Large corporates pay record $83.8 billion in income tax for FY21–22
An ATO report reveals large corporates paid almost 50 per cent more in income tax for the 2021–22 year compared to two years prior.
Large corporates paid a cumulative total of $83.8 billion in income tax in the 2021–22 year, an increase of 22.2 per cent from the previous year, and almost 50 per cent higher than two years ago, the latest ATO Corporate Tax Transparency (CTT) report shows.
The 2021–22 report includes data from 2,713 entities, a net increase of 245 entities since the previous report.
ATO Deputy Commissioner Rebecca Saint said the increase in population in the report and tax paid is a reflection of both the strong business conditions at the time and also the high levels of tax compliance by most large businesses in Australia.
Income tax paid in 2021–22 was again the highest since CTT reporting started, showing how Australia’s large taxpayers have rebounded from COVID-19 and lockdowns.
“This is a fantastic result for the Australian community. A combination of a rapidly recovering economy, high commodity prices and high levels of voluntary tax compliance, backed up by the hard work of the Tax Avoidance Taskforce over many years, has delivered in spades,” said Ms Saint.
All sectors of the economy showed increased tax payable from the prior year. However, consistent with recent years the significant tax increase came from the mining sector reflecting strong commodity prices.
“The 2022 income year was the first year that the mining sector paid more tax than all other sectors combined, something we haven’t seen in the history of the CTT report,” said Ms Saint.
The mining sector paid more tax in 2021–22 than the total tax from all sectors in each of the first three years of CTT reporting, said Ms Saint.
Ms Saint said the ATO is continuing to see improvement in voluntary compliance in addition to strong compliance actions.
“Corporate tax compliance in Australia sets the bar for the rest of the world, and these results reflect years of sustained effort from the Tax Avoidance Taskforce to drive and support increased tax compliance by large businesses,” said Ms Saint.
The percentage of those entities that paid no income tax has decreased since the first publication of the CTT report from 36 per cent in 2013–14 to 31 per cent in 2021–22.
Ms Saint stressed that the fact that an entity pays no income tax, does not necessarily mean that they are not meeting their obligations.
Tax is paid on profit not gross income. Even entities with large revenue streams may not make a profit for a variety of reasons,” she said.
“There are legitimate reasons why a company may pay no income tax, for example they may not have made a profit for the year or may be in the start phase of their business.
“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.”
The ATO noted that changes to the tax law that will come into effect from the 2022–23 income year will alter the threshold for inclusion in the corporate tax transparency report.
The amendment changes the $200 million income threshold for Australian-owned resident private companies to $100 million, it said.
“This will affect the data that will be reported in 2024 and onwards with a significant increase of private entities included in the report expected,” said the Tax Office.
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