• The Australian Taxation Office (ATO) has revealed that 22% of companies didn’t pay tax at all in Australia last financial year.
• As part of its annual transparency report, the ATO reveals how much taxation it collected and how many entities didn’t pay at all.
• Mining companies, buoyed by bumper profits, more than compensated for falling profits, and thus taxation, across all other sectors.
• Visit Business Insider Australia’s homepage for more stories.

The Australian Taxation Office (ATO) has opened its books, revealing who in corporate Australia is and isn’t pulling their weight.

The latest transparency report covers more than 2,300 companies, and shows that 741 of them, or 32%, didn’t pay a dime last financial year.

Take out those who are part of larger tax-paying corporate groups, and that exclusive club shrinks to 449 members, or 22%, which didn’t make a single contribution to the public coffers.

It’s not to say their accountants have been up to anything untoward, with loss-making companies not being obliged to chip in come tax time, amongst other legitimate reasons.

Some large tech companies can’t agree with the ATO what they should be paying and end up settling long-standing disputes in a single hit. Earlier this year, Google paid the ATO a $481 million settlement for a decade of tax arrangements that avoided any admission of guilt.

But there are of course also some bad actors. The tax office suspect that companies try to get away with around 7.5% of their collective bill — missed tax revenue that the ATO then whittles down to around 3.5%.

“The majority do the right thing and pay the right amount of tax, but we take firm action against companies that try to avoid their tax obligations,” ATO deputy commissioner Rebecca Saint said, noting they face the full force of the taxman.

“The Tax Avoidance Taskforce has proven very successful, contributing to the ATO raising a total of $19.8 billion in tax liabilities and collecting $11.2 billion from large public groups, multinational corporations, wealthy individuals, and private groups from 1 July 2016 to 30 September 2020.”

Of the largest 1,100 corporates, which pay more than a third of the entire tax base, the least transparent 20% are subject to “intensive scrutiny and investigation”, Saint said.

Meanwhile, the multinational anti-avoidance law (MAAL), which pressures international companies to recognise their Australian revenue and pay tax on it, pulled in an extra $8 billion last year.

The pandemic’s hit to profits

While the success of such measures help, this year’s bumper amount of tax revenue comes down to mega mining profits.

As commodity prices like iron ore soared to new highs, along with the fortunes of mining giants like Fortescue, the public purse swelled.

It was more than enough to offset declines across all other sectors in the face of the pandemic, with tax revenue growing by $3.8 billion compared to last year regardless.

Tax office steps up threats

But despite the growing tax base, the tax office revealed it is gunning for corporate tax avoiders in a new way this year.

“While the economic benefits of the MAAL will continue over the long term, the next significant step in addressing multinational tax avoidance will be the impact of the Diverted Profits Tax (DPT),” Saint said.

“The DPT prevents multinationals from reducing the amount of tax they pay by diverting profits offshore.”

The ATO revealed its hitting one company with a tax bill using it, while investigating “a small number” of others with it.

If found out, the companies are forced to pay 40% of tax on all profits, helping the tax man cover next year’s shortfall.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.