Their tax returns would likely win the Booker prize for fiction

PWC - Government floats loosening ATO secrecy on money-laundering, takeovers

 

The companies that won millions from the government and paid $0 in tax

By Connor Pearce

Updated January 7 2025 

Dozens of companies that receive more than $1 million in government work paid $0 in corporate income tax.

Analysis of Australian Tax Office data by The Canberra Times with the assistance of TenderTrace has found more than two dozen companies that received more than $1 million in government contracts but paid no income tax in 2022-23.

These include defence multinationals, accounting and consulting firms and IT specialists.

While the ATO obtained a record $100 billion in corporate income tax in 2022-23, more than 1200 companies did not pay a cent.

Some of these companies are large beneficiaries of government contractors, but contribute little to government coffers in return.

Aerospace and defence prime contractor Babcock Australasia was awarded just under $1 billion in government spending in 2022-23 across nearly 60 contracts, including for communication systems worth hundreds of millions of dollars.

The London-headquartered company paid $0 in income tax on half a billion dollars in income in Australia.

Babcock was the only firm in the top 10 companies by contract value in 2022-23 to not pay corporate income tax, with rivals such as Lockheed Martin, BAE Systems and Raytheon returning tens of millions to the public purse.

A spokesperson for the business said the company complied with all tax laws in Australia and paid $8.9 million in payroll tax in 2023.

A number of companies which won millions in government contracts yet paid $0 in corporate income tax. Picture Shutterstock

"Babcock Australasia proudly supports the safety and security of our nation and its communities, employing 1800 people who work across critical marine, land and aviation operations Australia-wide," they said.

The Australian arm of German heavy weapons manufacturer Rheinmetall Defence brought forward tax losses from the previous year to post a net income tax of $0. During the year, the company was awarded a $230 million contract missile defence launchers for Australian Hobart class and Anzac class ships.

A company spokesperson said the business paid zero tax in Australia in 2022-23.

Qantas was awarded $20 million in government contracts in the year, not including the amount spent on corporate travel by politicians and public servants which is not reported on AusTender, yet paid $0 in income tax on earnings of $19 billion. The company brought forward losses from previous years to offset its 2022-23 tax burden.

Government IT specialist Datacom reduced its income tax burden to $0, following investments in infrastructure which meant the company operated at a loss in the year to March 31.

Babcock, Qantas and PWC were some of the companies which won millions in government contracts yet paid $0 in corporate income tax. Pictures supplied by Karleen Minney

A company spokesperson said the business was fully compliant with all Australian tax obligations and paid $117.4 million in other taxes such as GST, payroll tax and fringe benefits tax, on $625 million in revenue.

"Datacom employs more than 2500 people in Australia we believe our investment in our people on the ground, our support of local tech training and talent programmes, industry groups, and our investment in property and infrastructure in all States, highlights our commitment helping our customers throughout Australia to achieve greater outcomes through the smart use of tech," a Datacom spokesperson said.

Alongside large privately owned corporations that paid no income tax are corporate Commonwealth entities. Australia Post and the NBN Co paid $0 in income tax.

Both publicly owned corporations posted a loss in 2022-23.

ATO deputy commissioner Rebecca Saint said the Tax Office was closely watching the corporations that reduced their income tax bill.

"While there are legitimate reasons why a company may pay no income tax, the Australian community can be assured we pay close attention to those who pay no income tax to ensure that they are not trying to game the system," Ms Saint said.

Assistant Treasurer Stephen Jones said despite the record tax haul, this was "not job done".

"We invested $1.5 billion in the ATO tax compliance programs in the May budget," he said.

"These programs are expected to increase receipts by nearly $5 billion, ensuring individuals and businesses meet their obligations."

Spotlight on corporate tax avoidance

Consulting firm Pricewaterhouse Coopers also made the list for top government contractors that paid no income tax.

The big four firm was itself minimising its tax burden as revelations surfaced that the tax advisor was using confidential information to win clients and help multinationals bypass Australia's proposed tax laws. 

According to the firm's transparency report, the company paid $659 million in taxes across Fringe Benefits Tax, Payroll Tax and other charges. This was 5.6 per cent more than the previous year.

Due to the PwC's partnership structure, income tax payable on the profits of the business is paid by the partners directly.

In the 2023 financial year, partners paid 37 per cent tax on average.

Since the tax scandal, the firm has since been blocked from any further government work and sold off its government consulting arm for $1.

PWC paid $0 in corporate income tax on $1 billion in earnings, and received $128 million in government spending across 162 contracts.

ACT independent senator David Pocock said the arrangement raised questions about Australia's tax system.

"Something is wrong when PWC has more than $1 billion in income, including some $128 million in taxpayer funding, but pays no [income] tax," Senator Pocock said.

"Government procurement needs to go beyond value for money and look at retained economic benefit to stop multinationals that leaching off us by sending profits overseas. That companies can benefit from government spending yet pay no tax is pretty extraordinary."

Rival KPMG paid $3,388,501 on $13,474,679 in taxable income out of a total income of $194,282,515.

Greens Senator Barbara Pocock pictured during question time. Picture by Keegan Carroll

Greens senator Barbara Pocock said she was not surprised PwC made it on to the list, along with fellow consultant McKinsey.

"There are plenty of smaller consultancies ready to do the work who pay their taxes but lose out to big multinational firms when it comes to contracting," Senator Pocock said.

"I think we should be reassessing the procurement rules to exclude tax avoiders."

Ms Saint said publishing corporate tax data increased the tax take for Australians.

"Providing transparency of corporate tax, the report has continued to improve accountability, encourage voluntary compliance and increase public awareness," she said.

Senator Pocock said there was a particular obligation on companies that received a large chunk of their earnings from the public purse to not excessively minimise their tax burden.

"We need to persist in our efforts to stamp out this behaviour and that should include banning known tax avoiders from government work. We want to do business with people who pay their fair share of tax, not those who seek to rip off the public purse," the senator said.

Comments 

 

2. 8 HRS AGO

   Without minimising the need to ensure transfer pricing for multi nationals is fair, good on some of the companies for at least mentioning other taxes they paid. The unsophisticated attempt to sensationalise this should have been met with a response from all the companies that they paid $W PAYG Withholding, $X GST, $Y Payroll tax and $Z FBT. And shame on David Pocock for his comments on this. He said he wanted to do politics differently, but here he is stirring up uninformed outrage to garner votes at the upcoming election.
3. Comment by Adrienne Sykes.

   23 HRS AGO

   How can this be...unbelievable...we need to vote more Independents in so this sort of rorting can be stopped...if the other mob win the election this year it will be even worse...
4. Comment by Dan O'Brien.

   1 DAY AGO

   The Dishonour Roll Board.. just deem them . Their tax returns would likely win the Booker prize for fiction .
5. Comment by tony estevez.

   1 DAY AGO

   Embarrassing that some of our politicians don’t understand the taxation system. No one could be surprised that PWC didn’t pay tax for the year they nearly went bankrupt. Qantas has huge carry forward losses from the pandemic which is less about the taxation system but more about the outrageous bailout of its shareholders when like tens of thousands of other businesses that were allowed to go broke.
6. Comment by Fred Bloggs.

   1 DAY AGO

   Good work from the ATO, breaking a record like that would be no small feat.

   It is a shame the government cant prioritise work to companies that actually do pay tax? Should be part of the lengthy tender evaluation processes that are done, time and time again.

   • Reply by Fred Bloggs.

     1 DAY AGO

     yes, they manipulate the tax system to not pay sufficient tax. Their whole focus is on profit and tax avoidance.
   • Reply by Neil Watson.

     1 DAY AGO

     As mine would be!

The Australian companies paying the most – and least – tax

Tom McIlroyCanberra Bureau Chief

Nov 1, 2024

Qantas, Star Entertainment, Toll, and Insurance Australia Group paid no company tax in Australia in 2022-23, with huge revenues from miners and oil and gas companies helping the Australian Taxation Office secure a record $100 billion haul.

Tech giants including Google Australia, Facebook and Apple each had significantly smaller tax bills, despite billions in revenue. Apple paid $142 million in tax, after recording $12.6 billion in total income, ahead of Google’s $124 million bill, based on $2 billion in income.

Mining giant BHP is the country’s biggest taxpayer with a 2022-23 bill of $7 billion. Bloomberg

Social media giant Facebook paid $38 million in tax on $1.3 billion in total income. Online retail giant Amazon paid $125 million based on $6.6 billion in total income.

The report showed that 1200 large companies paid no tax. Companies can legitimately avoid an income tax bill due to accounting losses and tax offsets. Qantas said their result was caused by $7 billion in losses during the COVID-19 pandemic. The airline has used up carry forward credits and resumed paying tax last financial year.

Media corporations including News Australia and Seven West Media also paid no tax.

Resources giants including Rio Tinto, BHP and Fortescue paid a combined $43 billion, while additional scrutiny on tax arrangements for oil and gas companies boosted revenue to the federal budget through $11.6 billion in tax.

Chevron Australia, Woodside and Chevron were among the top 10 payers.

Chevron paid $4.3 billion in tax on $24.2 billion of revenue, after spending more than $80 billion with partners on the Gorgon and Wheatstone natural gas facilities in Western Australia.

“Our $4.2 billion company income tax payment for 2022 highlights the strong earnings we achieved in that year through high reliability and production achievements by our facilities, combining with market conditions,” managing director Mark Hatfield said.

BHP paid more than $7 billion in tax through its two companies, BHP Group and BHP Iron Ore, which have a combined revenue of $70 billion. Together, this was more than Rio Tinto’s $5.7 billion in tax from $47.3 billion in revenue.

Glencore paid $4.7 billion in tax from about $42 billion in revenue. Its holdings company paid no tax on $12.2 billion in revenue.

Mineral Resources, the company founded by Chris Ellison, paid no tax from revenues of $5.6 billion. The Perth-headquartered diversified miner admitted this week it has been investigating a tax evasion scheme involving Mr Ellison for more than two years.

A spokesman said MinRes indirectly paid about $240 million through the company’s interest in the Mt Marion Lithium company. MinRes used franking credits to reduce its tax bill.

IAG, which owns insurers NRMA and CGU, had revenue of $15.8 billion in the year but paid no tax, ahead of AGL Energy with $13 billion.

Australia Post had an income of $8.9 billion but paid no tax due to an annual loss of $200 million.

Commonwealth Bank, Westpac and National Australia Bank were all in the top 10, paying a combined $8.2 billion in tax.

Nine Entertainment, which owns The Australian Financial Review, had more than $3.3 billion in total income and paid $88 million in tax.

Supermarket giant Coles paid $433 million in tax but was again behind rival Woolworths, which paid $750 million.

Wesfarmers, the corporate giant which operates Officeworks, Kmart and Bunnings, paid $968 million in tax, from total revenue of $42.5 billion.

The report revealed a 16.7 per cent increase in corporate income tax, as commodity prices and improved compliance with tax laws pushed up the total. Falling commodity prices are expected to stop a record run of corporate tax receipts as soon as next year.

The number of companies paying petroleum resource rent tax remained steady on the previous year. But there was a slight decrease in PRRT revenue from $1.99 billion to $1.86 billion.

Santos, Woodside, Cooper Energy, Esso Australia and Mitsui were among PRRT payees.

Woodside boss Meg O’Neill said the company was proud to be Australia’s fifth-largest taxpayer.

“When Woodside performs, Australia benefits, a fact clearly reflected by the more than $21 billion in Australian taxes, royalties and levies we’ve contributed since 2011.”

Ms O’Neill was appointed to the board of the Business Council of Australia on Friday, replacing former KPMG chairman Alison Kitchen.

Minerals Council of Australia boss Tania Constable said the 2022-23 report was the second consecutive year her members had paid more in tax than all other industries combined.

“In 2022-23, the mining sector not only led the nation in tax contributions, increasing its payments from the previous year but also paid a combined $74.6 billion in company tax and royalties, including $31.5 billion in royalties alone,” she said.

“The sector accounted for approximately 44 per cent of tax paid by large corporate entities, according to the ATO report.”

Corporate Tax Association boss Michelle de Niesedefended big business, including those not required to pay company tax. She said the majority of corporates wanted to pay their full tax obligations.

“For those few in the minority that do not, the public can be confident that they will feel the full weight of comprehensive and intensive review from the ATO, and the application of the toughest tax integrity rules in the developed world.”

Assistant Treasurer Stephen Jones said the government and the ATO had worked hard to “claw back” taxes owed by some of the biggest companies.

“The ATO’s work is crucial in the fight to hold big companies to account. Our government will always ensure it has the resources necessary to retrieve what is owed so we can fund services the community needs,” he said.