ATO transparency report indicates strong voluntary compliance among corporates

The ATO’s tax transparency report for the 2024–25 income year, released on 1 October, has revealed that 27 per cent of entities paid zero tax in this period, while its Tax Avoidance Taskforce continues to ensure that multinational enterprises, large public and private businesses, and associated individuals pay the correct amount of tax.

The Tax Office said that the nil taxpayers incurred an accounting loss, a tax loss, utilised offsets, and utilised tax losses from previous years.

“It’s important to remember that a nil tax result doesn’t automatically imply wrongdoing. Many large businesses legitimately pay no income tax, but we continue to scrutinise these outcomes closely, as the community expects,” ATO acting deputy commissioner Michelle Sams added.

“The majority of Australia’s largest companies are paying the right amount of tax and meeting their tax obligations. We continue to take firm action where we identify non-compliance,” Sams said.

The ATO’s Tax Avoidance Taskforce, established in 2016, has secured more than $36 billion in additional tax revenue from multinational enterprises and large public and private businesses.

“The Tax Avoidance Taskforce continues to deliver strong returns for the community by ensuring large businesses and wealthy groups pay the right amount of tax,” Sams said.

The big taxpayers

The report said that 52.7 per cent of the tax payable ($46.1 billion) was paid by entities with income of more than $5 billion, comprising 2.2 per cent of the corporate transparency population.

Further, it found that the mining, energy, and water segment paid 41.1 per cent ($35.9 billion) of total tax payable in the corporate transparency population.

This proportion has dropped by 25.8 per cent ($12.5 billion) from the prior year.

Sams attributed the reduction in tax paid to “reduced profitability of miners flowing from lower commodity prices”.

Reflecting on its report, it noted that a more complete understanding of a corporate’s tax position could have been provided through the inclusion of “operating profits, tax losses or tax offsets”, which was limited by confidentiality laws.

“Tax information is protected by privacy legislation, limiting what we can cover in this report,” the report said.