maddog boxing’s Sunny McLean has been going from strength to strength this past year, grabbing titles from each of the events he has been fighting in.

Sunny McLean and his coach, Scott Smith, who runs Maddox Boxing, were recently picked to represent Queensland as the fighter and coach team to compete in the national titles in Gosford.

Sunny won all his elimination bouts and beat the NSW champion in the gold medal fight, to become the newly crowned Australian champion in the lightweight division.

They were surprised with a visit from Jason and Andrew Moloney, world champion professional boxers.

“Every state in Australia was there with all the best fighters and the (Moloney brothers) came to support us, so we felt so special,” said Scott.

“They came to help me prepare Sunny for his last two fights in this event.”

Sunny was competing for Queensland as he already holds the title of QLD/NSW interstate champion.

“His first opponent, the referee stopped the fight in the 3rd round,” said Scott.

“His second opponent was the favourite from Tasmania and Sunny won that fight to go through for the gold medal against the NSW champion.

“Andy (co-trainer) and I worked out a plan to beat him and Sunny did exactly what he was asked and never last control of the situation.

“He is now the Australian lightweight champion from lil ol Swan Bay.”

For more local news, click here.

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Business News NSW Northern Rivers

Investments That Have Outpaced Inflation

Published

2 months ago

17 October 2024

Liam

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Investments That Have Outpaced Inflation

With high living costs dominating recent headlines, investors are seeking asset classes that can not only weather inflation but provide returns that outpace it. Inflation is a critical factor in the Reserve Bank of Australia’s (RBA) cash rate decisions, which has many Australians on edge, particularly those concerned about rising home loan interest rates.

Historically, inflation in Australia has hovered around the RBA’s target range of 2%-3%, but the landscape changed dramatically with the COVID pandemic. Inflation surged to 7.8% in late 2022 and, while it has since eased to 3.8%, its impact remains a key concern for investors.

The Erosion of Personal Wealth by Inflation

Inflation can erode personal wealth by diminishing the purchasing power of money. For example, if you had $10,000 in a savings account at the start of 2022, it would still be $10,000 at the end of the year, but inflation of 7.8% would have reduced the value of that money in terms of what it could buy. This demonstrates how unchecked inflation can undermine financial stability and the quality of life for Australians.

Assets That Have Outpaced Inflation

To protect against inflation, investors often turn to growth assets, which have historically increased in value over time.

Research by InvestSMART has identified several asset classes that have significantly outpaced inflation over the 12 months to 30 June 2024:

International shares: Returned 19.92%, outpacing inflation by 16.12%.
Australian shares: Returned 12.1%, beating inflation by 8.3%.
Listed property trusts (REITs): Achieved an impressive return of 23.79%, eclipsing inflation by 19.99%.

By contrast, savings accounts typically returned 4.5% over the same period, which, after accounting for inflation, results in a much lower 0.7% return.

ETFs: A Simple Option to Beat Inflation

For investors looking to outpace inflation without the complexity of selecting individual stocks, exchange-traded funds (ETFs) offer a diversified and accessible solution. ETFs track major asset classes and have consistently delivered near double-digit returns, beating inflation.

While growth assets like shares can come with higher risks, ETFs provide a straightforward way to gain exposure to these assets without needing to analyse individual companies. Diversification is key, and the longer you stay invested, the better your chances of riding out market volatility, benefiting from compounding returns, and staying ahead of inflation.

The Importance of Beating Inflation

With inflation eating away at savings and wealth, and most Australians not seeing wage increases that match the cost of living, investing in assets that outpace inflation remains one of the most effective strategies for maintaining and growing wealth. Whether through international shares, Australian equities, REITs, or ETFs, a diversified investment portfolio is crucial in navigating the current economic climate.

As always, consider your investment timeframe and risk tolerance before deciding where to invest. The more you diversify and the longer you stay invested, the more likely you are to grow your wealth and beat inflation.

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Business News NSW Northern Rivers

Award-Winning Digital Program Streamlines Export Processes for Australian Farmers

Published

2 months ago

15 October 2024

Liam

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Award-Winning Digital Program Streamlines Export Processes for Australian Farmers

By Ian Roberts

The Department of Agriculture, Fisheries and Forestry has been recognized with a prestigious Good Design Award for its innovative efforts in simplifying export processes through the Digital Services to Take Farmers to Market program. This initiative has been lauded for improving the administration of tariff rate quotas, offering significant benefits to exporters.

Deputy Secretary for Trade and Regulation, Tina Hutchison, highlighted the program’s role in enhancing access to quotas that reduce tariffs under international trade agreements.

“The new streamlined administration is already making it easier for exporters to get their products into overseas markets,” Ms. Hutchison said. “By using evidence-based, design-led approaches, our project teams are delivering an export service that reduces bureaucratic hurdles and supports the growth of Australian businesses.”

The award-winning solution was recognized for its effective design strategy, which improves the timeliness and transparency of tariff rate quota administration, making the export process smoother for businesses.

“These innovative design solutions are crucial for helping the agriculture sector achieve its goal of becoming a $100 billion industry by 2030,” Ms. Hutchison added. “Looking ahead, we plan to expand the system with features like a self-service option to view quota balances through our online digital export service.”

The Good Design Award judges praised the department for its inclusive approach, ensuring the service catered to a wide audience and led to more efficient service delivery for exporters.

For more details on the award, visit: Good Design Award. To access the export service, visit: Export Service.

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