Australian Tax Office Reels in $100 Billion in Corporate Taxes

An Australian 100 dollar note is shown on Oct. 6, 2009. Greg Wood/AFP via Getty Images

Corporate Australia has paid nearly $100 billion in income tax for the 2022/23 financial year, marking a record 16.7 percent increase from the previous year, according to the Australian Taxation Office’s latest report.

The 31-page Corporate Tax Transparency report, covering 3,985 entities, reveals record-high tax receipts, largely driven by major corporations.

The report includes 1,272 newly captured entities, following regulatory changes that lowered the reporting threshold to businesses with a turnover of $100 million, down from $200 million.

Stephen Jones, Financial Services Minister, attributed the rise to government initiatives focused on tax transparency and bolstering essential services.

“More corporates paying their fair share means increased funding for healthcare, infrastructure, and education. We’re ensuring that companies can’t avoid what they owe to Australians,” Jones stated,

He highlighted the role of the ATO’s Tax Avoidance Taskforce, which received an additional $200 million to pursue tax dodging by multinational and private entities.

Assistant Minister for Treasury Andrew Leigh noted the importance of transparency in driving corporate accountability.

“Australia is leading on corporate tax transparency to drive lasting change,” he said. “A fair, accountable tax system supports our businesses and workers.”

In 2022, the federal government addressed a yearly shortfall of more than $33 billion in unpaid taxes.

Following a change in the tax law in 2022, this is the first year data on Australian-owned private companies with total income between $100 million and $200 million has been published.

Over 1,200 Entities Avoid Tax

At the same time, more than 1,200 entities—roughly 31 percent of the corporate tax population—paid no tax, according to the report.

It attributed this to various factors, including business losses or tax offsets, highlighting the complexity of tax obligations across the corporate spectrum.

Deputy Commissioner Rebecca Saint explained that there are legitimate reasons why a company may not pay income tax.

“We ensure that any entities not contributing are doing so for genuine commercial reasons rather than through tax planning or structuring,” she told ABC News.

According to ATO data, 124 companies had assessments raised against them during the 2024 financial year, to the value of about $2.76 billion.

The bulk of the liabilities ($2.5 billion) was raised against 24 different taxpayers following audit and review activities.

About $2.22 billion of this amount is being disputed by 14 different taxpayers, and some of that money has been paid to the ATO under a 50:50 arrangement.

High-Earning Corporations Dominate Tax Contributions

The report highlights a stark disparity in tax contributions between Australia’s highest-earning corporations and mid-sized private entities, reflecting the reliance on large companies to fund public services.

Companies with revenues exceeding $5 billion, while representing just 2.2 percent of the report’s corporate population, account for over 61 percent of total tax contributions.

These corporations paid $60.4 billion in taxes, showcasing their weight in Australia’s fiscal landscape.

Expanding Tax Population

The report indicates that a change in tax law in 2022, which lowered the income threshold for corporate tax transparency, added over 1,000 Australian private companies to the report.

This year’s data, covering Australian-owned private companies with annual income between $100 million and $200 million, broadens the transparency scope, increasing the reported tax population by 46.9 percent from 2021-22.

These mid-sized entities form 26.1 percent of the corporate tax population but contribute just 2.5 percent of total tax payments.

Australian private companies, while comprising 43.6 percent of the total population, contribute 10.6 percent of tax payments, highlighting their smaller tax base.

Balancing Foreign and Domestic Contributions

Foreign-owned entities account for a significant 41.3 percent of the tax-paying population and contribute 41.5 percent of total tax revenue, reflecting Australia’s economic dependence on international corporations.

In contrast, Australian public companies, which make up only 15.1 percent of the population, contribute the largest portion of tax revenue at 47.9 percent.

The report also sheds light on how large corporate groups, particularly those not consolidated for tax purposes, distribute income across multiple entities within their economic structure, leading to a varied tax impact.

This complexity in structure means that the income of these groups may not be adequately captured by individual tax thresholds.