ATO shows mass avoidance
The ATO has released its latest corporate tax transparency data, showing hundreds of companies have reduced their tax bills to zero.
The tax office has assessed 2,311 entities for its 2018–19 transparency report, of which 741 entities (32 per cent) did not pay any tax.
Some of those entities are part of larger groups in which at least one corporation did pay tax. When this was factored in, the percentage that had zero payable tax drops to 22 per cent (449 entities).
One way to claw this money back is for the ATO to invoke powers given to it under the Diverted Profits Tax (DPT), which it has done this year for the first time.
The DPT was introduced under former Liberal treasurer Joe Hockey, intended to extract more money from firms that the ATO deems moves its money around in “contrived arrangements”. The authorities can hit companies like this with a 40 per cent tax on all profits.
The ATO has not discloses the name of the company or how much the tax assessment was worth, but says it is one of several DPT matters that “have advanced significantly”, suggesting there could be more companies hit.