More than 1,200 large companies paid no tax, ATO reveals, as it vows to fight profit shifting
ChrisEllison-style tax deals in the public interest: ATO
Tom McIlroy Political correspondent
Nov 1, 2024
The Tax Office says secret legal settlements like its controversial deal
with Mineral
Resources founder Chris Ellison are in the public interest and subject to
strict independent oversight, saying prosecuting every evasion scheme in the
courts would be unworkable.
Releasing new figures showing the country’s largest corporations paid more than $100 billion in tax in 2022-23, ATO deputy commissioner Rebecca Saint said resolving disputes through legal settlements was a key tool for the regulators and part of good tax administration.
MinRes founder Chris Ellison entered into a confidential agreement with the
ATO. Michaela
Pollock
The Australian Financial
Review revealed last month Mr Ellison operated an
offshore tax evasion scheme for a decade, through a company incorporated in
the British Virgin Islands in 2003.
Mr Ellison’s advisers approached the ATO in December 2019, at a time when
executives feared the offshore deals were about to be exposed.
They offered to voluntarily disclose the arrangement in return for an 80 per
cent cut in penalties and an ATO assurance that it would not refer the matter
to the Australian Federal Police, the corporate regulator or the Director of
Public Prosecutions.
The revelations – including a cost to shareholders of $7 million – are being
investigated by the company. The board of Mineral Resources expects to hand
down findings of a review of Mr Ellison’s tax affairs by Monday.
The Perth-headquartered diversified miner admitted this week it has been
investigating the tax evasion scheme for more than two years, but denied it
needed to tell its investors because the board did not think
it would affect the miner’s share price.
The Tax Office is barred from speaking about individual cases, but Ms Saint
said resolving disputes as quickly as possible was in the public interest.
“As part of good administration, we regard settlement as an important
mechanism for resolving disputes,” she said. “We have significant controls
around how we conduct settlements.
“We cannot litigate every case. It would be impossible for us to run a
comprehensive audit program if we needed to take every case to court.”
Among the controls are oversight by a panel of former Federal Court judges, to whom proposed settlements must be referred if they meet certain criteria.
Settlements selected for review include those involving large
multi-nationals and those uncovered by the cross-government Tax Avoidance
Taskforce.
Any case with a pre-settlement position greater than $50 million, or with a
settlement amount above $20 million is automatically referred for independent
review. Any case with a variance greater than $20 million must also be
referred.
Ms Saint said other
significant cases, including those with potential reputational
significance, can be voluntarily referred by the relevant deputy ATO
commissioner.
In 2021-22, the assurers reviewed 15 settlements agreed by the ATO, finding
all represented a fair and reasonable outcome for taxpayers.
“If anything, we refer more, not less, than the eligibility criteria
require,” she said.
The latest Corporate Tax Transparency Report shows the ATO banked $97.9
billion in income tax from large corporates in 2022-23, up 16.7 per cent from
the previous year.
The oil and gas sector paid a combined $11.6 billion. Strong commodity
prices, project production cycles and $4.3 billion realised through ATO audits,
anti-avoidance programs and compliance checks in that sector drove the result.
At nearly $55 billion, miners paid more tax than all other sectors combined
in the year, a total up more than fivefold since 2014-15.
About 31 per cent of the 3985 companies included in the report paid no
corporate income tax. That was because 14 per cent incurred accounting losses,
while 7 per cent had a tax loss, 2 per cent utilised offsets and 8 per cent
utilised tax losses from previous years.
Revenue from the petroleum resource rent tax fell by 6.5 per cent.
Since 2016, the Tax Avoidance Taskforce has secured an extra $33 billion in
revenue for the ATO from multinationals, large businesses and public companies.
Tom McIlroy is the Financial Review's political correspondent,
reporting from the federal press gallery at Parliament House. Connect with Tom on Twitter.
Email Tom at thomas.mcilroy@afr.com