Thirty-two per cent of Australian public companies paid no tax in 2020-21, according to Australian Taxation Office (ATO) data.
The ATO's eighth corporate tax transparency report, which covers 2,468 corporate entities, found that 782 (32 per cent) did not pay any tax.
The report attributes that to various reasons, including companies making an accounting loss or claiming tax offsets that reduced their tax bill to nil.
"There's legitimate reasons why companies may not pay tax," ATO deputy commissioner Rebecca Saint said.
"You have to have made profit in a year to be subject to tax. There are obviously genuine reasons why companies may not be profitable during the year.
"There's also other reasons why you may not pay taxes, you might be able to carry forward losses from earlier years to offset against income for that year.
"We do scrutinise why it is that [it's] nil tax … that they are genuine losses, and that they're not generated by uncommercial or artificial arrangements."
The data comes as the ATO continues to battle large companies over unpaid taxes, with Ms Saint telling ABC News that 113 companies had assessments raised against them during the 2022 financial year, totalling about $3 billion.
Tax payable increases off the back of strong iron ore prices
However, not all companies paid nil tax. The report showed 1,686 entities did pay tax.
Company tax collections increased to $68.6 billion in 2020–21. This is $11.4 billion — or 19.8 per cent — more than the previous year and the highest since reporting began.
"The real, large increases [were] predominantly due to strong commodity prices during the period, in particular, high iron ore prices," Ms Saint said.
She noted that some of the companies in the report received the JobKeeper wage subsidy.
Of the 2,468 entities that reported:
- 1,376 are foreign-owned companies with an income of $100 million or more
- 563 are Australian public entities with an income with $100 million or more
- 529 are Australian-owned resident private companies with an income of $200 million or more
Australian public entities contributed the most tax paid, at 66.2 per cent.
They were followed by foreign-owned entities at 22.9 per cent, and Australian private entities at 10.9 per cent.
Australian public entities contributed the most to the growth in tax payable in 2020-21, contributing $9.5 billion.
Foreign entities contributed $1.7 billion of growth, while Australian private entities had smaller growth, at $140 million.
In 2020-21, the number of entities paying Petroleum Resources Rent Tax PRRT decreased from 12 to 10, but the amount payable increased from $881.1 million to $926 million.
The increase reflects companies being more profitable off the back of higher oil prices during the year.
'Artificial' arrangements under audit
Of the 113 companies that had assessments raised against them during the 2022 financial year — totalling about $3 billion — Ms Saint said about $2.3 billion of it was being disputed by 19 different taxpayers.
And some of the $2.3 billion had already been paid to the ATO under a 50:50 payment arrangement.
Ms Saint noted that the Tax Avoidance Taskforce had raised tax liabilities of $29 billion since 2016, which has resulted in cash collections of $16.5 billion.
"The community can be confident that the entities within [the corporate tax transparency report's] population are being held to account," Ms Saint said.
"We've reviewed about 90 per cent of the corporate groups in the report."
The companies being audited fell across different industries, she said, but the ATO had specialist teams to deal with energy and resources sectors, particularly oil and gas companies, and in hard rock mining.
As well, the ATO had specialist teams dealing with financial services, banks and superannuation.
However, Ms Saint said, the ATO was still seeing some companies attempting to shift income into low-tax jurisdictions.
"Transfer mispricing and tax avoidance is still being observed in small numbers in the population," she said.
Another area of strong focus for audits was related-party financing.
"This is around the quantum of debt that's [held] in Australia — whether it's too high, and it's been artificially generated through some mechanism, or some structuring or whether interest rates are too high," she said.
"We're also very focused on other related-party arrangements, such as royalty payments to offshore related parties. Are they too high, generating excessive deductions in Australia?"
Ms Saint said that, post the Chevron tax win, the ATO had been able to eliminate more than $40 billion of debt deductions from the system.
"That means that there's an additional more than $12 billion that will ultimately flow through [in] additional tax over time," she said.
Market Forces research coordinator Axel Dalman said major fossil fuel companies paid zero tax in the 2020-21 financial year.
"It's ridiculous that such a wildly profitable industry is contributing so little to funding Australia's infrastructure and essential services," he said.
"The ATO is right to crack down on dodgy practices but the impact still isn't visible in the latest figures."
But Corporate Tax Association executive director Michelle De Niese said 85 per cent of the largest corporations in the country had obtained a high or medium assurance rating from the ATO indicating that they were mostly being compliant with their tax obligations.
"For those few in the minority that do not, the public can take heart in the fact that they will feel the full weight of comprehensive and intensive review from the ATO."
Diverted Profits Tax investigations launched
The ATO is also pursuing several cases using its Diverted Profits Tax (DPT) legislation powers, with one case now before the courts.
Known unofficially as the "Google tax", the DPT was introduced under former Liberal treasurer Joe Hockey.
It allows the ATO to hit companies it deems to be engaging in "contrived arrangements" with a 40 per cent tax on all profits.
Ms Saint noted that two cases have already been raised using the ATO's DPT powers.
The first case is public — it is against PepsiCo — and is already before the courts. The company is appealing the assessments.
Meanwhile, the second case is yet to go public and the ATO cannot name the company until it has a chance to review the assessment and make a decision about whether it will fight it out in court.
"Once a taxpayer receives a DPT assessment, they have 12 months [in] which they can make a submission to our general anti-avoidance panel, and they can contest … as part of that process," Ms Saint said.
Under Mr Hockey, the Coalition also introduced the Multinational Anti-Avoidance Law (MAAL), which has seen a number of companies, including Facebook and Google, restructure their tax affairs.
Ms Saint noted that 44 entities had already restructured under MAAL, and a couple of taxpayers were under audit, where MAAL could potentially apply.
She noted recent out-of-court settlements that had been made with large taxpayers, including Google and Rio Tinto.
"We've been successful in holding even the largest businesses to account," Ms Saint added.
The federal government announced in the budget that it would extend the Tax Avoidance Taskforce's funding by a year and give $200 million annually to expand its focus.
Ms Saint said this brings the total investment in the Taskforce to $1.1 billion over the next four years, which will allow the agency to recruit an additional 1,200 staff.
